Quality Products International

African Gold and China

by on Mar.23, 2011, under General News

As demand for Gold in China grows, some African countries are seeing mixed effects of direct investment, with China exporting more than just mining equipment.

An increasing number of small mines are owned by Ghanaians on paper but controlled illegally by Chinese entrepreneurs, according to miners, concession-owners and security forces interviewed by Reuters during a trip to Ghana’s mines belt.

Over 100,000 Ghanaians engage in small-scale extraction, known locally as “galamsey”, short for “gather and sell,” many without permits. Their work comprises almost 20 percent of gold output, making Ghana the second largest exporter in Africa.

Foreigners are forbidden from galamsey under the Mining Act which confines them to large-scale open pit mining and which initially meant Chinese outfits restricted themselves to providing ancillary services to the smaller mines.

The now-ubiquitous Chinese-made “Chang Fa” crushers and grinders started appearing three years ago, as did “Chinese blankets”, mats which rely on an old technique known as “gravity concentration” to separate minerals and catch gold granules.

But industry experts say the Chinese have gradually pushed further into the industry, providing capital to cash-strapped miners and increasingly purchasing land to extract ore themselves.

Pinning down the exact role of Chinese in the sector is difficult given that some 30,000 nationals now live and work in Ghana, according to immigration data.

Gold last week hit a record $1,444.40 per ounce on world markets as investors see it as a safe haven amid uncertainty for the global economy, making it a lucrative source of profits.

China, which last year overtook Europe as Africa’s largest trading partner and sees the continent as a vital strategic partner in its quest for resources, insist the problem is one for local authorities to deal with.

“There are many Chinese living overseas so I don’t think I will be capable to know what is happening to each and every Chinese in every corner of the world,” Commerce Minister Chen Deming said during a trip to Ghana this year, arguing that any illegal mining be punished under Ghanaian laws.

See full story: Reuters Africa

See related QPI Ltd blog Rising Gold imports into China

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