The much-criticised barter arrangement that the Akufo-Addo government made with Chinese Corporation, Sinohydro, in 2018, is facing a snag and may not materialise, Whatsup News has gathered.
According to reports, after Ghana opened an escrow account abroad to pool proceeds from bauxite sales as a guarantee mechanism for the Chinese to build infrastructure for the country, environmental implications of the deal have led to major European companies which use bauxite as raw material to blackball bauxite from Ghana.
Three global manufacturing giants – BMW Group, Tetra Pak and Schüco International – recently said they would not source bauxite from Ghana’s Atewa Forest due to the environmental risks associated with mining the forest.
“By calling out the risky nature of mining bauxite in the Atewa Forest, BMW Group, Tetra Park and Schüco International have certainly put the business community on notice and at the minimum, their peer firms are likely to proceed with caution when sourcing bauxite from Ghana in the future,” said Terrence Neal, a natural resources governance researcher.
According to the Europeans, their decision is based on the fact that they know the Chinese do not care about the environmental implications of mining bauxite from one of the country’s most important biodiversity forests.
In 2018, Ghana signed a bauxite-for-infrastructure deal with Chinese state-owned firm Sinohydro Corp. The Chinese would build infrastructure worth US$2billion for Ghana while Ghana would pay back with proceeds from bauxite.
The arrangement however angered conservationists because of the impact it would have on Ghana’s environment already messed up by illegal mining, called galamsey.
Among them was the Duke University. A report by its Nicholas Institute for Environmental Policy Solutions warned that the cost of implementing the proposed aluminum industry projects linked to the Sinohydro agreement would outweigh the potential benefits.
“Ghana’s environmental assessment laws are not adequately tailored to address these risks, and the government, thus far, has not facilitated comprehensive transparency concerning planned aluminum industry projects and the Sinohydro agreement,” read the report.
However, the Akufo Addo government threw caution to the wind and moved with the deal. So far, US$646 million of the loan funds have been approved for disbursement.
As collateral, Ghana agreed to establish an offshore escrow account for receiving revenues generated from the sale of bauxite.
But Ghana’s domestic aluminum industry does not generate sufficient revenues to satisfy its loan repayment and collateral obligations.
The country created a state-owned enterprise known as the Ghana Integrated Aluminum Development Corporation to develop aluminum industry projects and related infrastructure.
The corporation aims to establish up to three new bauxite mines, three new alumina refineries, one new aluminum smelter and will hold a minimum of 30 percent interest in new aluminum industry projects alongside private investors.
“If Ghana fails to comply with its collateral or repayment obligations, Sinohydro is entitled to prepayment of outstanding loan balances and may seize the full balance of the escrow account,” the Duke University report warns.
The European giants have decided they will not buy Ghana’s bauxite because the government decided to mine in the Atewa Forest, a biodiverse preserve which is also the main source of three major rivers that provide water for five million people.