Electrical Infrastructure and Mining Implications
The Impact of Ghana’s Electrical Infrastructure on the Mining Industry
February 19, 2016
Jessica Zhang and Brandon Raué – Primary Article Contributors
Matthew Wilson – Team Leader following Ghana
Keywords: Ghana, mining, electricity, infrastructure
A major infrastructure challenge for Ghana is an “inadequate and unreliable power supply.” Unreliable power is problematic for an industry such as mining that critically relies on the electrical sector. The country’s energy sector is heavily reliant on outmoded current sources of power. Furthermore, there is an extremely high demand and low supply of electrical energy. Approximately 7% of Ghana’s electrical production is supplied to mining companies, but that supply has been hampered in recent years.
Electrical distribution systems in Ghana frequently experience power outages that have pushed industries, like cold storage facilities in the region, to rely on backup generators. Tropical fruit producers, for example, estimate a reliance on diesel generators for operations 30% of the time, at a cost that is double that of sourcing power from the national electric grid. Additionally, the inadequacies of the energy infrastructure in Ghana have plagued mining industries in particular. In 2007, the energy supply was not adequate enough to run major mining factories at half capacity. In order to avert the major impact of power crises on the mining industry, major companies financed a USD $50 million power plant, the Mines Reserve Plant (MRP), in order to generate additional power in the case of a national energy shortfall. However, the government has been unable to keep the terms of the agreement, particularly in respect to the clause regarding that the plants would be given first priority in terms of load shedding in the country. Load shedding refers to the deliberate shutdown of electrical power in some areas or regions, in order to circumvent the failure of a country’s entire electrical system. This occurs when the demand for electrical power is greater than the supply of electrical power. Load shedding is a major issue especially for the mining industry as it limits a factory’s ability to produce at maximum capacity; this directly hinders a company’s financial position. Therefore, it is crucial for the government to keep the terms of the load shedding agreement so that the financial position of a company remains unconstrained.
This illustrates the costly and problematic impact Ghana’s weak electrical infrastructure has on industry. Both firm and industry infrastructure must be optimized to counteract against the infrastructural shortfalls of Ghana’s electrical sector. One solution practiced by some mining companies is augmenting their power supply with solar power solutions. Others have resorted to implementing thermal energy in order to reduce overhead costs. Perhaps these changes need to be executed in order to foster efficient production and generate the greatest amount of income achievable for mining companies. Another solution would be proper communication with the government. The MRP agreement primarily pushed the mining industry’s heavy reliance on electrical energy onto the forefront of the government agenda. Thus, it made the issue of the lack of electrical energy significantly more important to the government. Rather than seeing the MRP as a complete failure, it should be the first step in fostering growth and communication between the government and mining companies in order to achieve the top priority in both parties’ agendas: economic prosperity.
