Government of Ghana reducing Ashanti stake

The parliament of Ghana has authorized the government to privatize gold producer Ashanti Goldfields.

Minister of Finance and Economic Planning Kwesi Botchway told Agence France Presse in Accra that “the sale of the shares is to finance key development projects and also fund the Business Assistance Fund to promote local business.”

The government is expected to reap more than US$1 billion from the sale. The sale of a 25% stake in Ashanti will leave the state with a 30% holding in the company. The British-based consortium Lonrho owns the remaining 45%. Ashanti controls the Obuasi field, close to the ancient capital of Kumasi, 200 km northwest of Accra, which is estimated to contain more than 18 million oz. gold.

Several opposition politicians recently went to the Supreme Court with a bid to prevent the privatization, arguing that it would be an “abuse of confidence” since the state held its shares in the name of the people. The court rejected this claim.

Without waiting for a ruling on appeal, for which no date has been fixed, parliament approved the sale plan. Observers expect the appeal to fail. Two British firms will sell 20% of the government’s shares on the London Stock Exchange and the remaining 5% will be offered to Ghanaian and other West African purchasers in Accra.

Ashanti is also expected to issue new shares to raise its capital by 4.5%. Under the accord, neither Lonrho nor the government, which has just signed a 30-year land rights agreement with Ashanti, will be allowed to sell additional shares for two years or to increase their stakes in the company. In 1992, Ghana produced more than 1 million oz. gold, almost 700,000 oz. of which came from the Ashanti mines.

Gold exports, which were worth more than US$300 million last year, now account for most of Ghana’s foreign earnings, ahead of cocoa.