The Finance Minister has announced a $2 billion deal with Chinese engineering firm, Sinohydro Group Limited, to fund infrastructure projects by the government.
Photo: Ofori-Atta presenting the Mid-Year Review in Parliament.
Presenting the 2018 Mid-Year Budget Review to Parliament on Thursday, Ken Ofori-Atta said Ghana's infrastructure deficit, which is in the region of $30 billion, should be adequately tackled with the agreement that will see government leverage the country's bauxite deposits.
"Sinohydro Group Limited of China [will] provide $2 billion of infrastructure of government's choice in exchange for Ghana's refined bauxite. Ghana will establish a refinery within the next three years and select its own partner to undertake the refining of the bauxite," the Finance Minister said.
This agreement, says the Minister, is in line with a permanent strategy of bridging the country's infrastructure deficit through a new model that involves financing Ghana's infrastructure requirements through leveraging of the country's natural resources.
Meanwhile, according to figures by the World Bank, on average Ghana invests approximately $1.2 billion per year in infrastructure projects. The Africa Infrastructure Diagnostic Report for 2015 also states that for Ghana to meet its infrastructure deficit, $ 1.5 billion is required each year for the next 10 years.
The Finance Minister, however, clarified that under the Sinohydro agreement, "the $2 billion of infrastructure...will not add to Ghana's debt stock."
He added: "No revenues or resources will be encumbered as a result of the [Sinohydro] arrangement."
Figures: Bauxite deposits
Official estimates are that there are about 200million tonnes of bauxite deposits within the Atiwa mountain range at Kyebi, another 350million in Nyinahin, and 1billion tonnes of deposits in Awaso; making an estimated total of over 1.5billion tonnes of bauxite deposits Ghana.
Using conservative 2016 prices of $358 per tonne of bauxite, according to minerals.us.gs.gov, Ghana has a potential $ 554.9 billion worth of bauxite deposits.
In the first quarter of 2017, the average spot aluminium prices on the LME [London Metal Exchange] was $1,853 per tonne, indicating that the $554.9 billion of raw bauxite is just a tip of the iceberg regarding the potential wealth that remains to be generated when we look at processing our bauxite into aluminium.