"Economic Development and Planning for Mine Closure in"
Economic Development and Planning for Mine Closure in West Africa Mark Thorpe(1), Isaac Quarm(2) and Mike Boateng (3) (1) VP Sustainability, (2)GSOPP Estate Manager, (3)Wassa HSE Superintendent Golden Star Resources, Littleton, Colorado A BSTRAC T Gold mining in Ghana, West Africa is mainly carried out in the tropical rain forest in the west of the country. Although mining has been carried out for over 100 years, the development around the Golden Star properties is very limited and most of the community stakeholders are poorly educated and involved in subsistence farming. Mining is often seen as the resource curse with little advantage to the local person living around the mine site. Therefore, mine closure planning needs to address the economic development goals of the local community while providing the company with a strategy that will allow the release of the reclamation bond by the government. As part of the ongoing strategy, Golden Star has developed a workable palm oil production model that provides economic development for our stakeholder communities and provides guidance and assurance to the Government of Ghana that a closure scenario based on the tropical forest wanted by our local stakeholders. We have developed a farming model that allows tropical crops to be grown on mine lands (e.g. tailings disposal facilities will be rehabilitated to oil palm plantations that will be integrated into our oil palm initiative). Other rehabilitated areas originally planted to trees will be allowed to develop and then cut to provide additional farmland and provide security of food supply for our stakeholder communities. By working with our stakeholder communities, we are able to provide economic development that will continue beyond the mine life for the betterment of the entire region. 1 I N T RO DU C T I O N Golden Star is a mid‐tier gold mining company with operating mines along the prolific Ashanti Gold Belt in Ghana, West Africa. Production in 2007 totaled 246,278 ounces of gold and this is expected to increase in 2008. Our operations are in the moist tropical forest area of western Ghana (Figure 1). Evident in the figure are darker green areas that are forest inside the forestry reserves. The remaining lighter areas are farmland and secondary forest. The farmland comprises of two main agricultural regimes: cash crops (mostly oil palm and cocoa); and slash and burn agriculture for mostly subsistence crops (e.g. cassava, plantain, maize). Within the Western Region of Ghana, there is little primary industry. Due to the climate, there are some extensive plantations of both rubber and oil palm but other factories producing glass and tyres have closed down. In the Tarkwa region (Figure 2), mining and support industries for mining form the core of the economy. For example, Golden Star has a total employment of about 3,000 people with about 1,500 contractors. Conservative estimates of 3 jobs per mine job mean that Golden Star supports about 50,000 people (including worker’s families). Golden Star Resources SD08 Conference Presentation Figure 1 Location of the Golden Star operations within Ghana (from Google Earth) Figure 2 Details of the Golden Star locations (dark green patches are forestry reserves) (from Google Earth) 2 L OC AL E CON OMY The economy around the mines consists of mainly subsistence and cash crop farming mixed with small traders, workers employed in government (e.g. teachers and civil servants), Galamsey (illegal small miners) and mining and mining support industries. Our community outreach teams regularly meet with 20080918 Economic Development and Planning for Closure in West Africa.doc Page 2 Golden Star Resources SD08 Conference Presentation members of our stakeholder communities as part of our community consultation program. During the meetings, they are consistently asked about job opportunities at Golden Star. Most of the people in the area would like to work for a mining company but they are generally poorly educated and have few marketable skills. To address the concerns about local employment, at Golden Star, we have a policy of hiring locally wherever possible. All jobs are posted locally so that people our stakeholder communities have the opportunity to apply for work first. To verify their hometown, we short list the applicants with the name of their community and post the short‐list on notice boards in the community. The community then has seven days to object to anyone using their community as a base while not actually being a resident. In this manner, we ensure that those hired “locally” are truly from the area. 2.1 ECONOMIC DIVERSIFICATION Attempts at diversification of the local economy have been made with various interventions both locally and regionally. However, these have encountered various problems. At Golden Star, we worked with the local stakeholder communities and developed an alternative livelihood program. This included batik, chicken farming, soap production, and pasty making. Our livelihood programs worked well initially with inputs from the company. However, there we some unanticipated initial problems e.g. all the chickens went to market at the same time and saturated the market so reducing the value. We also determined that there was a finite market for soap and pastry. When the support from the company was completed and the program was to be stand‐alone, many of the participants dropped out and returned to their farming activity. Many other diversity initiatives succeed during the build out phase only to collapse when the initial development is complete. An example of this is grasscutter farming. Grasscutter is a large rodent that is much prized for food. There is an initiative to develop grasscutter production in Ghana, so the price of a breeding pair of grasscutters far exceeds the current meat market price. Once all the development has been completed, there will be a collapse in the value of the animals and the subsequent retrenchment of people actively involved in farming. Other barriers to economic diversity come from expectations within the sections of society. Despite being sustainable way to earn a small living, many of the unemployed people consider this a dead‐end job and do not want to enter a subsistence farming lifestyle. More recently, people have been attracted to the easier farming option of growing oil palm to produce palm oil. However, they are not really prepared to put in the work to develop the plantation for about 4 years before the cash generated become positive. Obtaining the initial cash to buy the oil palms and the agricultural inputs required can also be a challenge. 3 C LOS UR E P L AN NIN G 3.1 THE TRADITIONAL APPROACH Traditional mine closure planning focuses on establishing a post‐closure land use that is generally to return to land to the climax ecosystem for the region. In the case of our operations in Ghana, the Environmental Protection Agency has generally accepted closure and rehabilitation plans that establish the pre‐cursors to tropical rain forest with a view to developing through succession a mature tropical system with time. 20080918 Economic Development and Planning for Closure in West Africa.doc Page 3 Golden Star Resources SD08 Conference Presentation There planning and implementation of mine closure would be one where the workers were prepared for the closure of the mine with some re‐training and the operations Environmental and Mining Departments would proceed with the dump and tailings disposal facility to provide stable land‐forms that would developed into a mature ecosystem with time. Ongoing work post‐closure would include environmental monitoring and patching up areas where vegetation establishment did not achieve the targets. 3.2 COMMUNITY NEEDS AND CLOSURE The goals of the traditional approach, however, need to also be tempered with the realities of the area in which the mining operations are located. In the case of Golden Star, our operations are in a mainly agricultural area where slash and burn agricultural practices are prevalent. This is currently coupled with increasing populations that are resulting from improved health care and education. Additional population increases are currently be felt as large numbers of people are moving to the mining areas to participate in the illegal small mining, known locally as Galamsey. In these areas, although the trend will be transitory, there is additional pressure to produce food that can be sold to the migrant Galamseyers. The communities within our catchment area will suffer from a lack of income at closure from both directly from a reduction in wages and indirectly because spin off jobs and support workers will no longer be able to supply goods and services. This will have the greatest effect on the lower end and poorly educated workers who will be less likely to secure employment in other areas. Therefore, we decided to address closure from two distinct approaches: 1. Closure planning that addresses the ongoing needs of the community 2. Economic development work to provide economic inputs beyond the life of the mine The development of the closure plan for the mine to include an economic component was based on the experience gained at the Abosso Goldfields Damang Mine as outlined below. 3.2.1 Damang Mine Tailings Disposal Facility Approaches at adjacent mines have also focused on local community needs. For example, at the Abosso Goldfields Damang Mine, closure planning for a tailings disposal facility started with open houses with the local traditional leaders and opinion leaders. The plans for the closure of the tailings disposal facility were outlined when the facility was reaching the end of its life. Discussions on the closure planning included the traditional and opinion leaders but was steered toward providing an income to people when the facility closed. The opinion leaders were skeptical about the closure options and were not interested in the tailings disposal facility post‐closure. Following the discussions and evaluating the soil conditions, it was decided that the tailings disposal facility would be closed as a part wetland for wildlife and as an oil palm plantation. Therefore, the required spillways were installed in the original ground and the areas for the oil palm plantation laid out. Planting was carried out by excavating holes in the surface of the tailings and then filling them with reclaimed topsoil. The oil palm seedlings were then planted and the normal agro‐forestry husbandry techniques applied resulting in stands of oil palm on the tailings (Photo 1). Work continued and the tailings disposal facility was eventually completed with about 26 ha of oil palm (Photo 2). 20080918 Economic Development and Planning for Closure in West Africa.doc Page 4 Golden Star Resources SD08 Conference Presentation Photo 1 Oil palm growing on the Damang tailings in 2004 Photo 2 Oil palm plantation on the closed‐out tailings disposal facility 4 C LOS UR E P L AN NIN G AT G OL DEN S TAR Within Ghana, there is a legal requirement to present a provisional closure plan and establish a reclamation bond with the Environmental Protection Agency. In compliance with this requirement, Golden Star has registered mine closure plans for the Wassa and Bogoso / Prestea mines and is working on the concurrent rehabilitation of lands no longer used or required for operations. In keeping with the long‐term economic development requirements, closure planning is carried out in consultation with local stakeholders (EPA, community leaders). The end land‐use plans are developed with community input. Almost uniformly, there is a fear of the closure of the mines within the local communities, which will, of course result in a dramatic decrease in the local and regional economies. The traditional leaders realize that the mining operations will eventually close and are, therefore, supportive of efforts that will bolster the economy post‐closure. Therefore, our closure planning is based on a mosaic that attempts to address the local needs for food, cash crops and fuel wood. 20080918 Economic Development and Planning for Closure in West Africa.doc Page 5 Golden Star Resources SD08 Conference Presentation The two different operations are practicing concurrent rehabilitation for economic diversification and development. Each operation has worked to develop a closure scenario that contributes to the local economies as follows: 4.1 WASSA MINE The recent world fuel crisis and the move to develop biofuels has resulted in some areas that were previously planted to food being allocated to crops that produce oil that can be turned into bio‐diesel. This can affect the security of food supplies. However, to offset this and to provide an income in the longer‐term, the Wassa mine is working with a local bio‐fuel producer to grow Jatropha curcas. This crop produces an inedible fruit that can be turned into oil. The plant yields more than four times as much fuel per hectare as soybean, and more than ten times that of maize (corn). A hectare of Jatropha can produce up to 1,800 litres of fuel. The main advantage of the J. curcas is that it will grow on impoverished soils and needs minimal inputs, making it ideal for the development of an agricultural system on closed‐out mine areas where soils may be shallow and nutrient poor. The model used for the development of the Jatropha plantations is based on one developed by BioDiesel 1 Limited, a Ghana‐based company. The company provides technical advice, planting material and other support, as required, to Wassa. The model is such that the J. curcas plantation is intercropped with food crops (e.g. maize, plantain, vegetables) thus providing food for the farmer while allowing a cash crop to be properly developed (Photo 3). BioDiesel 1 Limited will buy the harvested seeds for processing as marketing assurance. Having a market for the seeds produced is key to the success of the venture. Photo 3 Jatropha inter‐planted with plantain on the Wassa Waste Dump As a trial, Wassa has planted 15 ha available land (Waste Dump 1 ‐ 8 ha, SAK Pit 3 – 5 ha, Borrow pits ‐ 2 ha) with J. curcas plant and intercropped them with maize and vegetables. This trial produced about 800 cobs of fresh maize, which was then used in the mine kitchen to produce lunches for our workers. Harvesting of vegetables is ongoing and a few kilograms of the J. curcas seed have been harvested. 20080918 Economic Development and Planning for Closure in West Africa.doc Page 6 Golden Star Resources SD08 Conference Presentation Jatropha has a life span of about 50 years and can grow on marginal land that would not be suitable for most food crops grown here in Ghana that require a richer soil. As such, Jatropha can be planted as long‐term crop so removing land from the slash and burn agricultural system that results in both air pollution and soil erosion with the subsequent contamination of adjacent watercourses. Wassa will develop its demonstration areas so that local stakeholders are able to understand the benefits of Jatropha production on marginal lands. 4.2 BOGOSO / PRESTEA MINE Closure planning at the Bogoso / Prestea mine takes advantage of the experience gained at the Damang Mine and is focusing on a tailings disposal facility that is now closed. The TSF I has a surface area of about 69 ha and is being gradually rehabilitated to oil palm. Even though operations are still using the facility as a water storage area, cooperation between the various departments identified an opportunity to develop about 15 ha of oil palm plantation on the edge of the facility. To accomplish this, the Environmental Department worked with the Golden Star Oil Palm Plantation (GSOPP) estate manager to lay out the oil palm plantation with a view to developing the closure scenario so that it could eventually be incorporated into the GSOPP plantation. The tailings material, although nutrient poor is not toxic and has very good water‐holding abilities, so making it an ideal medium for oil palm growth. The palms are planted into topsoil that was previously reclaimed from the footprints of mine developments and the inter‐planting of the rows to a legume cover crop (Pueraria) is accomplished by placing a small amount of soil in a very shallow hole (Photo 4). This soil provides the Rhizobium bacteria needed to establish the root nodules and, hence, provide nitrogen for the green manure cover crop. Photo 4 Oil palm planted on the closed tailings disposal facility at Bogoso / Prestea As with all plantation developments, success can only be assured through proper management of the plantation. As such, the TSF I will remain initially as a demonstration farm that will provide guidance 20080918 Economic Development and Planning for Closure in West Africa.doc Page 7 Golden Star Resources SD08 Conference Presentation for the development of other such developments on the remaining tailings disposal facilities when they close. Additionally, success with this rehabilitation plan will allow our Bogoso / Prestea operation to demonstrate a feasible closure scenario that will contribute to the local economy. 5 E CO NOM IC D EVELOPMENT AN D G OLDEN S TAR Golden Star has been working with local communities to provide some economic stimulus, more specifically focused on the young adults that form a large part of the Ghanaian population. Our economic development programs were initially focused at developing small businesses that could then form cooperatives. Our initiatives included poultry production, batik, soap making, and pastry production. Initially, while supported by company funds, the projects had a high success rate. However, when the individuals involved in the various economics diversity schemes were to move from company support to supporting their own businesses, the participation rate dropped dramatically. The factors contributing to this were from two main areas, support, and commitment to the success of the new venture. Although the schemes were designed to be initially supported by Golden Star and then to operate independently, the transfer from the one to the other was too dramatic. Both the financial and management support were withdrawn simultaneously. In hindsight, this placed a large amount of responsibility on the participants who, for various reasons, decided that they would return to their previous lifestyle. A review of the schemes indicated that longer‐term success and greater economic development would have been achieved if management support from Golden Star had been maintained for a longer period during the transition. This is one of the key lessons for such economic development plans if they are to endure beyond mine closure There were, however, some successes. Ms. Joyce Boateng a single mother living at Bogoso with her 2 children now has her own business printing batiks and tie dying clothes: “I sell quality batik and tie and dye to GSBPL workers, wholesalers and retailers. From every 24 yards printed batik and every 100 yards printed tie and dye, I raise a profit margin. I use part of the proceeds for food, savings and the children’s education. As a member of the Bogoso Vocational Training Association, I save every month into the Group’s Account with the local Rural Bank. Since early 2006, this trade has been my source of livelihood for me and my family.” Ms. Boateng’s participation in the Vocational Training project has changed her life and that of her children. She has been so successful in her business that that she now has a female assistant, who is also learning the skills from here. In her own words “Generally, what makes this practice unique is that it is profitable, marketable, and above all sustaining [for me].” 5.1 REVIEW OF ECONOMIC DEVELOPMENT OPTIONS Because of spotty success with initial economic development and infrastructure programs, Golden Star carried out a review of the outreach efforts with a view to developing something that would provide a real and lasting legacy to our stakeholder communities. This review covered both our infrastructure initiatives and our economic development programs. 20080918 Economic Development and Planning for Closure in West Africa.doc Page 8 Golden Star Resources SD08 Conference Presentation Our initial efforts in infrastructure development involved mainly offering different buildings to communities (e.g. schools, libraries). While these facilities were not refused, we were never certain if the correct type of infrastructure was benefiting the community. Therefore, we developed a bottom up approach to our community support. Following extensive community consultation, we formed community mine consultative committees, which, with our help, were tasked to develop a list of the required infrastructure for the communities they represented, including prioritizing the various projects. These committees now forward requests for infrastructure and other community support to the Golden Star Development Foundation, which reviews the various projects and then approves them for funding. This model allows us to support targeted projects that are driven by local community need. Our economic development review looked at the chances of success within our stakeholder communities and at other projects that were operating successfully in the Western Region of Ghana. Our key requirements for the selection of an economic development program were that it should be proven to work within Ghana, endure beyond the life of our mines and build on or enhance an existing skill that was widespread within our catchment communities. Our evaluation of options focused mainly on the skill set available in our catchment communities, which in large part was related to farming – both subsistence and cash crop (e.g. cocoa, coconut). A review of the more extensive developments in the Western Region of Ghana identified oil palm and rubber as potential economic development options. As our goal was to penetrate a larger segment of the population and oil palm is suited to both smallholder and out‐grower production methods, we selected oil palm as our sustainable economic development program. 6 G OL DEN S TA R O IL PALM P L A NTATIO N One of the most suitable long‐term cash crops for the western section of Ghana is oil palm. This has formed a small part of the smallholder income for some time. Additionally, some large multi‐national corporations own established oil palm plantations. These plantations operate on a business model that either employs people directly to tend the oil palms or they operate a smallholder scheme where individuals (or families) look after an area of oil palm trees. Nominally, 4 ha blocks of land are assigned to the small holders, who are also supplied with the agro‐chemicals (pesticides and fertilizer) required to produce the oil palm. Our review of development options identified oil palm production as one of the areas where local experience was good but the organization and plantation management were lacking. Within the Western Region of Ghana and, more specifically, in the area around Golden Star’s operations, oil palm production through both extensive and small scale plantations were present. Additionally, the large palm oil producers were experiencing a shortfall in production to meet their needs for oil palm. Oil palm is well adapted to smallholder schemes because plots are relatively easy for small farmers to tend and, once mature, oil palm plots are harvested every 12‐14 days, providing a steady income stream for farmers over a 20‐year period. 20080918 Economic Development and Planning for Closure in West Africa.doc Page 9 Golden Star Resources SD08 Conference Presentation The existing market for the extra palm oil allowed Golden Star to more fully develop a model that would allow for the rapid development of palm oil plantations while being assured of a market for the product. Market security has been the key to the success of the economic development programs established by Newmont. This allowed us to develop a model that would contribute to the diversification of the local economy while providing a stable long‐term income for local people. Golden Star Oil Palm Plantation (GSOPP) is an innovative, community‐based oil palm plantation development company that aims to reduce poverty in our stakeholder communities within the Wassa East, Prestea Huni Valley and Amenfi East districts of the Western Region of Ghana. Support for GSOPP originates at the highest level within our senior management, which has enabled GSOPP to expand its stakeholders to include: Traditional leaders (who are contributing land to the project) Unilever’s Benso Oil Palm Plantation (“BOPP”), which is providing technical support for GSOPP and an initial market for the fresh fruit produced during the initial years. One of the greatest constraints in Ghana to realizing commercial agricultural potential is access to land for developing sizable commercial farms (300‐500 ha). This is due to the traditional land ownership structure inherent in Ghanaian culture and practice. GSOPP has developed a unique approach to resolving this constraint through extensive community involvement and by creating economic and social incentives for local traditional leader to provide access to land: After an in‐depth community consultative process, land was committed by local Traditional leaders because employment and income will be created for the local community. 5% of revenues from the plantation revert to these Traditional leaders. Immediate employment is created during the plantation establishment phase as people are required to clear the land, lay out and plant the oil palms and tend them until they produce harvestable fresh fruit. Once the oil palms begin to produce harvestable fresh fruit bunches (FFB), land parcels of 4 ha are allocated to farmers in the community. GSOPPs farm extension staff will provide training and supervision 20080918 Economic Development and Planning for Closure in West Africa.doc Page 10 Golden Star Resources SD08 Conference Presentation FFB will be sold to BOPP at a price linked to world crude palm oil prices Revenues will be allocated as follows: 65% to the farmer. 30% GSOPP overhead, repayment to investors 5% rent to the landowners. Our oil palm project will create full‐time farm employment for up to 2,500 smallholders (at 10,000 ha planted) and an estimated 7,500 of their family members or employees. Earnings per farm will average $2,000 annually (2008 $), which is up from bare subsistence incomes of $200 to $500 per year. The initial phase started in 2006 with a pilot project in the Bogoso community to clear and plant 275 ha to test the concept. The pilot phase was successful and generated interest from community leaders allowing an expansion to four adjacent communities (Mbease‐Nsuta, Twidwaa, Himan and Wassa). The current development is presented in Table 1. Table 1 Golden Star Oil Palm Plantation development as of July 2008 Bogoso (ha) Chujah (ha) Nsuta (ha) Wassa (ha) Total (ha) Land Cleared (total) 0 72 80 100 252 Oil Palms Planted (2008) 0 15 5 32 52 2006/07 Planted 275 40 0 120 435 Total Planted to‐Date 275 55 5 152 487 Funding and Support is provided currently by Golden Star and we have committed to contributing $1 to GSOPP for every ounce of gold produced from its Ghanaian mining operations and to contribute 1% of total gross profit. We provide additional support in the form of management (finance and bookkeeping), offices, and direct management involvement in GSOPP at a senior level. We are currently seeking external funding to allow an accelerated build out of the oil palm plantations. Many alternative livelihood and community projects promoted by extractive industry companies fail because of poor due diligence, lack of community involvement, and poor ongoing management and support. GSOPP has aligned a set of stakeholders (traditional leaders, mining company, experienced management, a technical team, and a main customer) that can guide the GSOPP toward success. It has developed a unique business model based on community consultation and focused on creating immediate employment and long‐term income that has attracted support from these stakeholders. It has demonstrated through its pilot program that it can achieve performance goals on the ground. 7 S U MM ARY We are committed to extending the benefits of our mining operations in Western Ghana to our stakeholder communities and to making that benefit extend beyond the life of the mine. Through community consultation, we are able to determine the post‐closure land use that will best suit our stakeholder communities and then develop rehabilitation plans aimed at meeting those needs. As such, 20080918 Economic Development and Planning for Closure in West Africa.doc Page 11 Golden Star Resources SD08 Conference Presentation we are currently developing Jatropha on waste dumps at our Wassa mine and an oil palm plantation on a closed our tailings disposal facility at our Bogoso / Prestea operation. The shock to the local economy of mine closure is extensive. However, to address this eventual reduction in the local economy, we have established Golden Star Oil Palm Plantations Limited. This innovative, community‐based oil palm plantation development company aims to reduce poverty in our stakeholder communities and provide beneficial economic development opportunities that will endure beyond the life of our operations. By focusing our efforts on our community needs that we are able to understand through community consultation, we have been able to develop long‐term economic development opportunities and closure plans that will provide a lasting and beneficial legacy of our tenure in the Western Region of Ghana. 20080918 Economic Development and Planning for Closure in West Africa.doc Page 12