Mineworkers Union warns government over Ghanaian contractor policy risks
The Ghana Mine Workers Union (GMWU) has called on the government to suspend its directive requiring owner-mining companies to hand over mining operations to Ghanaian contractors, warning that the policy risks undermining workers’ welfare, shrinking state revenues and reversing decades of gains in labour standards within the industry.
The Union argues that while increasing local participation in mining is a legitimate policy objective, the current approach risks producing unintended consequences, including lower wages, reduced pension contributions and weaker tax collections.
Speaking in an interview on the sidelines of the 98th Annual General Meeting (AGM) of the Ghana Chamber of Mines in Accra, the Deputy General Secretary of GMWU, Jerry Kwabena Andoh, said the directive failed to consider the welfare of Ghanaian mine workers adequately.
“What does the nation stand to gain if you give a contract to a Ghanaian contractor who pays lower wages, resulting in lower pay-as-you-earn taxes, reduced pension contributions and generally lower benefits? Everything goes down,” he said.
Mr. Andoh stressed that the Union supports efforts to increase Ghanaian participation in the mining value chain, but believes the current policy should be put on hold until safeguards are introduced to protect workers.
“We align with the objective, but it should not be extended for now until we have cleaned up the system,” he said.
According to him, many mining companies currently operating in the country have developed labour standards and employment systems that have significantly improved workers’ conditions over the years.
“It appears that some of the Ghanaian contractors entering the industry are either unwilling or unable to meet those standards,” he added.
The Union is, therefore, urging the government to suspend implementation of the directive requiring companies currently undertaking owner-mining to transfer those operations to Ghanaian contractors.
The concerns stem from a directive issued by the Minerals Commission to mining companies to phase out owner-mining arrangements and shift certain mining activities to Ghanaian-owned contract mining firms under the Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431).
The Commission’s 6th edition of the Local Procurement List, which took effect on January 1, 2025, requires that surface mining operations are to be undertaken by contract mining companies incorporated in Ghana and wholly owned by Ghanaians, while underground mining contractors are required to have at least 50 percent Ghanaian ownership and directorship.
The Commission has directed mining companies to transition away from owner-mining operations and warned that failure to comply with the requirements could attract regulatory sanctions.
Some of the mining firms that currently undertake mining operations directly include Newmont, Ghana Manganese Company (GMC) and Zijin Mining.
Mr. Andoh argued that discussions about local participation and the redistribution of mineral wealth should not be reduced to who holds a mining contract, but should also consider the impact on workers and the broader economy.
He further warned that the policy could inadvertently create opportunities for fronting arrangements, where companies appear Ghanaian on paper but are effectively controlled by foreign interests.
“The broader implication of this government push is that, if we are not careful, we will end up with people merely fronting for foreign-owned companies. They will appear Ghanaian on paper, but in reality, they will be mining on behalf of foreign interests. In the end, Ghana will not get what it is actually looking for.”
According to the Union leader, worker preferences within the industry already reflect concerns about employment standards under some local contractors.
“If you conduct a survey among workers in the mining sector and ask them to choose between working for a local company and a foreign company, most will choose the foreign company,” he said.
The reason, he explained, is that workers have greater confidence that salaries, pensions and other contractual obligations will be honoured.
“Workers are assured that everything due them, including pensions and other benefits, will be paid. Unfortunately, the same confidence does not always exist with some local contractors.”
Mr. Andoh noted that the union has spent decades negotiating improved working conditions for Ghanaian mine workers and fears that some of those gains could be reversed if adequate protections are not put in place.
He argued that lower wages often translate into lower pay-as-you-earn tax collections, reduced social security contributions and smaller Tier Two pension payments, with consequences not only for workers but also for public finances.
“The reality is that when a contract is awarded to a Ghanaian contractor under the current system, the contractor often pays less. Lower wages mean lower pay-as-you-earn taxes, lower social security contributions, lower Tier Two pension contributions and reduced benefits across the board,” he said.
“As a result, even the corporate-related payments that should accrue to the state and support economic development are reduced.”
By Nana Kwamena Botwe