Ghana plans to exchange Bauxite with China for $10Bn infrastructure

Ghana is currently finalizing an infrastructure programme with China. This programme would enable it bater the cost of infrastructure with refined Bauxite before the end of the year. This was made known by the president of Ghana, Nana Akufo Addo while delivering his speech at the commemoration of Ghana’s 61st Independence Day celebration. The infrastructures include bridges, roads, and hospitals.

“My government is going to implement an alternative financing model to leverage our bauxite reserves, in particular, to finance a major infrastructure programme across Ghana. This will probably be the largest infrastructure programme in Ghana’s history, without any addition to Ghana’s debt stock. It will involve the barter or exchange of refined bauxite for infrastructure,” he said.

China and Ghana signed a memorandum of understanding last year in which China will provide funding for the project to exploit the West African nation’s 960 million metric tons of bauxite deposits. According to Geological Survey data, Ghana produced 827,000 tons of bauxite and 40,000 tons of aluminum in 2013.

China’s plans to develop bauxite sources in Ghana after Guinea surpassed Australia as the largest supplier to the world’s biggest producer of alumina. Bauxite is refined into alumina, which is then smelted to produce aluminum.

The president, further stated that getting Ghana to a situation Beyond Aid, means adding value to Ghanaian exports and stop the export of materials such as cocoa, gold, bauxite, manganese, and oil in their raw state.

“Our cocoa farmers, for example, get less than 10% of the value of a bar of chocolate, and yet cocoa is the main ingredient. On the world market, bauxite in its raw form is worth about $42 per metric tonne. Processing it just one stage further into alumina oxide will fetch twice that amount. Refining the alumina oxide into alumina will increase the value by seven times, and smeltered aluminum fetches one hundred fold what it gets in the raw state,” he said.

With Ghana having sought to establish an integrated bauxite and aluminum industry since independence, President Akufo-Addo says his government is determined to make it happen within the next three years.

“Work on the law establishing an Integrated Bauxite and Aluminium Development Authority is far advanced, and will be submitted to Parliament very shortly. The government also hopes to reach an agreement soon with potential partners to establish an alumina refinery and expand the VALCO smelter. A successful execution of this project will be key in moving Ghana Beyond Aid, as will be the successful exploitation of our iron ore and manganese deposits to build a steel industry for our country and the region,” he added.