Skip to main content

Gold Coast (Gold Mining)

Volume 463: debated on Thursday 31 March 1949

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. George Wallace.]

10.0 p.m.

I want to draw attention to the very serious straits in which the gold mining industry of the Gold Coast finds itself today. There are 10 companies mining gold in the Gold Coast, with a total capital of £15 million; of these 10 companies, six are making profits, large or small, but mostly rather small, and four are making losses. Since the year 1940–41, when production reached its peak, there has been a decline of nearly 40 per cent., and today production is very little more than half a million ounces a year.

Now, the gold mining industry is not only of great importance to the Gold Coast, where it is second in importance to the cocoa industry—and if the swollen shoot disease goes on growing in the Gold Coast as fast as the present Government of the Colony is allowing it to grow, the mining industry will soon be first in importance—but is also a big earner of dollars. The present production earns nearly 20 million dollars a year, and it is obviously very important to increase that production if we can, and to reverse the present tendency for it to decline. Can it be done? Well, at a conference between the mining industry and the Colonial Office held the year before last, the mining industry offered to increase the annual production to a million ounces—that is to say, to very nearly double the present production—within three or four years, provided the Colonial Office would play its part.

What are the reasons for the decline in production, and what is the Colonial Office asked to do to help? The first reason for the decline is the scarcity of labour, the big rise in wages, and the decline in output per man-shift. There can be no suggestion now that wages should be put back to their old level. The decline in output per man-shift is a phenomenon with which we are painfully familiar in this country in coal mining, and with which other countries are familiar. But the Colonial Office could very much facilitate the importation of labour into the Gold Coast proper from the Northern territories. Hon. Members who visited the Gold Coast with me a couple of years ago would, I think, agree that there is no employer in the Colony who treats labour better than do the mining companies. The labour in the mines is far better lodged and fed than is the ordinary agricultural labourer, although I freely admit that more could be done in the way of amenities if the profits of the companies were greater.

The second cause of the decline in production is the high and growing cost of the materials used in mining. Very little, if anything, can be done by the Government about that, but just because of the high cost of labour and materials I suggest that the Government ought to be very careful not to crush the industry out of existence by taxation. That is exactly what is happening. Large tonnages of developed ore hitherto payable have become unpayable, and unless a remedy is found, they will remain in the ground to the detriment of the Colony and of the United Kingdom.

Until recently an export duty on gold of approximately 10 per cent. was levied. That was quite clearly unfair because it was levied on all gold whether a profit was being made on it or not. I am glad to say that export duty was abolished last September, but a new tax based on profits was substituted, the yield from which was about the same in total as the old, though it was so framed that the low-grade mines benefited to some extent. However, the relief was not adequate to save the low-grade mines which, as I have said, are rapidly declining.

What does the gold mining industry desire in order to arrest the process of decay? Obviously the easiest thing would be a rise in the price of gold, but for that American consent would have to be forthcoming, and there does not seem to be very much hope that it would be forthcoming. We come then to the only remedy which seems to be adequate, and that is a subsidy. It seems absolutely necessary that if the production is not to go on declining, a subsidy be provided. In Canada, where there has been the same difficulty, a subsidy is given, in proportion not to the price of the gold but to the cost of mining it. I suggest that this principle should be applied in the Gold Coast. In the interests of the Colony and because of the importance of earning dollars, I urge that the question of a subsidy should be very seriously considered by the Government.

10.7 p.m.

There is at present a feeling in the country that we are being asked, in order to bridge the dollar gap, to do almost more than the country can. All have been reading in their newspapers today and yesterday the difficulties about Argentine meat and how we may well be forced to have less and less meat. On other occasions Ministers have appealed to the people to do their level best to buy less in order that more may be exported. We are therefore depriving ourselves all the time in order to improve the export market, and although we are told that that is going very well in non-dollar areas, it is made only too plain to us that from the dollar point of view the gap has in no way been bridged and we are still in a very difficult position.

Many of us are beginning to ask whether all parts of Great Britain and the Colonies are participating and doing their level best. As to the Colonies, we have seen in the White Paper on European Co-operation, Command 7572, which refers to what the Colonies can do, the way in which they can help, but, oddly enough, there seems to be no reference in it at all to the gold situation. South Africa, of course, is nothing to do with us from that point of view, and we can have nothing to say about it, but we can do a lot with regard to the Gold Coast. Are we doing so? I understand that some time ago the leaders of the gold mining industry in the Gold Coast, including the famous Ashanti Mines, approached the Colonial Office and explained what could be done; but practically nothing has been done.

Last Saturday hon. Members who read "The Times" will have seen a letter from the chairman of the Ashanti Mines and others concerned with the mining industry on the Gold Coast explaining that more could very definitely be done and that something like 35 million dollars could be provided each year to bridge the dollar gap. With Marshall Aid that would be helpful; when Marshall Aid is over it will be still more helpful. Are we doing anything about it? The impression I get in talking to those interested in Colonial affairs in this House, not only on the Opposition side but also on the Government benches too, is that with regard to general planning and mapping out of the possibilities of bridging this gap the Colonial Office is the one that hangs back most of all.

Those of us who have travelled in the Colonies in the past know only too well the stalling possibilities of the Colonial Office, and at present, from all we hear, the way those stalling officials have got round the Colonial Secretary and, in a sense, taken control of him is making it almost impossible for anything really to be done of a constructive nature in this matter. That is why we are bringing forward this question at the present moment. That is why we are pressing the Colonial Office to find out what they are doing in regard to the Gold Coast, and in regard to the possibilities of helping the United Kingdom and the working classes of the United Kingdom to lighten their burdens without really hurting the ordinary people of the Gold Coast.

I believe quite frankly that the Colonial Office as a whole is not bothering very much about it and has not been bothering much about it, and that is why we are bringing up this question tonight. If I may say so, we are not only bringing it up tonight but, so far as my hon. Friend the Member for Twickenham (Mr. Keeling), myself and others are concerned, we will continue definitely to bring it up in the future, because it is not only this country that is interested. When we hear of the famous remarks made by the Under-Secretary of State for Foreign Affairs and others in the United States that everything is going wonderfully well, that we are really now on our feet again in the United Kingdom, and then suddenly the Chancellor of the Exchequer says, "Oh, yes, but things are very tricky from the gold and the dollar point of view as regards the United States"—when that is being said, then not unnaturally the United States wants to see whether we are doing anything at all about the bridging of that dollar gap. And are we with regard to the Colonies?

With regard to the Gold Coast, my information is that we are doing practically nothing about it. When one gets Sir Edward Spears, the head of Ashanti, and Sir Joseph Ball, the great authority on mining, who, after all, are the biggest gold men practically in any part of the world, putting forward the suggestion that we should and could by a subsidy add considerably more dollars to the bridging of this gap, and when we hear that nothing is done about it and no attention is paid, I think that both the Americans and the Chancellor of the Exchequer, as well as the people of this country, who are at present suffering considerably, have a right to ask why is the Colonial Secretary doing nothing about it?

Is it because his officials are spending too much of their time thinking out their own little reforms internally in the different parts of the Colonies and saying, "We have nothing to do with what the United Kingdom working classes and other people are suffering. We are out for our own particular little interest. We are cut off from all this." Surely it is time that both the Chancellor of the Exchequer and the Prime Minister made the Colonial Secretary pool his ideas with theirs for the real help and benefit of the whole Empire as one.

My hon. Friend the Member for Twickenham has referred already to the possibility of a subsidy on Canadian lines. Other subsidies of course, have been used in Rhodesia and elsewhere. Without any doubt, a subsidy which would increase production and which would be related not to the price of gold, but to the cost of mining it, should have the immediate consideration of the Colonial Secretary—who, I am very glad to see, has now arrived and will, I hope, read our Debate tomorrow.

I should like to point out that the Canadian subsidy, unlike the Southern Rhodesian subsidy, is based on slightly different lines, which, as far as one can see, are arousing no opposition from the International Monetary Fund. If this is working satisfactorily, although there may be greater difficulties in mining in West Africa, it should be possible, with alterations, to use the Canadian method of subsidy for this area. I should like the Colonial Secretary to study this matter seriously in the immediate future and bring it before the Chancellor of the Exchequer as a possibility for the long-term future. As far as we know, it has not been properly studied, and therefore I appeal to the Colonial Office not only to try to help the Chancellor of the Exchequer in bridging the gap, but to help the people of this country in some way to lighten their burden.

I do not wish to make a speech. I only want to interject the relevant and not, I think, altogether uninteresting observation that I suppose gold is the only commodity in the world of which the dollar price was fixed in January, 1934, and has never been changed since.

10.17 p.m.

The House will appreciate that the hon. Member for Twickenham (Mr. Keeling) has the interests of the country at heart in so far he desires to increase the flow of gold from the Gold Coast and thereby benefit the trade of the Commonwealth as a whole. So far as the speech of the hon. Member for Brighton (Mr. Teeling) is concerned, however, I think that the matter which actuated him was completely political. He dragged in all sorts of extraneous matter which had nothing whatever to do either with gold or the Gold Coast, and made an attack upon my right hon. Friend which was entirely unjustified, as I shall show.

The fundamental difficulty of the gold mining industry is that while the selling price of gold is fixed, as the right hon. Gentleman the senior Burgess for Oxford University (Sir A. Salter) has said, the costs of production—wages and material—have increased in the last few years. This difficulty applies to all gold-producing countries and is not peculiar to the Gold Coast. Therefore, we in the Colonial Office and the Government of the Gold Coast have tried to ascertain what steps could be taken to increase the gold production of the territory, at the same time ensuring that a proper proportion of the proceeds of the gold from the Gold Coast results in benefits for the people of that territory.

Like all other mineral deposits, gold is a wasting asset. Every ounce which is extracted is taken from the country. My right hon. Friend has taken great pains personally to do all that he could to stimulate the production of gold, and in the course of his inquiries he tried to ascertain whether it was possible to amend the then system of taxation in order to arrive at this desirable result. Last October, after consultation with the Governor of the Gold Coast, a Measure was enacted in the Gold Coast introducing a new system of taxation to achieve the object which I have explained. Under the new system the duty payable is related to profits and not, as previously, to the quantity of ore extracted. It was intended to afford substantial relief to the low and medium grade mines on the Gold Coast. The overall result of this amendment of the system of taxation is a reduction in the total amount of duty payable by the industry in the colony.

That may be but it is a reduction, it is not an increase. In addition to that, the Ministry of Supply have helped the industry substantially by enabling them to obtain gold mining machinery; the price of fuel and gas oils has been reduced because certain taxation which previously applied to them has been removed. It is reduced by about 10s. a ton with effect from 9th February. Mining machinery is entirely exempted from import duties

The hon. Member for Twickenham asked certain specific questions. He said that labour and materials were high in cost and I agree with that. They have risen but, on the other hand, the tax is based on profits and not on the total amount of ore produced. He also said that we were taxing the industry out of existence, but in fact there has been a constant rise in the production of gold. In 1946 the figure was 647,000 fine ounces. In 1947, owing to strikes, there was a reduction to 569,000 fine ounces and in 1948 the amount had risen to 670,000 fine ounces.

In 1942 it was 882,000 fine ounces. In the last few years, from 1946—

On the contrary, it has gone up from 1946 to 1948. There has been a rise in the amount of gold exported. It will be realised that during the war very great efforts were made to get the maximum output of gold. The hon. Member stated that 35 million dollars could be obtained if certain measures, which are rather indefinite, were taken to produce more gold. In fact that figure would mean that there would have to be somewhere about one million ounces of gold.

More than that. But the peak production at any one time was 882,000 fine ounces when every effort was put in and when mining practice was neglected owing to the war.

If the hon. Gentleman is speaking of 1942 that was in the middle of the war. If the heads of the mining industry, who ought to know their job, say that it can be raised to one million, why should the hon. Gentleman suggest that it is not possible?

I am not saying that it is not possible but that it has never been done and we have not had explained to us how it is proposed to be done by the mining industry.

Our people have seen them and I have visited the mines. The peak production at any time was more than 100,000 fine ounces less than the million ounces which it is said would be required if 35 million dollars were to be obtained. The hon. Member for Brighton has said that we are completely out of touch with the industry and take no notice of the various mining representatives who come to see us. That is not so. Only a few months ago I myself visited the mines in the Gold Coast. At the present moment the Government of the Gold Coast have asked the local Chamber of Mines to give the Government a complete review of the economic situation of the industry with any suggestions which they may have and this review is awaited. That in itself shows that, so far from neglecting or cold-shouldering this industry, we are most anxious to work in close touch and harmony with it.

But only the other day the hon. Gentleman told me, in answer to a Question, that no representations at all had been received by him.

The industry have been invited by the Government to make representations or give a review of the situation and no such review has been received. No formal representations have been received. If they are received we shall consider them most carefully. I wanted to make that clear to show that neither on the part of my right hon. Friend nor the Gold Coast Government has there been any question of cold-shouldering the industry which, we quite agree, is a most valuable industry, both to the Sterling Area as a whole and to the Gold Coast in particular.

The financial papers and the financial writers do not take the lugubrious view of the situation which is taken by the hon. Member for Twickenham. Only last Sunday I read in the "Sunday Times" an article by the City Editor in which he advised his readers to buy gold shares. He said that many people were getting out of industrial and commodity shares and into gold.

Well, gold is gold and shares are shares. The City Editor went on to say:

"If he is looking overseas"—
and West Africa is, of course, overseas—
"he might reflect that oil is an even greater necessity than gold, though I do not rule out gold as an insurance against world-wide deflation."
Here is the City editor of the "Sunday Times" specifying gold shares as being excellent shares in which to invest.

He does not specify. We know that Kaffirs have been most active recently in the market. I read the "Financial Times" to get the wisdom of the right hon. Gentleman the Member for Bournemouth (Mr. Brendan Bracken), as we so rarely have the opportunity of hearing it in this House. I see that only today he, or his paper, comments on the activity in gold mining shares in the Kaffir market.

The hon. Member should realise that what has happened is that there was a very rapid fall and then a recovery. It is not relevant to the longterm outlook which he is putting.

I am saying, at all events, that those who write in the financial papers do not look upon this particular industry in the pessimistic way that the hon. Gentlemen opposite do. In fact, they strongly recommend gold shares as a good investment for those who wish to invest in Stock Exchange quotations.

As I have said, we in the Colonial Office, and my right hon. Friend in particular, realise to the full the desirability of increasing production to improve our dollar position and for the benefit of the Gold Coast. But the various measures which have been suggested are not measures which my right hon. Friend can take. They are measures for the Chancellor of the Exchequer, or for international agreement, and not matters that could be put to the Colonial Secretary. The measures were the subsidy and the rise in price of gold. Those are clearly not measures for my right hon. Friend but, so far as he is concerned, and within the scope of his function and powers he will do everything possible for the benefit of the industry.

The Question having been proposed at Ten o'Clock and the Debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Half-past Ten o'Clock.