The Minerals Income Investment Fund (MIIF) in 2023 defied all odds and the global economic downturn with a stellar financial performance in 2023 recording a net profit of GHȼ409 million from GHȼ205 million in 2022.
The Fund also recorded an increase in revenue from GHȼ323 million in 2022 to GHȼ456 million in 2023.
“MIIF’s assets under management may increase to US$ 1.5 billion dollars by end 2024 as it begins a revaluation of assets including Government of Ghana’s free carried interests”.
According to the CEO of MIIF, Edward Nana Yaw Koranteng, MIIF is currently evaluating its assets including Government of Ghana’s equity interest in mining companies which should place the Fund’s total Assets Under Management (AUM) to around US$1.5 Billion by end of 2024.
This is remarkable growth from a stated AUM of US$195 million in 2021 and will make MIIF one of the fastest growing specialty sovereign wealth funds in the world.
“The growth trajectory of the Fund is attributed to the hard work of the entire team at MIIF grounded in the vision of the president of the Republic of Ghana, Nana Addo Dankwa Akufo Addo to ensure that Ghana garners more value from its minerals.
The team has powered this incredible rise in the last twelve months by innovatively expanding our royalties base, the performance of the gold sector, strategic investments, the set up of a gold trade desk, good asset allocation and our treasury management” says Edward Nana Yaw Koranteng.
The Growth Factors
Expanding the royalties net
The main sources of income for the Fund are royalties and dividend payments. Ghana has seven royalty paying minerals with the potential for 15 paying minerals. Gold prior to MIIF expanding the royalties net was contributing about 99% of royalties.
The Fund since 2022 has successfully expanded the royalties net by working to include hitherto non-paying minerals such as medium scale gold, sand winning and salt. Royalties from quarries, limestone and silver have increased significantly with the expansion premised on two major initiatives by the Fund – the establishment of an inter-agency framework and task force in 2022 made up of GRA, MDF, Ghana Standards Authority, Minerals Commission and EOCO.
This framework is part of the strategic thrust of MIIF to enhance the collection of royalties, expand the royalties net and streamline communication on royalty payments from non-gold mining companies.
The second initiative by MIIF in this regard is the development of an in-house geo mapping, tracking and monitoring system which allows a real time view of mining activities from selected mines and quarries across Ghana. This allows tracking of mining companies and payment of royalties on time. The table below illustrates the growth in royalties following the implementation of the initiatives in 2022 which saw, silver, salt and sand winning paying royalties for the first time.
The Head of Business Development of MIIF, Dr. Kennedy Abrokwa speaking to journalists emphasised that with more gold mines coming on stream such as Cardinal, Bibiani, Chirano and the uncovering of more medium scale gold mines, investment in salt, discoveries of lithium and graphite among others, the royalty base should more than triple in the next five years.
Growth in Investments and Outlook
“It is my conviction that MIIF will be a US$6 billion dollar Fund within the next ten years in view of the growth trajectory and the nature of our investments” – MIIF CEO
MIIF’s investments are aligned with industrial policy and premised not just on increasing equity holdings for Ghana but towards the development of the entire value delivery system connected to each single mineral type says Mr. Koranteng.
“The core really, is for us to diversify the mineral base where we get our royalties. We are not just looking at the mineral space, we are looking at the entire value chain.
“This is why MIIF has developed a strategy for every mineral type in a bid to extensively develop and invest in that mineral’s entire value delivery system. Ghana can only transform if we hold significant equity positions across the entire value chain for each single mineral and to also align such with industrial policy; for example salt refining and it connect to over fourteen thousand uses including textile, manufacturing, food processing, pharmaceutical and petroleum or lithium and its connect to battery and automobile manufacturing, fibre glass and ceramic production. These examples positions MIIF to be a major cog for industrialisation” Mr. Koranteng stated.
Major investments by MIIF
MIIF has invested over US$ 40 Million dollars in the Chirano and Bibiani gold mines under the Canadian and Franfurt listed Asante Gold Corporation. This investment by MIIF has increased Ghanaian interest to circa 45% making it the only large-scale gold mine with significant Ghanaian interests today.
The Fund through its investment in the UK and Australian listed Atlantic Lithium is now the third largest shareholder in Atlantic Lithium globally and working on finalising a 6% stake in the company’s Ghana tenements including the Ewoyaa project mine which increases Ghana’s stake in Ewoyaa to 19% on the back of a negotiated 13% free carry for Government of Ghana at US$27.9 Million.
MIIF has also invested GHS 300 million in the development of the Ada Songhor Salt project under Electrochem Ghana. “Industrial salt is one such mineral if well-developed across its value chain could generate at least US$1 billion in direct revenue every year.
“The Ada acreage of 41,000 acres is the largest in sub-saharan Africa and the investment will push it to become the biggest producing facility in Africa. The Walvis Bay in Namibia which is the largest in sub-Saharan Africa at 16,700 acres produces circa 950,000 tons per annum with Ada having the potential to produce 2,000,000 tons per annum” says the Chief Investment Officer, Mr. Bubune Sorkpor.
MIIF is currently reviewing investment opportunities in three large scale gold mining companies in Ghana with one being exploratory, commercially proven graphite in northern Ghana in line with Ghana’s critical minerals policy and in lithium processing possibly with international co-investors.
Leverageing the Capital Markets
In 2023, MIIF executed an MOU with the Ghana Stock Exchange (GSE). The MoU was signed with the view to establish a practical framework to set forth the procedures to create an alternative asset class and promote the trade in minerals securities on any of the GSE’s markets.
In line with this MOU, MIIF shall endeavour to have all investments listed on the GSE. In this vein, Electrochem shall be listed on the GSE by end of 2025, Atlantic Lithium and Asante Gold have been listed thereby giving Ghanaians the opportunity to directly participate in these investments.
In view of the opportunity to leverage the GSE, the Fund is developing a gold backed ETF with the support of the GSE and IC Securities. This will be the second listed ETF after the ABSA South Africa New Gold ETF which has been trading on the GSE for at least four years. The MIIF gold backed ETF will provide the opportunity for Ghanaians and Pension Funds to invest in actual gold backed instruments and also create an alternative to government backed securities. MIIF intends to have this listed by end of 2024 subject to SEC approvals.
Enterprise Development (The MIIF Small Scale Gold Mining Incubation Program)
The Chief Technical Officer and Head of Operations of the Fund, Mr. Kwabena Barning reiterated the CEO’s position of investment along the entire value delivery process by emphasising the need to formalise the small scale gold mining sector by supporting the small scale gold miners under a program called the MIIF Small Scale Mining Incubation Program.
The Small-Scale Mining Incubation Program (SSMIP) is an enterprise development initiative designed to support the growth of the small-scale gold mining sector. The licensed small-scale sector contributes up to 40% of the total gold output of Ghana and employs more than 10% of the working population.
The MIIF Small-Scale Mining Incubation Program will be in the form of equity investment in the form of capital support, mining equipment, gold traceability mechanisms, imbuing beneficiary firms with corporate governance principles, exacting responsible mining methods to forestall environmental degradation as well as the provision of a ready offtake market through the MIIF Gold Trade Desk for the licensed miners.
According to Mr Kwabena Barning, “This initiative will be the most revolutionary in artisanal mining in Africa”. Mr. Koranteng emphasised the belief that the SSMIP has the potential to triple the small-scale output which is currently around US$ 2 Billion a year.
The objective of the SSMIP is to develop the creation of Ghanaian mid-tier gold mining companies, which would lead to the formalization of the sector with an attendant impact on eradicating illegal mining.
In addition, this program plans to move beneficiary companies from their artisanal status to high performing junior mines which can be listed on the Ghana Stock Exchange. The pilot phase of this project has begun with an initial investment outlay of US$ 30 Million over the next two years with a plan to cover over 100 companies within the next eight years.
The MIIF Gold Trade Desk
MIIF commenced the operationalization of its Gold Trade Program in August 2023. The Fund’s strategic goal is to integrate its investments along the whole value chain of commodities invested in.
“MIIF through its Gold Trade Desk has injected over US$700 Million into the Ghanaian economy”
Trade has attracted total inflows of US$719 million into the Ghanaian economy between August 2023, and July 2024 through its Gold Trade Desk. Out of these inflows, MIIF has traded foreign exchange amounting to US$531 million over the period with Bulk Distribution Companies (BDCs) under the Chamber of Bulk Oil Distributors (CBOD) in support of the Government’s gold for oil program.
MIIF has earned a gross annualized return of 33% from its trading activities. The MIIF Gold Trade program has provided a stable source of forex to the BDCs for oil purchases and stable fuel prices to the Ghanaian consumers and complementing the Bank of Ghana’s forex support for BDCs.
Next Phase of Growth
The MIIF Gold Trade program has been able to establish and test systems for engaging in efficient metals trading. MIIF’s robust system includes responsible sourcing of small-scale gold ore, tracking the commodity, logistics, insurance, and validation of the gold ore.
The Fund intends to onboard private banks and institutional investors who will be able to trade Ghana gold for forex, through its platform. “After piloting with one bank, we are ready to roll out a full-scale trading platform with other financial institutions and licensed gold aggregators.” Mr. Koranteng said.
“Our foray into trading metals is to build capacity to engage in financing instruments for the mining sector in Ghana. We want to be able to build derivatives, future and forwards that will be underpinned by the physical trade of commodities” Mr. Sorkpor said, Chief investment officer.
