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Resources Minister on Ghana’s Minerals and Mining Act
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11th April 2014
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Promulgated in 2006, Ghana’s Minerals and Mining Act is aimed at highlighting the country’s mining sector as attractive to investors, while at the same time ensuring that government takes a fair share in revenues that accrue from mining operations, said Ghana Lands and Natural Resources Minister Alhaji Inusah Fuseini, speaking at this year’s Investing in African Mining Indaba – which took place in Cape Town, in February.

Under the Act, the framework for granting mineral rights was improved to ensure that a more transparent system is put in place to assist prospective investors in making informed decisions. Regulations and guidelines for mineral licensing have since been developed to give effect to the relevant provisions in the Act that deal with mineral rights.

To strengthen the regulatory framework governing the management of the minerals and mining industry, six mining regulations were passed in July 2012 by the Ghanaian Parliament to operationalise the Minerals and Mining Act.

These regulations included general mining regulations, support services regulations, compensation and resettlement regulations, minerals and mine licensing regulations, explosives regulations, and health and safety regulations.

Further, while the Minerals and Mining Act is relatively new, having been enforced over the last seven years, certain provisions of the law have been amended.

Fiscal Provisions

Ghana is no exception to the trend of mineral commodity-dependent countries introducing new provisions to their fiscal regime to ensure a share in the favourable metal prices.

Some fiscal policies include a policy to increase the corporate tax rate for mining companies from 25% to 35%, following the established practice in the global extractive industry; a capital allowance of 20% for mining companies; and the 2010 promulgation of the Minerals and Mining Amendment Act 794, which provides for a flat mineral royalty rate of 5%.

“Various measures have been adopted to ensure that Ghana’s mineral endowment is man- aged on a sustainable economic, social and environmental basis and that there is an equit- able sharing of the financial and developmental benefits between investors and all Ghanaian stakeholders, taking cognisance of the need for intergenerational balance,” said Fuseini.

Further, some civil society organisations are calling for the review of and additional amendments to the Minerals and Mining Act. Fuseini mentioned that discussions about these concerns were ongoing and that other concerns might arise from the talks being held by government’s minerals renegotiation team, which was currently reviewing aspects of the investment agreements of certain major mining operations in the country.

Fuseini was unable to make further com-ments on the details of the renegotiations, as the team had yet to complete its work. He mentioned, however, that, by next year, Ghana’s mining industry stakeholders would be able to discuss in detail the renegotiation team’s recommendations.

Illegal Mining

Fuseini also mentioned that the activities of illegal small-scale miners in the country had become a problem – so much so that it necessitated imminent redress.

With this in mind, an amendment to the Minerals and Mining Act is being developed to criminalise illegal mining and punish its perpet-rators to deter others from undertaking such activities. “This will ensure that illegal small-scale gold mining on licensed concessions, water bodies and forest reserves is significantly reduced to mitigate the environmental impact of these activities and to ensure that social conflicts in mining communities are reduced,” says Fuseini.

Additionally, the proposed amendment would enable the Minister to promote regulations that prescribe for mining companies the rate, method and period of royalties payment to the government.

Fuseini said this had become necessary as the mineral royalties regulation, which is the only operative law relating to how royalties should be paid, required mining lease holders to pay royalties at a rate of between 3% to 12% of their total revenue, depending on the profitability of the mining operations.

The maximum rate payable was subsequently limited to 6% under the Minerals and Mining Act. However, in 2010, the Amendment Act was promulgated to provide for the payment of royalty at a flat rate of 5%, but no regulation was passed dealing with issues such as the periodicity of payment. The proposed amendment seeks to deal with these deficiencies.

Geological Data

Fuseini also pointed out that mining, especially gold mining, had been established in Ghana for well over a century. The logical consequence of this was a considerable reduction in known mineral resources, which implied that mineral production might decline in the near future if the necessary action was not taken to find more resources.

“That is the reason why the government has sustained exploration activities that have led to an update of the geological map of Ghana and the generation of prospectivity maps of uranium, phosphorous, gold and diamonds, which have also been generated in the Voltaian and Keta basins for the first time,” he said, adding that investment opportunities in these areas should pique investors’ interest.

The Cost of Doing Business

The Ghanaian government was conscious of the need to control the cost of doing business, said Fuseini, adding that one of government’s initiatives was to consistently reduce the time it took to process a mineral rights application.

“To achieve this, specific time limits have been provided in the Minerals and Mining Act, which was complemented by the passage of the licensing regulations,” he said.

Further, an enhanced portal for Ghana’s mining industry had been commissioned and mining sector institutions had been linked by a wide area network to promote dissemination of information on a timely basis. “Government aims to eventually make it possible for prospective investors to apply for mineral rights online,” said Fuseini.

Meanwhile, in terms of infrastructural development, government has commitment itself to improve and expand the road and port infrastructure.

Several interventions, including the comple-tion of a third hydroelectric power generation project, have added about 400 MW of power to the national grid. Further adding to the national grid, Ghana has completed a gas-processing plant to supply gas for electric power generation to improve the supply and reliability of power in the country, and to complement imported gas from Nigeria under the West African Gas Pipeline Programme.

Investment Opportunities

Besides the opportunity to invest in the exploration and exploitation of minerals, other opportunities exist in Ghana’s mining-allied industries, including gold refinery and value-added products.

“Ghana is already producing more than 4.3-million ounces of gold each year. In spite of this level of production, only small-scale refineries refine gold produced by small-scale miners in the country. Bullion from large-scale production continues to be exported for final refining outside the country,” said Fuseini.

He pointed out that establishing such a major gold refining facility in Ghana would also serve other gold-producing countries within the subregion. “This is a project that investors with the technical know-how and financial capacity would wish to consider,” he added.

Also in line with the Ghanaian government’s objective of having value added to the country’s raw materials prior to export, Precious Minerals Marketing Company – a wholly owned government company – was focusing on the manufacture of high-quality jewellery, featuring Ghanaian cultural symbols, for local consumption and export.

“Opportunities exist for either individual initiatives or joint ventures with the private sector to expand this subsector of the indus-try. Similarly, opportunities exist for the estab-lishment of a facility to cut and polish diamonds,” highlighted Fuseini.

Iron and Steel Development

Fuseini further mentioned that, over the years, the Ghanaian government had made an effort to assess its iron resources and promote and develop an iron and steel industry. There are three major iron deposits in Ghana, which are potentially important for Ghana in terms of industry and commerce. These deposits include the Opon-Mansi lateritic iron deposit, the Shieni sedimentary iron deposit and the Pudo titaniferous-magnetite deposit.

Other minor iron mineral deposits in Ghana include the Adum Banso deposit, in the Western region, and the Akpafu deposits, in the Volta region. Ghana’s government has prioritised the development of these deposits and has welcomed investors to review documentation about them.

Support Services

Fuseini also highlighted several companies in Ghana that provided support services to the country’s mining industry, including contract mining and drilling services, assay laboratories and geological consulting companies.

Using Ghana as a home base, these companies had ventured and expanded their activities into the West African subregion. Through incentives, the Ghanaian government had encouraged such companies to continue investing in the country.

Fuseini maintained that investment opportu-nities existed for investors to set up assembly plants and machinery for the manufacture of components required by the mining industry.

In addition to these investment opportunities, the attractiveness of Ghana’s investment climate was buttressed by a revised legal and regulatory framework and improved infrastructure. These, supported by a pool of skilled labour to service the industry, made Ghana the obvious destination of choice for mining-sector invest-ment, said Fuseini.

“More importantly, the country continues to enjoy decades of political stability and the proverbial Ghanaian hospitality awaits you all. The government also continues to demonstrate its commitment to making the private sector the engine of growth in the economy,” he added.

Fuseini encouraged investors to join in on the 'Better Ghana Agenda' of economic development. “I encourage this against the backdrop of the very friendly relations and fruitful cooperation that exists between Ghana and the rest of the world,” he concluded.

Edited by: Samantha Moolman

 

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