Out of $23b from gold, Ghana gets 7%

Source: Business and Financial Times

The country earned $1.7 billion, roughly 7%, in taxes and royalties out of a total $23 billion, which is the value of gold produced in the country from 2016 to 2013, a study by the Africa Centre for Energy Policy has shown.

Using Newmont as a case- study, ACEP said the scant rent the country received from gold happened at a time when price of the commodity was good.

“The cost of production per ounce of gold was US$596 in 2012 and $542 in 2013. This indicates a revenue of $850 - $1050 per ounce of gold in 2012/2013,” the think-tank said in a press statement read by Dr. Ismael Ackah, a policy analyst.

Titled 'Golden Days for Newmont', the report said Newmont from 2003 to 2012 paid less than US$500million in taxes to the government of Ghana despite reporting annual revenues of $931 million in 2012, $919 million in 2011 and about $2.5 billion in three years.

“While Ghana's economic performance is declining over the years, the mining sector grew by 11.7% in 2013 (EITI, 2014),” the study indicated.

Over the years, there has been a clarion call for government to find ways of clawing back a lot more than the country currently gets from mining rents, especially as mining communities have not seen much benefit from same.

The companies have argued that developing communities is the task of government and not theirs, once they meet their tax obligations to the state.

In January 2012, government inaugurated a team of negotiators led by Prof. Akilakpa Sawyerr, to renegotiate existing mining contracts which were widely seen to have failed citizens.

On December 23, 2015, the Ministry of Lands and Natural Resources released a press statement to the effect that government had successfully renegotiated the contract for Newmont, the largest single investor in gold mining in Ghana.

“The proposed changes are expected to improve benefits for the Ghanaian government and economy, and increase revenues for government while assuring a fair, predictable and beneficial long-term basis for Newmont's business in Ghana,” said the statement signed by sector minister Nii Osah Mills.

At the end of the negotiations Newmont is expected to make some upfront payments of up to $27 million, which Nii Osah Mills says the company is organising to pay.

While commending government for renegotiating the Newmont contract, ACEP said the country needs a law on resource rent tax in the mining sector “to capture a share of excessive profits and introduce other exempted taxes without negatively affecting long-term mining investment”.

The country, it added, needs a mining investment law to guide how mineral revenues are collected, disbursed and spent; as well as effective transparency and accountability to track the share of royalties that goes to traditional authorities.