Ghana losing Gh500million to smallscale miners annually

Gold exports from Ghana’s smallscale miners in 2012 and 2013 amounted to the same volume of production by the three leading mining firms in the country.

Figures from the Minerals Commission indicate small scale and artisanal mining accounted for 34% of total gold production in Ghana, which amounts to 1.6million ounces of gold.

This is equivalent to the total exports of Anglogold Ashanti Obuasi mine, Goldfields Tarkwa and Newmont Gold Ahafo mine.

The State is however losing its resources without compensatory revenue.

There is no mineral royalty payment on the extraction of gold by the small scale miners – an annual Gh₵500million in taxes and royalties is estimated to have been lost to the artisanal mining.

The Mining and Minerals Act 2006, Act 703 does not differentiate between small scale and large scale operations in terms of royalties and both are liable for royalty payment.

The 2012 and 2013 report of Ghana Extractive Industries Transparency Initiative (GHEITI) has recommended that “the rate at which royalty is paid may be differentiated between large scale and small scale holders” whilst royalty payment may be instituted at the point of export for the small scale operators.

Dr. Steve Manteaw of the Integrated Social Development Centre (ISODEC), a civil society group, says taxing the smallcale miners will demand mainstreaming of their activities.

He observed the failure of the country to make formalization of illegal mining attractive to galamsey operators.

“When multinational mining companies come into the country, we bend over to give them incentives and whatever support they need to be successful; their success become of paramount interest to the State. Why shouldn’t the success of smallscale miners be of paramount interest to the state?” he quizzed.

According to him, players in the informal mining sector can be incentivized with support mechanisms, including access to geological data, technical aid - in which a plant pool of equipment can be accessed at subsidized rate.

“If I know that by formalizing my activities I get some support in terms of being able to access venture capital fund to finance my operations, then it becomes attractive to move away from illegal activities into the formal sector; once you’ve done that then we can identify these groups and tax them appropriately to finance national development,” suggested Dr. Manteaw.

Story by Kofi Adu Domfeh 

GHEITI Bill to be laid before parliament this year

A bill to institutionalize the Ghana Extractive Industries Transparency Initiative (GHEITI) is expected to be laid before parliament this year.

The Initiative is a global coalition of governments, extractive companies and civil society working together to improve accountability in the management of natural resources.

Data collection for the Ghana EITI is currently voluntary for interest parties, including government agencies and firms operating in the extractive industry.

The Natural Resource Sector Transparency and Accountability Bill, 2014 seeks to provide the legal framework to enhance transparency and accountability in relation to governance of the natural resource sector of the economy.

National Coordinator of the Ghana EITI, Franklin Ashiadey, observed the Initiative has been instrumental in most reforms in the extractives sector – including the review of the minerals royalty from three to five percent, review of the corporate tax and capital allowances.

“For the fact that companies are now willing to disclose information to the general public, for Ghanaians to know how much companies are paying to government alone is enough to ensure some transparency in their operations,” he stated.

The GHEITI was introduced over a decade ago with a narrow focus on revenue transparency. This has been broadened to provide accountability and transparency along the entire extractive value chain – from the award of licenses and contracts through to regulation, collection of taxes, distribution and use of revenues to support sustainable development.

Legal Consultant on the Bill, Tuinese Amuzu, describes the legal instrument as a good governance and accountability tool. He explains the general context is to ensure natural resource extraction benefits the people.

The Bill also provide platform for the effective implementation of the EITI Standards and other measures aimed at good natural resource governance, whilst empowering the general public to demand accountability and transparency in the development outcomes from benefits from payments made by mining firms to government.

Mr. Ashiadey says giving legal backing to the Ghana EITI process will help address some of the challenges faced by the Initiative.

He is hopeful Bill, currently going through stages of consultation with interest groups, should go through parliament before end of year.

Story by Kofi Adu Domfeh 

GRA tasked to retrieve Gh6.6m from Prestea Sankofa Gold

The Ghana Revenue Authority (GRA) has been tasked to retrieve an estimated Gh6.6million in outstanding mineral royalty from Prestea Sankofa Gold Limited, a gold mining firm in the Western region.

The company has failed to pay royalties for 2012 and 2013 after exporting over Gh130million worth of gold in the two years.

The default in payment is contained in the Ghana Extractive Industries Transparency Initiative (GHEITI) Report for 2012 and 2013.

“Whatever the excuse, it’s something that is due the State and they have to pay,” said Kwadwo Asafo-Aidoo of Boas & Associates, which prepared the GHEITI Report.

Prestea Sankofa is essentially a Ghanaian gold mining company with the Ghana National Petroleum Corporation (GNPC) holding majority shares.

The company produced 21,237 ounces of gold in 2012 at total revenue of $36,012,936 and an additional 22,853 ounces at revenue of $31,760,747 was recorded in 2013.

According to the GHEITI report, the company paid over Gh1.5million to the GRA over the period, but the amount covered outstanding royalty payments for 2011.

Liquidity and production challenges are some factors attributed to the company’s failure to honour the obligation.

But Mr. Asafo-Aidoo says the appropriate legal penalties should be meted out to the company.

“If these people have waited for two years without any payment of royalty, then you can imagine the quantum of liability… the GRA is at the moment taking up that issue with them and I believe that in the shortest possible time they should come up with that payment,” he stated.

The GHEITI Report has requested the GRA to investigate and reconcile the revenue to royalty payment and to recover the probable difference due the state.

The Report has also recommended regularization of royalty payment frequency in split quarterly payments to ensure standardization and adherence to procedures for royalty payments to promote compliance.

The Report noted that corporate tax has exceeded mineral royalty for three continuous years. “This may require further investigation and actions to ensure the sustainability of mining revenues,” it concluded.

Story by Kofi Adu Domfeh