Home Business & Economy Ghana begins audit of mining sector contracts as it seeks more revenue

Ghana begins audit of mining sector contracts as it seeks more revenue

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GHANA has started an audit of its mining industry as it seeks more revenue and wants to ‘ensure compliance’ among companies in the sector.

The West African nation, Africa’s second-biggest gold producer, has appointed consultants who are scrutinising contracts, deputy finance minister Kwaku Kwarteng told Bloomberg early this week. Bloomberg also reports Vice-President Mahamudu Bawumia as saying on May 8 that Ghana was benefiting little from its mineral wealth, and needed a review of its mining code and tax policies — a move the country’s chamber of mines says has ‘sent jitters’ through the industry.

‘Our objective is to see where there are gaps so we can take measures to plug them,’ Kwarteng said. ‘We hold the contracts and agreements sacrosanct, but we also consider that we are entitled to review agreements if situations have arisen, or things have happened that clearly make the case for a review.’

The country would discuss its findings with the companies to try to reach an agreement on decisions, he said.

Ghana’s government is driving policies to derive more benefit from its commodities as it seeks to narrow its budget deficit and lower public debt. AngloGold Ashanti, Newmont Mining and Kinross Gold are among producers in the nation that also mines bauxite and diamonds and is the world’s second-biggest cocoa grower.

The country has earned almost nothing in dividends from its 10 percent stake in most mines since 2012, rendering the operations ‘virtually useless,’ Bawumia said. His comments coincided with Mauritania rejecting a key permit for Kinross for the expansion of a project in that country, sending the gold miner’s shares to the lowest in more than a year.

The vice-president’s comments ‘were quite unsettling and sent jitters — people are not too sure what the government wants to do and that is worrying,’ said Sulemanu Koney, the CEO of Ghana’s chamber of mines, which met with the country’s economic management team a few weeks ago.

Companies ruffled

‘We thought we had opened up for dialogue and therefore this public statement ruffled us a bit — companies are concerned about it,’ Koney said in an interview. ‘There is nothing wrong with the government trying to get more revenue, but what is important is to engage and try to understand the industry better before decisions are made.’

The chamber is considering meeting with the government again, Koney said.

The contracts have a clause that allows either party to call for a review or amendments of some aspects, the deputy finance minister said. ‘We are confident that when we make a strong case, it will be difficult for our counterparts to say they don’t want to know.’

While mining and quarrying made up about 1 percent of GDP in 2017, gold is the country’s top export-revenue earning, bringing in 42 percent of the $13.8bn reported in the fourth quarter, the Bank of Ghana said in a statement on its website.

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