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You Are Here: Home » Investment, Lead Story » Ghana unhappy with amount of royalties mining companies pay

The government of Ghana is unhappy with the amount of royalties that mining companies pay to the country, according to a GNA report.

The government has therefore, appealed to mining companies operating in the country to increase the amount of foreign exchange they retain in the country in the face of the global financial crisis.

Dr Kwabena Duffour, Minister of Finance and Economic Planning, who made the appeal, said though the international price of gold and other metals had increased over the last three years, the quantum of royalties paid to Ghanaians had not changed.

“We are not happy about the inability of mining companies to increase the quantum of royalties paid to Ghanaians even though the international price of gold and other metals have increased tremendously over the past three years,” he said.

Dr Duffour said this in a speech read for him at a pre-validation workshop of the Ghana Extractive Industries Transparency Initiative (EITI) at Dodowa at the weekend.

The workshop was used as a platform to officially inform stakeholders of government’s intentions to open up Ghana’s EITI process for validation and to dialogue with them on the way forward.

Ghana is among countries that must undergo validation by March 9, 2010, or face the possibility of being de-listed from the EITI process.

The EITI is a global initiative to improve transparency and accountability being implemented in more than 20 resource-rich countries by publishing regularly an independent reconciled data on payments made to governments by the extractive industry and revenues received by those governments.

Dr Duffour said it was the aim of government to ensure that extractive sector revenues were utilised in the most efficient and effective manner with accountability and transparency being the guiding principles.

“It is only in this way that we will be able to escape the spectre of our resources becoming more of a curse than a blessing to us,” he said.

He said Ghana had learnt lessons from the natural resource-related conflicts that had plagued some countries in Africa, adding, “ we are guided by this to ensure that wealth from our natural resources are equitably distributed for the benefit of all, but, more especially, for those immediately impacted by extractive sector activities.”

Dr Duffour said with the discovery of substantial amount of crude oil off the shores of Ghana, it had become a challenge for government to ensure that Ghana did not repeat the mistakes of many oil-rich developing countries.

He said as a nation heavily dependent on non-renewable natural resources, it was incumbent on all to ensure the prudent use of the nation’s natural resources.

The Finance Minister called for the building of capacities for public financial management at the sub-national level in order to achieve the required transparency.

“Capacities are also needed to deal with the other emerging issues in the extractive sector, especially, with the plan by Ghana EITI to extend EITI into oil, forestry and fishery sectors,” he said and that donor support must be flexible enough to meet the country needs as far as EITI was concerned.

Alhaji Collins Daudu, the Minister of Lands and Natural Resources, said in a speech read for him that it was time for citizens of mining communities to start taking the published finding from the EITI reports seriously and use them as a basis to demand accountable governance from the managers of these resources.

He said all over the world, in rich and poor countries alike, there was a growing recognition that the path out of poverty rested on good governance.

“Without transparent and accountable governance based on rule of law and checks and balances, reforms aimed at improving people’s lives would not work.”

Alhaji Daudu said it was unfortunate that after over a hundred years of mining in Ghana, “we are still struggling to provide our mining communities decent infrastructure.”

Alhaji Dauda assured that government would go beyond the issues of transparency and accountability to address the social issues in the mining communities.

Nana Juaben-Boaten Siriboe, Chief Director, Ministry of Finance and Economic Planning (MOFEP) and chairman of the Ghana EITI National Steering Committee, said in a speech read for him that Ghana had been implementing the EITI since 2003 and had made remarkable progress.

He said progress so far made was impressive but yet there was more to be done and expressed the hope that the country would be successful come 2010 when Ghana would undergo validation.

Ghana’s mining sector has been predicted to be worth $3.14 billion in 2003 from $1.03 billion in 2008, according to the first quarter report for 2009 by Business Monitor International, a market survey company.

The report also indicated that gold mining forms as much as 90% of the total mineral exports of Ghana. Apart from gold, the country also produces other minerals like diamond, bauxite and manganese ore. Indeed, Ghana is among the top five countries in the world that produce manganese ore.

According to a Ghana Chamber of Mines data, Ghana’s gold output increased by 4% to 2.6 million ounces in 2008. Meanwhile, the rising price of gold – which has been seen as a safe haven during the credit crunch – resulted in mining revenues reaching US$2.3 billion, an increase of 28% on 2007 levels.

The report however said mining companies are exploiting legal loopholes to abuse human rights as well as the environment.

Critics of the mining industry also say African countries rich in mineral resources, including Ghana are losing millions of dollars in revenue that can be used to fund health, education and other social programs because of tax breaks and low royalties that African countries have given to mining companies.

Meanwhile, in the last two decades, more than US$5 billion have been devoted to new mining projects in Ghana, Dr. R. Anthony Hodge, the President of the International Council on Mining and Metals has said.

By Emmanuel K. Dogbevi

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