Gold Fields to advise shareholders over proposed Ghana mining tax hikes

Gold Fields Limited says it has noted this week’s 2012 budget announcement by Ghana’s Minister of Finance and Economic Planning, which includes proposed changes to the tax regime for the country’s mining industry.

“We require more details of the proposed tax changes to further assess their potential impact. Accordingly Gold Fields is not yet in a position to advise shareholders on implications for the Company,” said Gold Fields in a brief note on its website November 18, 2011.

Once we have completed our assessment we will provide shareholders with further information, the miner added.

Finance Minister Dr Kwabena Duffuor reading the budget in Parliament November 16, 2011, said “Beginning in the fiscal year 2012…following established practice in the extractive industry, and in the oil and gas sector, the corporate tax rate for mining companies will be increased from the current 25% to 35%.”

The government also said a windfall profit tax of 10% will be collected from all mining companies and “a uniform regime for capital allowance of 20% for five years for mining, as is the case in the oil and gas sector.”

Government explained that environmental degradation resulting from mining operations also imposes additional costs on the country.

Already, the Ghana Chamber of Mines has stated that government’s proposal to increase the mining taxes will lead to low investments in the sector.

“It will not encourage investments…lead to cost of production. These are business entities and they operate on demand and supply,” Dr Toni Aubynn told ghanabusinessnews.com exclusively on phone November 17, 2011.

Ghana is Africa’s second-biggest gold producer.

In a related development, the Bloomberg reports November 18, 2011 that Ghana will by 2012 establish a publicly traded company to manage revenues made from gold, including profits from the windfall tax and higher corporate tariffs.

The Ghana Gold Company, according to the publication citing Mr. Newman Kusi, an adviser to Finance Minister Kwabena Duffuor will be majority owned government and will list shares on the Ghana Stock Exchange (GSE) after it is established.

By Ekow Quandzie