Oxfam Australia has published a report Sunday July 28, 2019 in which it analysed the operations of Australian mining companies in some African countries including Ghana.
Oxfam prepared the report jointly with Tax Justice Network Australia and Uniting Church in Australia, all of them Civil Society Organisations, in which they claim Australian mining companies are highly opaque in their tax practices.
“Edikan Gold Mine in Ghana (owned by Perseus Mining) does not appear to have paid a single cent in tax in Ghana since the mine began operations in 2011,” the report said.
Oxfam, the Uniting Church in Australia and TJN-Australia said they analysed in detail three mines owned by Australian headquartered companies and listed on the Australian Stock Exchange (ASX). These are Perseus Mining, Iluka Resources and MMG Ltd — and found several red flags.
“Our investigation indicates these mines have financial and corporate arrangements that may have led them to pay significantly less tax than the public should expect,” they said.
According to the report, while Iluka Resources has more recently purchased the mine and now has a chance to turn things around, MMG Ltd and Perseus Mining have been in full control of their mines for the period of the examination.
They indicated that overall, they conservatively estimate that the three mines could have paid $149 million more in corporate income tax than they did over five to seven years across Ghana ($57 million), Democratic Republic of Congo (DRC) ($52 million) and Sierra Leone ($40 million).
“These tax revenues could have gone a long way towards improving the lives of citizens: $57 million in Ghana is enough to pay the annual salary of more than 8,000 nurses; $52 million in the DRC is the full cost to respond to the 2018 Ebola outbreak 1.5 times over; and $40 million in Sierra Leone is enough to cover the healthcare of more than 67,000 Sierra Leonean women and children for one year under the country’s Free Health Care Initiative,” the group stated.
The further argued that globally, recent estimates show that $8 trillion in financial wealth was hidden in tax secrecy jurisdictions (tax havens) at the end of 2013, meaning $190 billion a year in tax revenues was lost to governments around the world. Of this, $15 billion in tax revenues a year was ripped out of the African continent. Others suggest the tax loss could be as high as $650 billion a year to countries right around the globe, they added.
Oxfam and its partners estimate that as much as $1.1 billion in profits was shifted out of Africa in 2015 alone by the Australian mining sector through the use of tax secrecy jurisdictions.
“This means Australian mining companies may be responsible for the loss of an estimated $289 million in government tax revenues in some of the poorest countries in the world (many of which are in Africa) in one single year alone,” they said.
The report indicated that despite huge mine revenues (turnovers of more than $150 million a year in most cases) for each of these Australian based companies, the governments of Ghana, Sierra Leone and DRC have received on average 0–0.9 per cent of these revenues in corporate income tax from 2009 to 2015. The remaining 99 per cent stayed with the companies.
“While revenues do not always result in profits, given the corporate tax rate is at least 30 per cent for mining companies in Sierra Leone, Ghana and the DRC, and given these mines have been operating for some time, it is not unreasonable to expect that a higher proportion of revenues from these mines should have gone to governments in the form of taxes,” the group argued.
Before it started operations in Ghana, Perseus in 2009 had expected an average gold production of 206,000 oz/y the first eight years of full production, including 493,000 oz in the first two years. A processing rate of about 4.5-million tons a year was also expected for the flotation carbon-in-leach (CIL), and up to 1.4-million tons a year for the heap-leach.
The company assessed that about 4.9-million tons of oxide and oxide-transition material would be treated through the company’s existing uninstalled heap-leach plant, and the 76 per cent recovery rate achieved from the previous heap-leach mining operation had been assumed.
Ghanabusinessnews.com reached out to Perseus Mining for their response to the allegations, we are yet to hear from them.
By Emmanuel K. Dogbevi
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