Investing in Ghana’s Mineral Processing Sectoradmin
Ghana is endowed with substantial mineral resources and has a well-established mining sector, which has grown considerably in recent years to represent an important pillar of the Ghanaian economy.
The general slowdown in the mining industry however resulted in medium and micro impacts in terms of loss of employment and other local socio-economic contributions, as operating mines and exploration companies restructured to cut cost in the face of falling gold price. The mining sector contributed GH¢1,285 million to Government revenue in 2015 as against GH¢1,193 million in year 2014. This represented an increase of 7.79% over the previous year’s figure. Pay As You Earn (PAYE) from the mining sector contributed GHC 478.1 million in 2015 as against GHC 291.73 million in 2014 representing a 63.88% increase. In 2015, a total of GHC 485.63 million was paid as mineral royalties. This represents a 3.24% increase over the 2014 value of GHC 470.37 million. It is however worthy to know that, cooperate income tax paid by mining companies decreased by (25.28%) from GHC 429.53 million in 2014 to GHC 320.94 million in 2015.
In 2015, mining sector contributed GHC 1,285 million (14.14%) of a total Domestic Revenue Collection of GHC 9,091 million. It is worthy to note that, though revenue generated from the mining sector has been on the steady assent, the contribution of mining sector to total domestic tax collection has been declining. Figure 4.4 illustrates the trend of contribution of mining sector to total Domestic Tax collection over past ten (10) years.
Earnings from minerals exported during the year 2015 amounted to US$ 3,322.61 million compared to US$ 4,516.29 million earned in year 2014. This shows a decrease of 26.43%. The unfavorable price of gold, Ghana’s flagship mineral, on the international commodity market which resulted in a decline in gold production accounted for the decrease in revenue. Of the total earnings from mineral exports in 2015 (US$ 3,322.61), gold accounted for US$ 3,212.59 million (96.68%), bauxite brought in US$ 41.06 million (1.24%), whilst diamonds contributed US$ 4.22 million (0.31%) and Manganese racked up US$ 64.74 million (1.95%)
In year 2015, data from the Bank of Ghana indicate that total merchandise export earnings were US$10,356.70 million compared to US$ 12,983.16 million in year 2014. The contribution of minerals to the earnings for the year was 32.0% of the total merchandise exports.
Minerals and Mining (Amendment) Act, 2015 (Act 900)
Working together with the Ministry responsible for Mines, the Attorney-General’s Department and the Parliamentary Select Committee on Mines and Energy, the Minerals Commission drafted an amendment to Act 703, which the Hon. Sector Minister submitted to Parliament. The amendment relates to provisions of royalty payments and punishment for offences in engaging in illegal mining.
The amendment has been passed and its main focus is to ensure that illegal small-scale mining (galamsey) is criminalised and its perpetrators punished severely to deter others from undertaking such activities. Hopefully, this will help bring some sanity into the sector.
Local Procurement Issues
Under the Minerals and Mining (General) Regulations, 2012, (L.I. 2173), mine support service providers, holders of mineral rights and holders of licence to export or deal in minerals are required to submit a 5-year Procurement Plan to the Minerals Commission for approval. In the preparation of the Procurement Plans, companies are required to take into account the requirements of a Local Procurement List of goods and services with Ghanaian content, which the Commission shall make available annually to the mining industry.
Working together with the Chamber of Mines and other stakeholders (including the Association of Ghana Industries), the Minerals Commission identified and added eleven (11) products (goods/services) to the existing local procurement list. The current updated list (Second Edition) comprises nineteen (19) goods/products which shall be procured in Ghana. The list is as provided in the table below.
Table I: Local Procurement List
|3||Cement and cement products/Grout|
|4||Quick and hydrated lime|
|6||High Density Polyethylene (HDPE) and Polyvinyl Chloride (PVC) pipes|
|7||Retreading of Tyres|
|9||Bolts and Nuts|
|11||Plastic Sample Bags|
|14||Chain Lining Fencing, Wire netting, Barbed wire etc.|
|16||Metal/PVC core trays|
|17||Overalls and work cloths|
The Ministry developed Minerals and Mining Policy of Ghana to promote diversification to lesser known minerals, and linkages between the mining sector and other sectors of the economy. In 2017, the Ministry will facilitate approval and implementation of the policy. This is expected to increase local content participation, among others.
Additionally, the Ghana Geological Survey Authority Act, 2016 (Act 928) was passed by Parliament to enhance new mineral discoveries throughout the country and diversify the country’s mineral resource base from the traditional minerals.
The Ministry is developing a fully-fledged computerized mining cadastral system to ensure accountability and compliance in the management of mineral rights to boost investment. When completed in 2017, investors can apply for mineral rights online, and conduct cartographic searches in District Offices.
Source : www.gipcghana.com