GHANA’S MINING FRAMEWORK AND INVESTMENT …€¦ · Overview of Ghana’s Mining Sector...
Transcript of GHANA’S MINING FRAMEWORK AND INVESTMENT …€¦ · Overview of Ghana’s Mining Sector...
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FIRST EDITION OF AFRICA’S MINING WEEK ACTIVITIES IN WEST AFRICA (SAMAO), OUGADOUGOU, BURKINA FASO.
22-24 SEPTEMBER, 2016
JERRY AHADJIEMINERALS COMMISSION, GHANA
GHANA’S MINING FRAMEWORK AND INVESTMENT ATTRACTIVENESS
Location Map
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Overview of Ghana’s Mining Sector
Traditional
Minerals
• Gold, Bauxite, Manganese & Diamonds
• Others: Iron Ore, Limestone, clays, kaolin, granites, solar
salt etc.
Mining Sector
Investment
• Some US$ 15.6 billion invested in mining sector (1983-
2015) & has become highest gross foreign exchange
earner.
Gold
Production
• 2nd in Africa after South Africa and 9th in the World
• Produced 134 MT of gold (4.3 million oz. in 2014) & 113 MT
of gold (3.63 oz. in 2015)
Sector
Contribution
• 14% of Govt. Revenue (Domestic Tax ) in 2015, 27% in 2012
• Employs some 22,000 people (large scale mining sector) &
about 1 million in small scale mining.
Status of
Mineral
Rights
• As of December 2015, 265 local and foreign companies
held Prospecting/Reconnaissance licenses. Additionally, 13
large scale mines are currently operating in the country.
MINING SECTOR ENVIRONMENT
• Ghana has the requisite environment that serious investors need.
This includes:
– Availability of abundant mineral resources with geo-scientific
data which is continuously updated;
– Political and macroeconomic stability;
– Attractive investment framework,
– Well structured institutions to reduce corruption &
bureaucracy; and
– Improved mineral cadastre to increase transparency in the
management of our mineral resources.
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OVERVIEW – MINERAL PRODUCTION TRENDS
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500,000
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Minerals
Trends in Traditional Mineral Production
1990
1995
2000
2005
2010
2015
CONTRIBUTION TO TOTAL MERCHANDISE EXPORTS BY KEY SECTORS
OVERVIEW: MERCHANDISE EXPORTS
SOME EXPLORATION AND MINING COMPANIES OPERATING IN GHANA
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Asanko mine expected to boost the country’s economic growth by creating jobs for the local people and generating revenue for government
A New Gold Mine Commissioned
A New Gold Mine Commissioned
FRAMEWORK FOR MANAGING MINING IN GHANA
• 1992 Constitution [Section 257 (6)]
• Minerals Commission Act, 1993 (Act 450)
• Minerals and Mining Policy of Ghana
• Minerals and Mining Act, 2006 (Act 703) & Regulations
• Water Resources Commission Act, 1996 (Act 522)
• Forestry Commission Act, 1999 (Act 571)
• Environmental Protection Agency Act, 1994 (Act 490) & Regulations
• Mercury Act, 1989 (Act 217)
• Land Policy of Ghana
• Environmental Policy of Ghana
Framework to ensure contribution to the SDGs
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• The Policy and Regulatory Environment
– Developed Minerals & Mining Policy which has SD as its guiding
principle
• Basic Geo-scientific Data Availability
– Ensure Availability of geo-scientific data – both in the form of
airborne geophysical and geological surveys
• The Legal Framework/Regime
– A fair, stable regime based on Good Governance (Act 703)
– Regime that ensures reasonable revenue to Govt. & Investors
– Regime that demands environmental protection & Remediation
– Regime demanding integration with local economy
REGULATOR’S ROLE
SOME POLICY INITIATIVES
The Minerals and Mining Policy of Ghana seeks to establish a frameworkfor sustainable development: Some key policy initiatives being undertakeninclude:
– Cleaning of Mining Cadastre: Open Grounds for Exploration
– Ensuring a good balance between the incentives to attract investors
and benefits that accrue to the country
– Integration with the Rest of Ghana’s Economy and Value Addition to
Minerals.
– Diversification of Minerals Exploited
– Reforms in the Small Scale Mining Sector• Amendment to Act 703: Act 900 (Allows for confiscation of
equipment)• Re-categorisation of mining underway
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Cleaning of Mining Cadastre
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Concession map
Ensuring a Balance Between Incentives
and Benefits
• In ensuring a win-win situation for all stakeholders, acomprehensive review of the mining fiscal and regulatoryregime has been carried out.
Leading to:
• Predictability and stability of fiscal incentives over time;
• Transparency and a level playing field for all companies;
• Broad and active Stakeholder Engagement; and
• International Competitiveness
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INTEGRATING MINING TO REST OF ECONOMY
– Local Content Regulations passed to integrate mining to rest of
economy
– Manufacturing of Inputs and Services for the Mining industry
– Value Addition, production of jewellery, adding value to
Bauxite and Manganese
– Development of Local Procurement List (throughStakeholder Collaboration)
• 19 Goods & Services Identified for procurement locally
• In 2015, 78% of Goods & Services procured under theLocal Procurement List.This is equivalent to US$184million.
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INCREASE LOCAL CONTENT IN THE MINING SECTOR
Currently 19 Goods & Services are being procured locally.
These include:
– Grinding Media,
– Explosives,
– Cement and Cement Products,
– Electric Cables,
– Quick and Hydrated Lime,
– HDPE & PVC Pipes and
– General Lubricants,
– Tyre Rethreading Etc.
Diversification of Minerals Produced
• Diversification of Minerals Produced
– To ensure that economy does not suffer in times
of weak gold prices,
– Explore occurrence of Copper, Lead Zinc, Nickel,
Lithium etc.
– Upscale solar salt production to take advantage
of the enormous market in West Africa
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IMPROVING THE COST OF DOING BUSINESS
– Mineral Concession Cadastre being developed with support
from Australian Government.
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On-line Repository Launched
• Web-based portal where all data recorded in the
MCAS pertaining to mineral rights and related
revenues are published
• System designed to enhance transparency,
effectiveness, accountability and compliance in the
management of mineral rights
• Portal could be accessed via:
http://Ghana.revenuesystems.org
ENHANCED MINING PORTAL
September, Africa DownUnder, 2015. PERTH, Australia
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Ghana Mining Portal – www.ghana-mining.org
FISCAL REGIME
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GHANA’S FISCAL AND REGULATORY FRAMEWORK
LAWS, REGULATIONS & GUIDELINES:
• Minerals and Mining Act, 2006 (Act 703) as amended;
• Minerals (Royalties) Amendment Act, 2010 (Act 794) ;
• Internal Revenue Act, 2000 (Act 592) as amended and associated regulations;
• Value Added Tax Act 1998 (Act 546) as amended and associated regulations;
• Customs and Excise (Duties and Other Taxes) Act, 1996 (Act 512);
• Transfer Pricing Regulations, L.I. 2188, 2012
• Mining List.
• Income Tax Act, 2015 (Act 896)
Applicable Taxes and Fees Include:
• Corporate Income Tax
• Mineral Royalties
• Personal Income Taxes (“PAYE”)
• Withholding Taxes
• Annual Mineral Rights Fees
• Customs Duties
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Ghana’s Mining Fiscal Regime
Imposts/Benefits Provision
Mineral Royalty Rates:
Royalty base
5%, Gross market value of mineral sale
Application Fees As prescribed in regulations (L.I. 2176)
Surface Rentals
Annual Ground rent:
Annual mineral rights fees:
(Prescribed: GHC15/Acre
Payable to Minerals Commission, prescribed
Income Tax Rate:
Capital allowances:
Allowable losses:
35%
20% for 5 years for mining
5 years Carry forward
Import Duty Concessionary rates for Plant, Machinery & Equipment
exclusively for mining
Value Added Tax Machinery apparatus & appliances designed for
mining(Mining list) exempt
Free Carried Interest 10%
Current Fiscal Regime
Imposts/Benefits Provision
Transfer Pricing
Regulations, L.I. 2188,
2012
Regulations require taxpayers to demonstrate
that all transactions between them and their
related entities are carried out at arm's length
[Effective Date: July 27, 2012]
Withholding Taxes:
Income Tax Rates
Interest – 8%
Dividend – 8%
Royalties – 10%
Management and Technical Services fees –
20%
Goods & Services (Residents) – 5%
Goods & Services (Foreign) – 15%
Non-Resident Individual -20%
Current Fiscal Regime
Current Fiscal Regime: Others
• Stability Agreement:
– To Protect Mineral Right Holder for up to 15 Years from adverse
fiscal effects of future changes.
• Development Agreement:
– For Investment > US$500million on terms of Stability
Agreement, plus more favourable terms than existing law
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OPPORTUNITIES IN THE MINING SECTOR
– Cleaning Up of the Concessions Map
– Value Addition to Bauxite and Manganese
– Iron Ore Deposits
– Solar Salt (Best Climatic Condition in the Sub Region)
– Industrial Minerals
• Decorative Stones.
– Service and Engineering Sector
– Activated Carbon Production
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INVESTMENT OPPORTUNITIES
• Gold Refinery and Value Added Products
– Ghana produces over 4 million ounces of gold per
annum. Setting up a refinery could serve other gold
producers in the sub region
–• Integrated Bauxite-Alumina – Aluminium Industry
– Over I billion tonnes with about 300 million tonnes
of contained aluminium.:
– Deposits: Awaso, Kibi, Nyinahin and Mt.
Ejuanema.
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OTHER INVESTMENT OPPORTUNITIES
• Iron and Steel Development
– (i) Opon-Mansi lateritic iron deposit;
– (ii) the Shieni sedimentary iron deposit; and
– (iii) the Pudo titaniferous-magnetite deposit
� Solar Salt
Best climatic conditions for Solar Salt production in West
Africa. 500 km of shoreline. The “White Gold”.
Chlor-Alkali Industry
Utilisation of salt to produce caustic soda, soap and
detergent industry but also for the production of alumina
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OTHER INVESTMENT OPPORTUNITIES
• Industrial Minerals: Potential for domestic use
• Service and Engineering Sector
– There are several companies in Ghana providing support servicesincluding; contract drilling, assay laboratories, contract miningand geological consultancies to mining companies.
– Using Ghana as a base, these companies have ventured andexpanded their activities into the West African sub-region.
– Government has through incentives encouraged such companies.
• Activated Carbon– Coconut Husk raw material is readily available
• Decorative Stone:- High quality Granites as floor tiles.
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MINE SUPPORT SERVICES
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MINE SUPPORT SERVICES
September, Africa DownUnder, 2015. PERTH, Australia
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Good Governance Practices
• EITI Complaint
• KPCS
• African Mining Vision
• ECOWAS Directive on Harmonization of Mining
Policies
• Inter-Governmental Forum (IGF) on Mining,
Metals and Sustainable Development
• Voluntary Principles on Security & Human Rights
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CONCLUSION
• Availability of Geo-scientific Information
• Good Governance Institutions
• Good Infrastructure
• Most Stable Politically
• A Commonwealth Nation
• Common Law Legal System
• Hospitable People
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GHANA: GREAT NATION,
HOME OF BLACK STARS35