Ghana’s booming mining sector requires fresh thinking in its governance and regulatory regimes, as well as better community participation, to overcome emerging debilitating threats and weaknesses, Vice President, Bekoe Amissah-Arthur has said.
“Growing concern has been, and is being, expressed in our country about the overall costs and benefits of mining activity.
“Specifically there are issues of the social costs as communities struggle for better conditions and returns and debate the loss of livelihoods and the environmental impact of mining,” Amissah-Arthur said at the opening of the three-day Ghana Mining Summit and Exhibition 2013, on June 12, which drew over 70 exhibitors from Africa, Europe, North America and Australia.
The country’s gold mining subsector, which accounts for over 90% of mining sector earnings, has, in recent years, been inundated by illegal foreign miners who have invaded the small-scale sector reserved by law for only Ghanaian indigenes.
Despite being one of the main drivers of the economy, the gold mining industry remains an enclave and while it has created employment, there has been minimal value addition with the bulk of the country’s gold exports in bullion form.
Amissah-Arthur explained that the country’s current response to the growing challenges is first to reviewthe sector’s governance and regulatory regimes; then to review contracts and incentives framework, specifically stabilization clauses and transfer pricing; and finally addressing community issues and community participation, recognising that mining needs to support rural livelihoods and employment.
“The widely held view is that Ghana’s share of mineral revenues must increase; that we need to build capacity and enhance not only the skills of officials who negotiate fiscal issues but to effectively monitor compliance with taxation laws,” Amissah-Arthur said adding government is bent on aligning management and use of mineral revenue to the widely-acclaimed Petroleum Revenue Management Act.
He disclosed that the Ministry of Lands and Natural Resources has been tasked by government to ensure that mining is undertaken responsibly and meets community needs and expectations.
“It must create employment, provide fair economic returns to the communities where they operate and must protect the environment,” Amissah-Arthur emphasized, adding that the Ghana Chamber of Mines’ proposed Minerals Development Fund Bill is being seriously considered by government to ensure local-focused infrastructural and economic development in mining communities.
Dr. Toni Aubynn, CEO of the Ghana Chamber of Mines, concurring with the Ghanaian Vice President, re-echoed the Chamber’s call for the establishment of a Minerals Revenue Management framework with clearly defined distribution streams which; “will not only deepen transparency, but will also help correct the erroneous perception that the country does not benefit from the extraction of its minerals.”
Dr. Aubynn disclosed that the recent boom in gold prices has reflected relatively well in the mining industry’s contribution to the country’s economy.
“Domestic revenue has risen steadily from less than 5% in the 1990s to 27% consecutively in the last two years.
“The industry has consistently contributed an average of 40% of the country’s merchandise export since 2000, making it the leading contributor in this area,” Aubynn said, while explaining that the impact of over US$10 billion FDI in the country in the last couple of decades is not only on the establishment of production plant but also the construction and repairs of roads, extension of electricity and construction of potable water sources among a host of other critical infrastructure.
“In terms of spending within the local economy, the industry has progressed significantly from spending less than US$1,000,000 on local purchases in the 1980s and early 1990s to a whopping US$1.3 billion spend in 2012,” Aubynn disclosed.
Aubynn noted that while in recent months, the industry has witnessed a downward trend in commodity prices, particularly gold, increasing cost pressures coupled with an ongoing discourse of ensuring equitable benefit sharing among stakeholders including the host community, the host country, employees and investors, is causing mining companies to rethink their strategies of remaining viable.
He emphasized the Chamber’s determination to stimulate a paradigm shift in the mining industry, thus the strategic choice of the summit’s theme “Making mining the true catalyst for development – Thinking outside the box”.
“In spite of the increasingly complex environment, we at the Chamber believe that Ghana, and for that matter West Africa should take their rightful place in the comity of mining regions in the world,” Aubynn said.