Dr Steve Manteaw Defends Proposed Sliding-Scale Mineral Royalties as Fair Revenue Mechanism for Ghana
Dr Steve Manteaw, Co-Chair of the Ghana Extractive Industries Transparency Initiative (GHEITI), has defended government’s plan to introduce a sliding scale royalty regime for minerals, arguing that the proposed system is designed to ensure the state benefits more when commodity prices rise.
Speaking on PM Express on JoyNews during a discussion on government’s push to increase gold royalties, Dr Manteaw explained that the existing 5 percent royalty rate paid by mining companies has remained unchanged due to the absence of a ministerial prescription under the law.
According to him, amendments to Minerals and Mining Act, 2006 (Act 703) empowered the sector minister to prescribe royalty rates for mining companies operating in Ghana.
“The Act 703 was amended and we provided that the minister shall prescribe the royalty rate for mining companies in Ghana, but in the absence of that prescription the status quo will remain. So five percent, which was what the companies were paying at the time, remains until now,” he explained.
Dr Manteaw noted that renewed discussions about royalty reforms gained momentum following recent negotiations around lithium mining agreements in the country.
He further disclosed that as far back as 2012, GHEITI had proposed the introduction of a windfall tax for the mining sector to enable the state to capture additional revenues during periods of high commodity prices.
“Because we are dealing with a commodity and commodities go through boom and bust cycles, resource owners want to position themselves to be able to cream off a bit of the extra profit during the boom periods,” he said.
However, he indicated that the mining industry resisted the proposal at the time, arguing that prevailing gold prices were not favourable for introducing an additional profit tax.
According to him, while the windfall tax proposal was shelved in the mining sector, a similar mechanism was incorporated into the petroleum sector under the country’s petroleum revenue management framework.
He cited a recent instance where an oil company paid additional profit tax to the state after exceeding the stipulated profitability threshold.
Dr Manteaw explained that the proposed sliding scale royalty regime is intended to serve a similar purpose as a windfall tax, allowing government revenue to adjust in line with global commodity price movements.
“Sliding scale allocates risk and benefits equitably. When the price goes up, we all share the benefits of the boom, and when the price becomes depressed, companies pay less and government also receives less,” he stated.
The proposal by government seeks to replace the existing fixed 5 percent royalty on gold with a variable rate ranging between 5 percent and 12 percent depending on international gold prices.
However, the proposal has drawn concerns from some international stakeholders and development partners.
Dr Manteaw acknowledged that some diplomatic missions and partners had raised concerns, largely around the level of consultation that preceded the proposed reform.
“I do not think we had adequate consultations, especially in establishing the price bands or the thresholds at which the various royalty rates kick in,” he noted.
Industry observers have also pointed out that some of the largest gold producers operating in Ghana – including Newmont Corporation, AngloGold Ashanti and Gold Fields – have stability agreements with government, meaning the new royalty regime would not immediately apply to them.
According to Dr Manteaw, this situation could create disparities within the sector, particularly for smaller and emerging mining firms that do not enjoy similar contractual protections.
Meanwhile, international news agency Reuters has reported that governments including China and the United States have mounted coordinated pressure on Ghana to reconsider the proposed royalty hike, warning that the move could negatively affect some of the world’s largest mining companies.
The report noted that the proposed royalty scale could make Ghana one of Africa’s most expensive mining jurisdictions if implemented in its current form, potentially squeezing margins for mining firms.
Authorities in Ghana are seeking to introduce the new royalty framework as part of efforts to capture more value from rising global gold prices, which have reached successive historic highs in recent months.
Mining companies, however, have submitted counter-proposals seeking lower royalty bands, arguing that the current proposal remains too aggressive despite government’s reported decision to reduce an existing levy to facilitate the reform.
