GHEITI advocates for conversion of State’s 10% carried interest in mining to mineral resources
The Ghana Extractive Industries Transparency Initiative (GHEITI) has highlighted the inadequacy of the state’s 10 percent carried interest in mining operations, suggesting an alternative approach that could bring about more substantial returns. Currently, the state holds a 10 percent equity interest in mining operations, even without contributing financially. However, this arrangement often results in insignificant dividends, and when companies don’t generate profits, the state receives no returns.
GHEITI has proposed that the state’s equity share should be converted into mineral resources, rather than relying on dividends. This strategic shift could potentially allow the state to capitalize on its own mineral resources more effectively, ultimately contributing to Ghana’s economic development.
The current system allows private entities to hold mineral rights and mine minerals, with the government holding a minority equity interest. GHEITI’s argument is that converting this share into minerals could provide the government with tangible assets, mitigating the risk of companies channeling funds into other ventures, thereby depriving the state of its deserved revenue.
Dr. Steve Manteaw, Co-chair of the Ghana Extractive Industry Transparency Initiative, emphasized the importance of innovative strategies to ensure the state benefits from its own resources. He highlighted that the government should find ways to tap into its resources more effectively, rather than relying on the goodwill of mining companies. Converting the carried interest to minerals could help the government optimize its mineral resources and support key initiatives like the Bank of Ghana’s gold reserve drive and the Gold for Oil barter scheme.
This proposed shift aligns with Vice President Dr. Mahamudu Bawumia’s earlier comments in 2018, where he lamented that the current carried interest arrangement yielded zero dividends to the government for years. Dr. Bawumia emphasized the need for a reevaluation of the existing regime and advocated for a comprehensive regional strategy to develop Ghana’s mineral resources.
By converting the carried interest into tangible mineral resources, Ghana could potentially secure a more reliable source of revenue and bolster critical initiatives aimed at utilizing its mineral wealth for economic growth and stability.
