Reduction in withholding tax on unprocessed gold by small-scale miners leads to 550% increase in output
Ghana’s gold exports reached a value of US$6.6 billion in 2021, according to the country’s Minister of Lands and Natural Resources, Samuel Abu Jinabor. Although this represents a decline from the US$6.779 billion in 2020, the value of gold exports alone in 2022 has already exceeded the total minerals export value of the previous year.
The decline in revenue from mineral exports in 2021 is attributed to a contraction in gold production, particularly the near-collapse in volume of gold exports by the small-scale sub-sector. However, the increase in gold exports in 2022 is attributed to the expectation of a 12.5% increase in output from large-scale gold producers in the country.
Mr. Jinabor also reported a significant increase in output from small-scale mining, which rose by 550% from 2021 to 2022. This was largely attributed to the reduction of withholding tax on unprocessed gold by small-scale miners, which was introduced in 2015, from 3% to 1.5%.
Furthermore, the Ghanaian government is undertaking a review of the mining policy adopted in 2014 and the Minerals and Mining Act passed in 2006, seeking to align them with current developments in the mining industry as part of efforts to promote more investments in the sector. This is in line with the government’s commitment to implementing a two-pronged approach of law enforcement and reformation to deal with illegal mining and promote responsible small-scale mining through community mining schemes.
In addition, the minister announced that significant investments have been made in the redevelopment and expansion of existing mines in the country, as well as in the exploration of new sites. This includes the revival of the Bibiani Mine, which had been dormant for seven years before production restarted in October last year. Four new large-scale mining operations are also expected to start production within the next two and a half years.
However, the government has continued to take a tough stance on illegal mining activities, with river-bodies remaining “red zones” for mining and reconnaissance, prospecting and/or exploration in forest reserves continuing to be suspended, except in exceptional circumstances. To address illegal mining, the government is implementing the Minerals and Mining (Mineral Operations – Tracking of Earthmoving and Mining Equipment) Regulations, 2020 (L.I. 2404) to track some 4,000 excavators and other earth-moving equipment. So far, a control room has been established at the Minerals Commission, and 75 excavators at various mine sites have been fitted with tracking devices.
The government’s efforts to promote responsible mining practices and curb illegal mining activities are expected to improve the sustainability and profitability of the mining sector in Ghana. The country’s rich mineral resources, including gold, bauxite, and manganese, are important drivers of economic growth and foreign exchange earnings. However, the sector has also faced challenges, including environmental degradation, social conflicts, and illegal mining activities. As such, a sustainable and responsible approach to mining is crucial to ensure long-term benefits for Ghana’s economy and its people.
