Taxes levies on mineral exploration making Ghana unattractive for investors – Chamber of Mines CEO
Chief Executive Officer (CEO) of the Ghana Chamber of Mines, Sulemanu Koney, has said exploration investments into the country’s mining sector are currently making Ghana unattractive for exploration companies.
According to him, exploration companies should be allowed by the State to use 100 percent of their exploration investment in mineral exploration – particularly gold – rather than being made to pay taxes and other levies before even breaking the ground to find the mineral.
“It’s one of the concerns we had and the need to provide a fertile and conducive environment for exploration companies to use practically 100 percent of their exploration investment into exploration, rather than paying taxes and other levies even before they break ground.”
“So we continue to advocate and engage with stakeholders for this to happen, and our expectation is that in the not too distant future, policy makers will hear our cry and will put in place the kind of policies that will allow exploration companies to operate competitively in the country,” he stated.
Adding that taxes and levies charged exploration companies contributed to low exploration investments recorded in 2020.
“When it comes to investments in exploration activities, we didn’t do too well in attracting investments into exploration which is the lifeblood for the sector and ensures the sustainability of the mining industry,” Mr. Koney added.
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Speaking further, Mr. Koney remarked that exploration companies should be ‘excused’ from paying taxes and levies on exploration investments.
“Exploration is quite expensive and even uncertain that you make a commercial find, and yet we have a fiscal regime which requires companies to make some payment before even digging the ground.”
“And that’s the challenge we have, so when companies outsource for instance drilling services, it comes with VAT and we believe this is not good for exploration, it detracts from the competitiveness of Ghana as an investment destination for exploration investment. We think that exploration companies should be excused from paying levies and taxes before commencing exploration,” he noted.
Ghana, in 2020 lost its position as the second-largest recipient of investments in gold exploration on the continent.
The country lost its position to Burkina Faso who in turn lost its enviable position as the largest recipient of investments in gold exploration on the African Continent.
In first and third place are Cote d’Ivoire and Mali respectively.
Cote d’Ivoire’s rise to first place, the Chamber notes is due to a significant increase in budgetary allocation for gold exploration in Cote D’Ivoire – around $105 million.
Total planned gold exploration expenditure in Africa for 2020, according to the Chamber amounted to $590 million.
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A reduction by some $25.9 million when compared to the $615.9 million spent by gold mining firms in 2019.
Gold production volume in Ghana fell by 12.1 percentage points in 2020, the lowest in the last sixteen (16) years – since 2004.
Gold production dropped to 4.02 million ounces in 2020 from 4.57 million ounces in 2019.
But despite the fall, the country, however, retained its position as Africa’s top gold producer and sixth biggest producer in the world.
Ghana’s closest rival and long-term leading producer, South Africa, also recorded a 13.7 percent decline in production at 91 tonnes and remained in second place on the continent and tenth globally.
