- Why Shorter Mining Leases Could Cost Ghana Big Projects and Jobs
Ghana, Africa’s leading gold producer, is once again at a pivotal policy moment. The government’s proposed amendments to its Minerals and Mining Act, 2006 (Act 703), aim to tighten regulatory oversight and increase state returns. But industry leaders warn that in the drive to secure short-term fiscal gains, policymakers risk undermining the long-term viability of a sector that has underpinned Ghana’s economy for more than a century.
At the heart of the debate is a seemingly technical but consequential proposal: cutting the tenure of mining leases from 30 years to 15 years, with a single renewal of no more than 10 years. To the Ghana Chamber of Mines, this is no mere bureaucratic adjustment; it strikes at the very economics of mining investment.
Mining is uniquely capital-intensive. It requires billions in upfront investment, years of geological uncertainty, and long lead times before cash flows are positive. A shorter lease horizon, the Chamber argues, compresses the payback window, lowering a project’s Net Present Value (NPV) and disincentivising the development of complex or marginal ore bodies.
“Every mine is not the same, and the economics vary significantly,” insists Ing. Dr. Kenneth Ashigbey, Chief Executive Officer of the Chamber. “If tomorrow we encounter a project requiring a longer period due to its complexities, such as higher strip ratios or extensive waste removal before accessing ore, why should the government deny that flexibility?”
The risk, he adds, is that companies respond by high-grading, mining the richest ore bodies quickly, while leaving behind marginal deposits that require longer-term commitment. That strategy maximises short-term returns but deprives Ghana of full mineral recovery and the downstream benefits of sustained operations.
Ghana is not alone in rethinking mining policy. Côte d’Ivoire, for instance, offers an initial lease term of 20 years with a 10-year renewal, while Kenya provides initial terms of between 5 and 21 years, with renewals not exceeding 21 years. Both frameworks tie the tenor of mining rights directly to project economics, reflecting the diversity of ore bodies.
Against this backdrop, Ghana’s proposed reforms risk making the country an outlier, leaning toward rigidity just as competitors are embracing flexibility.
Another flashpoint is the government’s plan to reduce the tenor of stability agreements from 15 years to 5. These agreements, granted selectively, are meant to insulate investors from Ghana’s frequent fiscal and regulatory shifts.
Only three of Ghana’s 14 operating mines currently benefit from stability agreements. Yet for capital-intensive projects with lifespans stretching decades, such predictability is indispensable.
“A stability agreement of at least 10 years is critical,” argues the Chamber, “not to shield companies from fair taxation but to provide assurance against abrupt changes that can erode investment assumptions.”
The fear is that without such guarantees, high-value projects will simply bypass Ghana in favour of more predictable jurisdictions.
Perhaps most controversial is the proposed abolition of Development Agreements (DAs), special arrangements designed to attract investments above US$500 million. These instruments allow the government to negotiate tailored terms that balance national interests with investor requirements.
For the Chamber, scrapping DAs is tantamount to closing the door on transformative, large-scale projects. Without them, Ghana could find itself consigned to incremental, low-value investments that deliver less technology transfer, infrastructure, and community development.
The debate is not confined to fiscal and legal stability. It also touches on how mining companies engage with host communities. The law currently requires firms to sign Community Development Agreements (CDAs) and contribute 1% of gross mineral revenue.
The Chamber does not oppose community investment; indeed, its members already channel significant funds into local projects. But it argues that rigid levies are counterproductive, particularly for marginal mines, and strip communities of ownership and innovation in corporate social responsibility (CSR) design.
Voluntary but guided CSR frameworks, underpinned by clear policy guidelines, would, it believes, yield more sustainable and tailored community benefits.
The government also proposes reducing prospecting licences to nine years. Exploration is inherently risky and often requires extended periods to prove up viable reserves. By shortening the discovery window, Ghana risks shrinking its project pipeline and discouraging greenfield exploration.
This carries particular resonance given that 80–90% of prospecting licences are Ghanaian-owned. Cutting the tenor could therefore erode opportunities for local entrepreneurs and derail efforts to expand Ghanaian participation in the sector.
As of 2024, Ghana had 24 large-scale mines, one state-owned, two wholly Ghanaian-owned, and two with significant local participation. The small scale sector, meanwhile, produced nearly 40% of output but contributed less than 1% of tax revenue.
For policymakers, the temptation is clear: extract more from the formal sector through shorter leases, tighter agreements, and additional levies. However, the Chamber cautions that if these measures are combined, they could make Ghana’s mining fiscal regime, which is already highly competitive globally, less appealing.
The question, then, is not whether Ghana should reform its mining laws, but how. Can it strike a balance between maximising state revenues and sustaining investment in one of its most strategic sectors?
Mining has long been a pillar of Ghana’s economy, accounting for export earnings, jobs, and community development. But it is also a fiercely competitive global industry where capital is mobile and policy missteps are swiftly punished.
As Dr Ashigbey concludes: “Balanced, data-led reforms should maximise state benefits while sustaining investment for centuries to come.”
For Ghana, the choice is stark: craft reforms that attract capital and foster sustainability, or risk watching investment and opportunity flow elsewhere.
