The Ghana Chamber of Mines has called for the establishment of an incentive scheme to help reduce the high cost of exploration and to also attract the required investments into the high-risk business of mineral exploration. Addressing the annual general meeting of the Chamber, Mr Eric Asubonteng, President of the Chamber, said the relevance of exploration in ensuring a pipeline of future viable mining projects cannot be over-emphasized.
Mr Asubonteng, therefore, called on government to exempt exploration companies from payment of Value Added Tax on big ticket cost items such as drilling and laboratory services.
“This exemption has proven to be a major incentive for attracting exploration into mining countries globally,” he said.
He said exploration was critical in guaranteeing sustainable production of mineral and discovery of new mineral resources to supplement production from existing mines or replace output of mines whose economic ore body gets exhausted.
“However, exploration investment in Ghana has declined significantly in recent years. This is alarming for a country to which mining is critical for forex and fiscal revenue generation as well as other value enhancing services,” Mr Asubonteng said.
The expenditure on global mineral exploration, as measured by company exploration budget, dropped by 11.5 per cent to US$ 4.293 billion in 2019 from US$ 4.852 billion in 2018.
The decline in budgeted exploration expenditure was caused by a general reduction in spending across all the mining jurisdictions except Australia and South East Asia-Pacific regions.
In Africa, the projected exploration spending for 2019 stood at US$ 615.9 million and Ghana’s neighbour, Burkina Faso, was the biggest beneficiary.
Burkina Faso was earmarked to receive US$ 132 million in 2019 while Ghana came second with a budget of US$ 98.6 million.
“The disparity runs its own sad commentary for the Ghanaian mining industry. As Africa’s leading producer of gold, Ghana must continue to create the requisite policy and legal prescriptions and platforms to engender mining exploration.”
Mr Asubonteng said in taking advantage of the opportunities that mining presents, Ghana must be seen to be creating the enabling environment for both local entrepreneurs and foreign investors while looking beyond the risks associated with exploration.
Touching on the challenges facing the mining industry, Mr Asubonteng said the poor railway system had remained the biggest challenge for the bulk mineral producers.
He said without a railway system which is a more cost competitive mode of transporting the bulk materials to the ports for shipping, companies would be forced to use the more expensive road haulage alternative from their respective mines.
It is estimated that the cost of road haulage is 50 per cent more expensive than the alternative of using the railway lines; which would consequently result in high cost of operation and adversely impact the revenue that the State would receive by way of corporate tax.
“We need to take advantage of the innovative measures in global transportation to construct fully functional railway systems to further open opportunities in the value chain of mining,” he said.