Exploration for minerals in Ghana remains hampered by tax burdens, Sulemanu Koney, CEO of the Ghana Chamber of Mines, has told The Africa Report. “We are not happy with the level of investment we see in exploration,” Mr. Koney said adding that there is a need to focus on this area as it is the pipeline of projects for the industry.
Mr. Koney finds it worrying that taxation is front-loaded before commercial finds are made. He questions the VAT liability of inputs used in exploration, which he sees as “not appropriate”. “Exploration is high risk and miners don’t have deep pockets.”
VAT and other taxes should be payable only once commercially viable finds have been made, he says. The Ghana Chamber of Mines says the country is losing potential mining investors to other destinations, particularly Burkina Faso, where exploration does not attract VAT.
According to Mr. Koney policymakers have been sympathetic to advocacy, but nothing concrete has happened yet. He’s “cautiously optimistic” that a solution can be found. The Ghanaian industry is no longer dominated by mining majors: The industry has changed over the years and about 40% of the country’s output now comes from small-scale producers.
Ghana, Mr. Koney stated, is likely to extend its lead in gold production over South Africa this year, having become Africa’s largest gold-producing country for the first time in 2019. It’s too soon to say by how much Ghana’s gold output will rise, but overall mining production in 2020 will be stronger than in 2019, “especially in gold,” he asserted.
A greater focus on minerals other than gold can help attract greater foreign investment in mining, he said. Ghana has significant reserves of manganese, bauxite, aluminium and iron, but about 97% of its mineral extraction is gold.
Ensuring that geological data is in a format that can be used by mining majors is a key challenge, he says, adding that existing legislation, if properly implemented, would allow greater funding for geological surveys.