View Full Version : Mining Coys Pay GH¢0.50 Ground Rent

16th January 2012, 09:22 PM
Mining companies in the country continue to exploit mining communities by paying GH¢0.50 as ground rent per kilometre square of concessions entrusted to them.

Daniel Owusu Koranteng, Executive Director of the Wassa Association of Communities Affected by Mining (WACAM), stated this when he made a presentation titled: 'Managing Community and Oil & Mining interests: How do we strike a balance?' during the 63 rd Annual New Year School at the University of Ghana.

Referring to a Ministry of Finance & Economic Planning report, Owusu-Koranteng said the rate has remained the same and companies such as Newmont Ahafo Mine based on the Development Agreement do not pay property rate.

AngloGold Ashanti, Obuasi paid GH¢167.35 for 334.27 kilometres square concession while AngloGold Ashanti, Iduapriem, paid GH¢15.50 for 31.0 square kilometers square.

Goldfields Ghana Limited paid GH¢102.10 for 204.22 kilometres square while Bogoso Gold (now Golden Star Resources) paid GH¢112.03 for 224.05 kilometres square.

Abosso Goldfields Limited, which has a concession covering 49.0 kilometres square, paid GH¢24.50 while Ghana Manganese Limited (now Ghana Manganese Company) with a concession covering 175.93 kilometres square, paid GH¢87.96.

The Ghana Bauxite Company, which has a 29.39 kilometres square concession, paid GH¢14.70.

'Ghana is increasing its dependence on the extractive sector with mining accounting for about 40 percent of the foreign exchange earnings of the country but its contribution to gross domestic product (GDP) is about six percent despite the high gold price.

'In terms of employment, mining formally employs about 15,000 to 18,000 employments and accounts for about 12 percent of the total income tax of workers.'

Mr Owusu Koranteng further said the country's fiscal regime provided generous incentives to the mining companies.

'In 2004, the capital allowance granted the mining companies according to the Internal Revenue Service (IRS) were in the range of US$77,927,000' he emphasized, adding that a GNA report of 21 st July 2006 quoted Joyce Aryee, the then Chief Executive of the Ghana Chamber of Mines as saying that 'the mining industry recorded an increase in mineral revenue from $798 million in 2004 to $995 million in 2005.'

Furthermore, he explained that a report by UNCTAD in 2005 stated that only five percent of the total mineral revenue went to government of Ghana.

'This means that for the year 2004, mineral revenues available to government were almost equal to the capital allowance granted to the mining companies.'

He indicated that a report by the Forestry Commission and the Wildlife Division (2004) similarly estimated the worth of bush meat in Ghana to be between US$ 200 and US$ 300 million per annum. 'The implication is that the bush meat trade gave Ghana about four to five times what we earned from mining in 2004.'

'The Minister for Finance and Economic Planning stated in the 2012 Budget that recent studies in the mining sector showed that Ghana loses about US$36 million a year in transfer pricing.

In an attempt to seal off some of the leakages in the mining sector, the government announced some measures in the 2012 budget as a way of increasing the benefits from the mining sector: an increase of corporate taxes from 25 percent to 35 percent in the mining sector; a windfall profit tax of 10 percent to be collected from all mining companies and a uniform regime for capital allowance of 20 percent for five years for mining.

Mining is associated with pollution and the destruction of water bodies. Mining is destroying forest reserves, which has grave consequences for Ghana in the near future. Already, Ghana is losing its pristine forest cover at an alarming rate and a recent report of the International Tropical Timber Organisation (ITTO) mentioned that Ghana comes third after Togo and Nigeria with regards to countries with the worst rate of forest depletion. In spite of the foregoing, authorities are granting mining leases for mining in forest reserves in addition to the destruction of sacred groves including cemeteries.

'Goldfields Ghana Limited displaced 30,000 landlords in five years; Newmont Ahafo mine destroyed the livelihood of about 10,000 people in the first phase of its operations; Newmont Akyem mine has the potential to destroy the livelihood of about 10,000 people, among others.

The major concern associated with mining is the payment of low compensation payment.

'Mining companies pay one-off compensation of about GH¢20.00 for a cocoa tree, which may not cover the farmer's earnings from a cocoa tree for one year. This denies farmers of making earnings from their long-term investment in cocoa, which has economic life of about 50 to 60 years. The unpaid compensations translate into subsidies that the poor farmers provide to the multinational companies.'

By Samuel Boadi