Mining accounts for 5% of the country’s GDP and minerals make up 37% of total exports, of which gold contributes over 90% of the total mineral exports. Thus, the main focus of Ghana’s mining and minerals development industry remains focused on gold. Ghana is Africa’s 2nd largest gold producer, producing 70 t in 2003. Gold production reached 2,143 Moz in 2005. Production is dominated by homegrown Ashanti Gold Fields, which produced nearly half at 37 t from its five mining operations. Ghana is also a major producer of bauxite, manganese and diamonds.
The country currently has thirteen large-scale mining companies producing gold, diamonds, bauxite and manganese, and, there are also over three hundred registered small scale mining groups and ninety mine support service companies. Several other organisations are involved in producing building and industrial minerals in the country. In 2005 Ghana’s mining sector saw diamond production reaching to 1,065,923 ct, bauxite production reaching to 606,700 t and manganese production reaching to 1,719,589 t.
Ghana’s economic geology is centered around Proterozoic rocktypes, notably the Birimian and Tarkwian systems. The Proterozoic Birimian belt in West Africa hosts nearly all of the known gold deposits in Ghana, Burkino Faso and Cote De Ivoire. The Ashanti Gold Belt of SW Ghana, part of the volcano sedimentary Birimian Belt, includes seven producing mines. Gold mineralisation in the Birimian is mainly in the form of auriferous quartz veins of ‘reefs’ and as sulphide ore. Tarkwian system rocks consist of a thick series of argillaceous sediments resting unconformably on the Biriman. Gold is found in these sediments, occurring as blanket reefs or conglomerate beds, similar to those of the Witwatersrand in South Africa. Alluvial diamonds, about 80% of industrial grade, are produced on a large scale. Primary kimberlites have yet to be found.
Constant power supplies to mining operations have been disrupted in Ghana due to drought, resulting in a drop in production of many gold mining operations. The Volta River feeds into the Volta Dam, whose hydroelectric scheme supplies almost all of Ghana’s electricity.
Ashanti Goldfields has signed an agreement with a consortium led by KMR Power Corporation, a US based power project developer, and the Ghanaian Ministry of Mines and Energy, for support of a 220MW gas fired, combined cycle power plant. Up to 100MW of this plant’s energy will be allocated to Ashanti. Construction is underway, and full commissioning was expected to be completed before the end of 1999. In addition to this plant, a 144MW barge mounted, gas fired plant is also being constructed at Tano in the west of Ghana. Commissioning was also expected by the end of 1999.
Mineral Policy and Legislation
Mining and minerals were a specific and integral part of the Economic Recovery Programme. New legislation was promulgated, financial incentives were introduced, new state institutions were set up and major rehabilitation of state-owned mines were carried out.
The basic law is the Mining and Minerals Law which was passed in 1986 (PNDC Law 153). This and associated legislation combines regulation of the mining industry with fiscal incentives for investors. Some of the more significant features of the legislation are:
1. All minerals are owned by the State. Exclusive mining rights are granted by the Ministry of Mines and Energy. A summary follows:
|Licence type||Reconnaissance||Prospecting||Mining Lease||Restricted lease|
|Purpose||Regional exploration, not incl. drilling||Search for minerals and valuation||Extraction of minerals||Building and industrial minerals|
|Area||No limitation on size||150 km²||50 km² per lease up to maximum of 150 km² per company|
|Period||12 months renewable||2 years renewable with reduction of area to not less than half||30 renewable|
2. Negotiable matters are deferment of royalty payments, work programs, and the level of export earnings retention allowances. No transfers are permitted without the approval of the Minister of Mines and Energy.
3. The legislation is to be applied equally to Ghanaians and foreigners, except for the provisions relating to artisanal mining and exploitation of construction minerals which is reserved for Ghanaians.
4. The Government is entitled to a free carried equity interest of 10% in mineral ventures. It also has the option of purchasing an additional 20% at a fair market price.
5. Royalties vary form 3% to 12% of the gross value of minerals produced. The variation is related to the “operating margin” and is designed to prevent royalties becoming too onerous during times of low profitability.
6. Relevant institutions include:
- Ministry of Mines and Energy – overall responsibility for the mining industry
- Minerals Commission – recommends mineral policy. The first contact for prospectiv investors and source of essential information
- Geological Survey Department – geological studies including map production and maintenance of geological records
- Mines Department – health and safety inspections and maintenance of mining records
- Lands Commission – legal records of licences and legal examination of new applications
- Chamber of Mines – association of representatives of mining companies.
- Environmental Protection Agency – overall responsibility for environmental issues related to mining
Fiscal Regime and Commercial Legislation
The Ghana Government acquires 10% free equity in any mining venture and has the option to acquire an additional 20% participatory interest at fair price. In addition to this, the holder of a mining lease is required to pay royalty of between 3% and 12% on the total revenue of the minerals obtained from the mining operations.
The holder is required to pay income tax at the rate of 35% and an additional Profit tax of 25% as provided under the Additional Profit tax Law 1985 (PNDCL 122). A mining lease holder is also required to pay annual rental charges as prescribed by Regulations.
The above taxes may be decreased by the following capital allowances:
(i) Depreciation 75% of the capital expenditure incurred in the first year of investment and 50% of the declining balance in subsequent years.
(ii) Investment allowance of 5% in the first year only.
(iii) Losses in each financial year not exceeding the value of the capital allowance for the year may be carried forward. Capitalisation of all pre-production expenses approved by the authorities when the holder starts development of commercial mining.
The holder of a mining Lease is also granted the following benefits:
(i) Exempted of staff from out of Ghana payments of income tax relating to furnishing accommodation at a mine.
(ii) Exempted of staff from out of Ghana payments of income tax relating to furnishing accommodation at a mine.
(iii) Immigration quota for expatriate personnel free from any tax imposed by government for the transfer of foreign currency out of Ghana.
(iv) Exempted from the selective alien employment under the selective alien employment decree.
Ghana’s Minerals and Mining Act 2006, Act 703 have added some significant aspects to the country’s commercial law, and, according to the Mining Journal, they are:
(i) Expenditure on exploration and development may be capitalised in accordance with regulated amortisation provision for tax relief;
(ii) Capital allowances have been designed to shorten the pay-back period and include 75% write off of capital in the first year and 50% annually thereafter on a declining balance;
(iii) Retention of a proportion of revenue in foreign currency account for use in acquiring essential equipment and spare parts required for mining operations which would otherwise not be readily available without the use of such earnings;
(iv) Exemptions from import duties on imported plant and equipment.
Banlaw Africa Ltd, Birim Goldfields Ghana Ltd, Dunkwa Continental Goldfields Ltd, Ghana Consolidated Diamonds Ltd, Gold Coast Resources, Inc., PMI Gold (Ghana), Premium Ghana Company Ltd, Renato Impex Agencies Ltd, Rothschild Precious Minerals Marketing Agency, Sleasus Agencies, West African Mining Services (Pty) Ltd, Abosso Goldfields Ltd, Al-Marzuk Company Ltd, Aluworks Limited, Association of African Stone Producers, Atlas Copco Ghana Ltd, Ausdrill (Ghana) (Pty) Ltd, Bayswater Contracting and Mining (Pty) Ltd, BHP Minerals International Inc, Bonte Gold Mining Company
Abore, Ahafo, Akrokeri, Akwatia, Awaso, Ayanfuri, Bibiani, Bogoso/Prestea, Bonte Gold Mine, Chirano, Damang, GBC, Grumesa-Awisam, Iduapriem, Konongo, Nsuta, Ntotoroso, Obotan, Obuasi Gold Mine, Prestea