The Ghana Chamber of Mines has asked government to fast-track the review and renegotiated stability agreement to guarantee investor confidence in the country’s mining regime.
“We think that the committee established by government to review and renegotiate all mining agreements must work faster, because investors are very sensitive to instability.
“Investors need to be assured that the fiscal regime will not let them down. It is important that government work on that. What investors are looking for is stability in the regime over a period of time.
“Investors apply a lot of speculation and this requires planning, so they want assurance that the regime will not change every year,” the Chambers’ Chief Executive Officer, Dr. Toni Aubynn, told B&FT in an interview in Accra.
Early this year, government set up a seven-member national renegotiation team led by academic and jurist Prof. Akilagpa Sawyerr to critically review, re-negotiate and redesign the entire mining regime so as to ensure the state derives maximum benefit from the sector.
The first task of the committee is to review and re-negotiate any part of the stability agreement between the Republic of Ghana and any mining company that is not in the best interests of the country.
The team’s second task is to revise the manner of granting stability agreements, and the third to redesign any existing or draft agreement to ensure that it yields better social and economic returns for the country.
The team will be assisted by a local resource team and advised by international mining experts in discharging its duties.
After government gave indication last year of its intention to renegotiate contracts with mining companies, some miners had hoped to count on the stability agreements which contain fixed clauses and conditions to shield them from any sweeping revisions.
Among the changes were a review of the corporate tax-rate for the industry from 25 to 35 percent, the imposition of an extra 10 percent windfall tax, and a reduction in the capital allowance rate from what was sometimes as high as 80 percent to 20 percent for five years.
At least two miners, Anglogold Ashanti and Newmont, have signed such agreements with the government that freeze taxes, royalties and other conditions over 10-15 years, and have said they do not expect to be immediately affected by the new rules.
Anglogold Ashanti Limited, which signed a stability agreement with the state in 2004, has said it will not scale-back planned investments at the Obuasi mine, its biggest operation in Ghana, despite the tax-changes -- which include an increase in the corporate tax from 25 to 35 percent, a windfall-profit tax of 10 percent and changes to capital allowance rates.
Anglogold believes it will remain productive for at least the next 30 years. When early indication of the government wanting to review the mining regime and contracts was given two years ago, Newmont said the company had reminded government of its stability pact, but was nonetheless “willing to “talk”.