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07.05.2008 Business & Finance

WACAM calls for better royalties on mining

By Daniel Nonor - Ghanaian Chronicle

In the wake of recent debates on the contribution of mining to the development of the economy, the Director of Wassa Association of Communities Affected by Mining (WACAM), Mr. Owusu Koranteng has descended on issues raised by the Chief executive officer of the Chamber of Mines, who had made public pronouncements to the effect that the mining sector was making significant contributions to the economy as against the otherwise publicly held perceptions.

The debate emanated from a plenary discussion of the just ended 12th United Nations Conference on Trade and Development (UNCTAD) in Accra where the Minister of lands Forestry and Mines Mrs Esther Obeng Dapaah made known government's intension of amending the too liberal mining laws to make maximum gains from that sector.

The minister also raised concerns about certain inadequacies in the mining act such as lack of knowledge on how mining companies declared their profits.

Addressing the issues Mr. Koranteng indicated that it was an undeniable fact that royalties from minerals provided government with the greatest revenue, indicating that a total of $58.80 million paid to government as royalties for last year by the mining companies as against the $2.5billion total mineral revenue generated that year was woefully inadequate.

He indicated that ironically, the mining sector equally creates employment as much as destructions to the environment.

Mr. Koranteng said that “…mining operations destroy a lot of livelihood, for example Goldfields in a spate of one year displaced 30,000 landlords in the first phase of NewMont Ahafo mine, and has already displaced 9,300 landlords for the second phase which has been earmarked to displace the same number when completed.” He stated

He pointed out that the compensation paid by these mining companies to the affected landlords does not restore their livelihood. “For example, NewMont pays GH¢9 for a cocoa tree that could yield for a period of forty to fifty years.”

Mr.Koranteng criticised the current fiscal regime which gives mining companies a lot of generous concessions and tax holidays for local and foreign purchases for their operations.

He argued that mining has become very profitable hence the time for government to abolish that kind of regime as the government was losing so much from that.

He said it was time for government to evaluate the social and environmental cost associated with mining, to access whether the venture had been beneficial or not. “If this is not done, government is bound to spend huge sums of money to address the legacy problems when the mining boom is over,” he warned.

What the World Bank also said

A project performance assessment report on the future of large-scale mining in Ghana has this piece of comment:

“It is unclear what its true net benefits are to Ghana. Large-scale mining by foreign companies has high import content and produces only modest amounts of net foreign exchange for Ghana after accounting for all its outflows. Similarly, its corporate tax payments are low, due to various fiscal incentives necessary to attract and retain foreign investors. Employment creation is also modest, given the highly capital intensive nature of modern surface mining techniques. Local communities affected by large-scale mining have seen little benefit to date in the form of improved infrastructure or service provision, because much of the rents from mining are used to finance recurrent, not capital expenditure. A broader cost-benefit analysis of large-scale mining that factors in social and environmental costs and includes consultations with the affected communities needs to be undertaken before granting future production licenses”

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