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14.10.2008 Business & Finance

LET`S USE MINING AS TOOL FOR DEVELOPMENT… Advocates Joyce Aryee, as she counts benefits of mining

By Sebastian R. Freiku, Kumasi - Ghanaian Chronicle

MS. JOYCE Rosalind Aryee, Chief Executive Officer (CEO) of the Ghana Chamber of Mines, has stressed on the need to deliberately plan to use mining as a tool for development.

Referring to the theme of the 80th Anniversary celebration of the Chamber of Mines that “Life without mining is impossible,” during a presentation at a networking lunch with the Ashanti Press Corps in Kumasi, the CEO indicated that mining was a catalyst which must be exploited to accelerate national development.

Ms. Aryee said mining companies had contributed to development, by their very existence in rural communities, and pointed to these social multipliers in the areas of Information Technology (ICT), telephony, education, technology transfer, human resource development, supply chain, electricity and health.

She also mentioned other areas as infrastructural development, where mining companies created access roads to stimulate economic growth in the rural communities.

Explaining to buttress her point why mining was indispensable in our development agenda, Ms. Aryee indicated that the mining companies had provided training in ICT professionals to work in the industry, and that the presence of the mines at Tarkwa, Obuasi, Chirano and Kenyase and others, had promoted the location of banks to do business with other companies, while these banks and emerging companies, employ locals and provide services for the community-based businesses.

In the area of telephony, the CEO said mining companies usually set up masts to enhance communication, which masts go to facilitate telephone, and cell phone services to communities living around the mines.

According to her, the mining companies had either provided schools or maintained existing ones in the mining communities, as well as transformers, electric poles, cables and other equipment to facilitate the extension of power to mining communities.

Under health, Ms. Aryee pointed to the fact that the mining companies had contributed to the health needs of staff and members of communities in which they operate, by establishing hospitals and healthcare centres.

Talking of upstream activities by mining companies, she referred to the generation of employment in communities, where raw materials such coconut husks and palm kernel shells are produced for activated carbon for the mining industry, while the mines also engaged in downstream activities with local jewelry manufacturers.

Ms. Aryee, as well, mentioned direct and indirect revenue from mining, and the voluntary contribution by mining companies in the areas of education, health, electricity, roads, water, housing, agro-industry, agriculture, sanitation, Resettlement Action plan (RAP) and Alternative Livelihood Projects, which social contribution in 2007 amounted to US$13.1million.

In the area of education, the mining industry had contributed US$1,121,061 and spent US$368,440 and US$1,228,439 on health and agriculture respectively in 2006.

The mining companies had also voluntarily expended US$176,086 on electricity; US$399,020 on roads; US$738,546 on water and US$19,543 on housing also in 2006.

These contributions to rural development, according to Ms. Aryee, had been sustained over the four year period, from 2003 to 2006, and beyond.

She made a special reference to the recent establishment of a GH¢865,521 Sustainable Development Fund by Newmont Ghana Limited, and the construction of a modern toilet facility at the Essipong Stadium, as well as the renovation of two schools that were used as hostels, at a cost of US$150,000 by Gold Fields Ghana, as part of its community responsibility by the said companies.

Besides, Gold Fields Ghana, Golden Star Resources, Ghana Bauxite Company, Chirano Gold Mines and Newmont Ghana Gold, have all established Social Development Funds, according to Ms. Aryee.

The CEO of the Chamber of Mines said Ghana had benefited from the increasing price of gold, in that irrespective of the profitability of a gold mine, it pays 3% of its gross revenue to the state.

Mining companies also pay dividends and corporate taxes to the government, and that the mining industry paid a total of US$892,004,323; US$1,281,904,104 and US$1,793,343,307 respectively in 2005, 2006 and 2007 in mineral revenue.

According to her, total mineral revenue was up from US$1,419,974,200 in 2006, to US$1,793,343,307 in 2007, an increase of 26.29%.

She also disclosed that the mining industry returned a total of 66% of mineral revenue to Ghana in 2007, out of which 5% was paid to the government at the national and district levels, in the form of royalties and taxes.

Accordingly, 8% was paid to the Volta River Authority (VRA) and Electricity Company Ghana (ECG) for electric power purchases, while 11% was paid to Shell and Total oil marketing companies for fuel purchases, with 4% (about GH¢64 million) additionally being paid to the cost of fuel, mining companies as taxes, levies and duties on the products to government, and margins to oil marketing companies, among others.

Ms. Aryee said payment of mineral royalties were US$26,760,130; US$38,457,123 and US$53,800,299 in 2005, 2006 and 2007 respectively.

According to her, 80% of mineral royalties went to the government, while 10% went into the Minerals Development Fund, with the remaining 10% going to the Stool Lands Administrator for the development of communities, out of which 1% was for administrative costs, with the 9% (converted into 100%) going to Stools (25%), Traditional Councils (20%) and District Assemblies (55%).

Gold revenue, Ms. Aryee said, increased by 28.93%, from US$1,327,455,774 in 2006 to US$1,711,511,381, which increase was attributed to an appreciation in gold output by 10.79%, from 2,244,680 ounces in 2006 to 2,486,821 ounces in 2007, as well as an increase in realised price of gold, from US$591 per ounce in 2006, to US$688 ounces in the same period.

Ms. Aryee has, therefore, recommended a mutually beneficial co-existence between the state and mining companies, since benefits of mining, such as employment generation, long-term capital formation, social investments, as well as skills transfers, complement the fiscal payment to the state.