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01.04.2015 Business & Finance

Ghana losing Gh500million to smallscale miners annually

By Kofi Adu Domfeh
Ghana losing Gh500million to smallscale miners annually
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Gold exports from Ghana's smallscale miners in 2012 and 2013 amounted to the same volume of production by the three leading mining firms in the country.

Figures from the Minerals Commission indicate small scale and artisanal mining accounted for 34% of total gold production in Ghana, which amounts to 1.6million ounces of gold.

This is equivalent to the total exports of Anglogold Ashanti Obuasi mine, Goldfields Tarkwa and Newmont Gold Ahafo mine.

The State is however losing its resources without compensatory revenue.

There is no mineral royalty payment on the extraction of gold by the small scale miners – an annual Gh₵500million in taxes and royalties is estimated to have been lost to the artisanal mining.

The Mining and Minerals Act 2006, Act 703 does not differentiate between small scale and large scale operations in terms of royalties and both are liable for royalty payment.

The 2012 and 2013 report of Ghana Extractive Industries Transparency Initiative (GHEITI) has recommended that “the rate at which royalty is paid may be differentiated between large scale and small scale holders” whilst royalty payment may be instituted at the point of export for the small scale operators.

Dr. Steve Manteaw of the Integrated Social Development Centre (ISODEC), a civil society group, says taxing the smallcale miners will demand mainstreaming of their activities.

He observed the failure of the country to make formalization of illegal mining attractive to galamsey operators.

“When multinational mining companies come into the country, we bend over to give them incentives and whatever support they need to be successful; their success become of paramount interest to the State. Why shouldn't the success of smallscale miners be of paramount interest to the state?” he quizzed.

According to him, players in the informal mining sector can be incentivized with support mechanisms, including access to geological data, technical aid - in which a plant pool of equipment can be accessed at subsidized rate.

“If I know that by formalizing my activities I get some support in terms of being able to access venture capital fund to finance my operations, then it becomes attractive to move away from illegal activities into the formal sector; once you've done that then we can identify these groups and tax them appropriately to finance national development,” suggested Dr. Manteaw.

Story by Kofi Adu Domfeh

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