Wacam Warns Against Contract-mining

The government has been asked to adopt a policy against contract-mining because that is not in the best interest of the people - the true owners of the resources.

This comes amid the push by Gold Fields Ghana Limited (GFGL) to transit from owner-mining to contract-mining.

A press statement by Wacam - human rights, environmental and mining advocacy NGO, signed by Hannah Owusu-Koranteng, the Associate Executive Director, said if the government allowed the GFGL to succeed in doing that it would encourage other mining companies to do same considering the huge savings from the cut in labour costs.

Foreign Direct Investment (FDI) should be beneficial to the host country through the creation of decent jobs, payment of corporate tax and income tax by the employees.

It noted that in the case of contract-mining, the companies would be shirking their responsibility of creating decent jobs and affected employees would also suffer diminution in their terms and conditions of service.

The reduced remuneration of employees would translate into lower income tax payment and that would have cascading negative impact on national development.

The release said GFGL had been pampered over the years - having operated as an underground mine alongside surface mining operation for a few years.

Its decision to close down the underground mining operations in July, 1999 led to job losses, especially among the underground workers despite the fact that the operations of the underground mine was the justification for the generous terms of the agreement to attract the company to revamp the underground mine.

The statement likened the agreement to what it termed "Buy one get three free".

It explained that Goldfields South Africa had purchased the Tarkwa Goldfields Limited (TGL) underground mine in 1995 for a paltry US$3,000,000 and that gave the South African Company access to the large concession of TGL of about 280 square kilometers.

'The sale of the mine was shortly after the government had secured a loan of $35 million Canadian dollars to invest in the underground mine. By the acquisition of TGL, Goldfields South Africa gained additional properties of the State-owned TGL including housing estates for workers such as the Tamso Estate, Green Compound Estate; Aboso Estate and many bungalows for middle-level management staff and senior managers.'

'Beyond these freebies for the survival of the company and the generous fiscal regime' was the associated development agreement, which provided it the opportunity to negotiate high retention of foreign revenues and reduced corporate tax among other things.

"Above all GFGL had the opportunity to reap windfall profits during the period when the price of gold skyrocketed to around $2,000 an ounce.

Unfortunately, our country's inability to take advantage of the high gold price by instituting windfall profit tax in the fiscal regime for mining, helped companies like GFGL to repatriate huge profits to the home countries of multinational mining companies operating in the country.'