New regime for allocating mineral rights

A new plan to govern the allocation of mining rights will come into effect by close of this year to ensure transparency and maximum revenue for the nation from the industry. ‘Tendering of mining rights’, the new initiative, when fully operational will replace the current practice whereby interested investors apply for mining licences and are allocated concessions to commence exploration. This blueprint legislation is aimed at developing regulations that will govern access by the private sector to mineral rights for blocks found to be geologically promising. Tendering of mining rights is a global acceptable best practice in the mining industry wherein mining concessions are advertised and selected, and available blocks are allocated to the bidders. The Minerals Commission, the lead promoter of the initiative, is excited about its implementation which will benefit the country by ensuring maximum benefits from the sector and promoting transparency. Mr. Jerry Ahadjie, Principal Sectoral Policy & Planning Officer at the Minerals Commission, disclosed to the Business and Financial Times in Accra that there has been enormous investment targetted at enhancing geological, geographical and geochemical information within the dedicated concessions. “A lot of investment has gone into this project just to weed out speculative investors.” The prime objective, he explained, is to speedily attract reliable investors with financial and technical capabilities to help develop the various mining blocks. “We want to attract serious investors who are technically and financially capable of exploring and exploiting the deposits to our benefit,” he said. “It is also to attract investors with technical and financial capabilities to help generate enough revenue for the state.” Mr. Ahadjie disclosed that various minerals, including the base-metals, have been discovered in large deposits in areas such as the Volta, Western and the Ashanti Regions. “Tendering of mining rights, which is currently awaiting parliamentary approval, will form part of the new mining law. Presently, a special committee has been set up to fine-tune the guidelines which will be adopted as a blueprint guiding the sale and allocation of mining rights in the country. “It is part of the government and European Union-funded project completed in 2010 and tasked to zone viable mining areas for possible exploration to attract investors,” he revealed. Government is embarking on a mining industry review to reflect changes that fairly meet the needs of the industry, tighten exemptions, and ensure fairness across industries while safeguarding revenues. The review will mandate companies to pay mining royalties monthly instead of quarterly. It will also push for an increase in royalties paid by mining companies. In March 2010, government announced an increase in the country's mineral royalty tax from three percent to five percent. Government is also implementing its new increased corporate tax rate for miners from 25% to 35%, while a windfall profit tax of 10% has been imposed. Ghana is ranked the seventh-biggest gold-producing country based on 2011 output. According to the London-based metals-consulting company, CRU, the country is producing more than Canada (8th), Indonesia (9th) and Mexico (10th), but came below South Africa, which was fourth on the log. China came first followed by Australia, US, South Africa, Russia and Peru in that order. The country produced 102 metric tonnes of gold in 2011 as against 92 metric tonnes in 2010, with the world’s production for the year under review recording 2,789 metric tonnes as compared to 2,638 in the previous year.