New Gold Fund officially listed

Ghana Stock Exchange (GSE) has officially listed Absa Capital’s New Gold Exchange Traded Fund (ETF) on the local bourse with an initial offering split into 400,000 units, to test market demand.

South African group Absa Capital took the decision to list its gold-backed ETF on the GSE after the primary listing in South Africa and other listings on bourses in Nigeria and Botswana.

It is the first commodity-backed exchange-traded fund on the GSE, aimed at helping to broaden the range of securities on the bourse. It is the only gold-backed ETF on the continent, which is a simple and cost effective way of investing directly in physical gold bullion through a GSE listed share.

ETFs are securities traded on exchanges like shares, but track the combined value of a portfolio or basket of underlying assets such as shares, commodities and bonds.

New Gold, Africa’s largest ETF, is the best-performing ETF on the continent over five years with a return of 22.55 percent per year, a two-year return of 24.76 percent, and a return over three years of 21.66%. As at August 1, 2012, New Gold’s assets under management were US$2.15billion.

Dr. Sam Mensah, Chairman of Council of the GSE, made the official listing pronouncement and together with officials of the South African group Absa Capital rang the bell to signal its official admission to the trading platform in Accra.
 
Kofi Yamoah, Managing Director, GSE, explained that investors will be able to track the performance of the security once they know the gold price and dollar-cedi exchange rate.
 
“Besides, listing on the bourse will help diversify the stock exchange away from the equities and bonds that currently dominate it.”

 Mr. Yamoah added that the listing will deepen and broaden the security types that are available and traded on the bourse, and that the listing will also provide a learning platform for the development of other ETFs in future.

Dr. Vladimir Nedeljkovic, Head of Investments at Absa Capital, expressed hope that New Gold ETF will bring valuable additions to the country’s investment space.

 
“The introduction of Exchange Traded Funds to the GSE offers both individual and institutional investors a cost-efficient and convenient way to invest in multiple shares or other assets, such as commodities, through a single security,” he said.

“We have been encouraged by the success of the New Gold ETF in the African markets where it has been listed. Africa is an exciting proposition for this product, and we will continue to explore opportunities across the continent.

“The listing is in line with Absa Capital’s overall strategy to expand its suite of products and services in sub-Saharan Africa, said Dr. Nedeljkovic.”

Mr. Benjamin Dabrah, Managing Director Barclays Bank Ghana, said gold is a reliable store of value and the ETF will provide an avenue for investors seeking alternative investment products.

 “We are confident that the product will benefit the entire Ghanaian nation because it is a transparent product which offers value for money.

“ETFs provide investors with liquid and low-cost exposure to underlying commodities or other assets, and trade like a stock on an exchange.”

Patrick Kingsley-Nyinah, Director of Oak Partners speaking at media interaction on ETFs, said on the African continent ETFs have been in issuance since November 2002 with the introduction of Satrix 40, which tracks the top-40 companies on the Johannesburg Stock Exchange (JSE).

“After Absa introduced the New Gold ETF on the JSE in May 2004, it was subsequently cross-listed on the Botswana Stock Exchange in July 2010 -- the first ETF dual-listing in sub-Saharan Africa with a current net asset value of approximately US$2.5billion.”

Batsile Ngomane of Absa Capital, explaining the benefits of ETFs, said: “It offers benefits of diversification like a pooled investment vehicle and that of a stock’s tradability. ETFs can be sold short and margined, just like any other listed equity.

“In jurisdictions that charge capital gains tax, ETFs offer a tax-efficient structure due to their slow turnover and hence lower tax liability due from sales and realisation of capital gains.

 “Portfolios of ETFs are transparent and allow for the operation of arbitrageurs to keep the trading price as close as possible to the net asset value.”

Absa Capital, the corporate and investment banking division of the Absa Bank Limited and affiliate with Barclays Bank, is a leading South African corporate and investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.

Absa is a leading originator of exchange traded funds in the South African market, and has 48% of the market share based on assets under management.

AngloGold injects US$682m to transform operations

AngloGold Ashanti (AGA) Ghana says over US$$682million has been invested in its Obuasi and Iduapriem mines to transform the operations into world-class mines.

This investment has been focused on reshaping the infrastructure, upgrading the mining methods and seeking to rectify -- as rapidly as far as possible -- both social and environmental legacies, in accordance with the company’s values.

This is also to enable the company to produce more gold at lower costs to generate more cash and meet its commitments to both shareholders and stakeholders.

Mr. Peter Anderton, Senior Vice President, AGA Ghana, said this at the company’s maiden townhall meeting held at Tarkwa in the Western Region.

The meeting brought together stakeholders including chiefs, opinion leaders, government officials and individuals, and was aimed at deepening community engagement and updating stakeholders on the performance and challenges facing both the company and the communities.

It was also to create the opportunity for meaningful interaction with stakeholders, especially people in the immediate communities.

Mr. Anderton indicated that beside the thousands of Ghanaians employed by the AngloGold Ashanti, its contribution to the country’s economy is enormous and has manifested in several ways.

He said AGA has paid about US$394million to the government, made up of direct and indirect taxes, and funded many corporate social responsibility projects to raise the living standards of the people in and outside the immediate communities.

“As part of its contribution to communities and societies where it operates, the company has funded the construction of more than dozen schools and partnered with Institute of African Studies of the University of Ghana to promote the study of the contribution of Africans to world civilisation.

“In the area of health, the company has created access for thousands of people to modern medical care through the construction and operations of hospitals and clinics; and currently AGA is scaling-up its Malaria Control Programme, started in Obuasi, to 40 districts and municipalities in the country -- most of which are in the malaria-endemic regions in the northern part of the country.”

He added: “AGA has also provided a number of infrastructure including schools, health facilities and among others in both the Obuasi and Iduapriem host communities.

“The company’s apprenticeship schemes in the operational areas have made it possible for hundreds of University and Polytechnic as well as technical school graduates -- most of whom are from host communities -- to access practical training in engineering, welding and fabrication, and management,” he said.

Mr. Paul Evans Aidoo, Western Regional Minister explained that the contribution of the mining industry to the country’s development cannot be over-emphasised.

“I have keenly followed development in the mining industry for a long time, and have always blamed mining companies for not doing much to publicise what they have been doing in the country to show how best the industry can be used to propel growth of the economy.

“For the mining companies, failure to be transparent enough and to throw more light on your activities is like operating in the dark.”

Gold drives up revenues

Cummulative mineral revenue for the first half of 2012 was US$2.76 billion -- up by 19% as against US$2.313billion recorded in the half-year of 2011.

“The impressive first-half performance was largely on the back of the performance of mineral revenue from gold and bauxite, despite the dip in reveue from diamond and manganese,” Dr. Toni Aubynn, CEO of the Chamber, disclosed to B&FT.

Gold, which has in recent times seen a remarkable increase in world price, saw an appreciation in revenue of 20%. The metal recorded US$2.69billion for the half -year, as against US$2.24billion for the first half of 2011.

Gold production was up by 6%.  This is attributed to the fresh production from Perseus Mining Ghana Ltd and Adamus Resources, which commenced production in the second quarter of 2011.

On the other hand, bauxite increased significantly by 82% on account of the substantial rise in shipments of the ore, which went up by 71%. Shipments rose from 173,601 tonnes in the half-year of 2011 to 295,993 tonnes for the same period in 2012.

Diamond purchase dipped significantly by 33% from 185,557 carats in the first-half of 2011 to 123,699 carats of the same period in 2012.

Manganese shipments saw a decline by 25%, and this translated into a slump in manganese rev

enue by 24% -- from US$61,489,236 in the first half of 2011 to US$46,981,229 for the same period in 2012.

“The performance of the mining industry in the area of production six months through the year has been mixed, but the generally significant increase in revenue confirms mining’s continuous position as a key fortress for the country’s economy.

“The industry, which has been a major contributor to the economy, witnessed an increase in the overall minerals revenue while output and shipments of some of the product segments recorded negative variances,” Dr. Aubynn said.

He anticipated a rise in this year’s gold production, after full-year gold production in 2011 declined marginally.

Total investment inflow into the country’s mining sub-sector increased from US$770million in 2010 to US$780million in 2011.  

High gold prices are motivating mining firms to increase production. New companies have also come on-stream. The higher rates make it profitable for mining companies to mine low-grade ore.

Gold output last year came down two to three percent compared to the year before, and the decline could have been deeper but for the fact that Australian miner Adamus Resources poured its first gold in January last year.

Two more mines are expected to come on-stream this year, and we also anticipate that Adamus will increase its production. So we are going to see production go up this year.

Need to improve working relations in mining communities

Although mining sector reform has enhanced the country’s reputation over the years as an attractive destination for foreign investment and has drawn a number of mining companies into the country, it is still perceived as exploitative by some mining communities and stakeholders. This translates into a frosty relationship between mining concerns and their host communities.

Such relationships lead to violent confrontations in mining communities, and invariably affect the production output of some mining communities

It is in the light of this that Mr. Andrews Kingsley Doku, Head of Human Resource of the University of Mines and Technology (UMaT), has noted that communication should play a broader and more strategically significant role between organisations and stakeholders.

“All communication programmes should be designed to build relationships with organisational stakeholders, and communication must address potential conflict between the organisation and those relevant internal and external stakeholder groups which may affect the organisation’s reputation,” he added.

Speaking on “Improving mining companies and their stakeholders relationship: the role of a symmetric model of public-relations” at the 2nd UMaT Biennial International Mining and Mineral Conference at Tarkwa in the Western Region, he pointed out that a report from the Commission of Human Rights and Administrative Justice (CHRAJ) in 2008 confirms that the absence of effective communication and consultations between mining companies and communities has largely contributed to conflicts in mining areas.

“This is an indication that mining companies have not applied the kind of communication that seeks to sustain and engage mining communities as key stakeholders in the extractive industry,” he said.

He said, as a result, mining communities presume that they are unrecognised stakeholders, even though resources extracted by the companies belong to them -- this lack of recognition, of power and influence, of mining communities provides the single greatest impediment to improved relationships.

According to him, as these concerns become reality the need for dialogue, negotiation and consensus building in any industry becomes crucial.

“There is also the perception that while mining communities continue to wallow in poverty, millions of dollars worth of gold is extracted freely from ancestral land.  As such, the perception usually metamorphoses into situations that have potential for sparking conflicts between mining companies and host communities,” he said.

Mr. Doku noted that this requires a kind of communication that has the potential to assuage and accommodate the concerns and interests of mining communities, instead of resorting to use of the press, public information and asymmetric models of communication that selfishly see organisation stakeholders as passive recipients of information.

He said for mining companies to become successful in a highly regulated environment, its communication must give premium to dialogue and negotiation to achieve understanding between the mining company and its communities.

AGA-Iduapriem mine gold production hits 917,400 ounces

Anglogold Ashanti (AGA) Iduapriem Mine produced 917,400 ounces of gold for the first quarter, exceeding its target of 913,509 ounces.   

 The mines’ conceptual stage for its expansion option has been completed and will be proceeding to pre-feasibility.  Its Ajopa pit is in its final stage of optimisation and forms part of the 2012 business-plan.

Mr. Sicelo Ntuli, Managing Director, Iduapriem Mine, said the company will continue to contribute toward the country’s socio- economic growth and development with emphasis on the local communities.

“Iduapriem’s achievement was through hard work, sustained education, and improved mine worker relations.
He disclosed that the company has embarked on a number of expansion programmes aimed at maximising its production levels.

“We have a stable outlook as to the life of mine, and as we mine we look for possible opportunities to sustain our operations.”

He said safety is a paramount ingredient in the mining sector, and that occupational injuries usually led to Loss Time Injuries (LTI); but Iduapriem has adopted many modern operational practices to eliminate such injuries, making the mines a safer place for all its workers.

“The company values its staff and will do everything to make them feel safe and give of their best, and will not compromise mine safety principles and standards.”

He said conscious efforts will be made to allow the various host communities to benefit more through engagements with them, especially in community activities.

Mr. Ntuli appealed to the workers not to relent on their safety and basic mine rules to safeguard lives and property.

Gov’t ready to flush-out illegal miners

Government says it will no longer tolerate the activities of illegal miners and any form of their activities that will degenerate into lawlessness and insecurity, the Western Regional Minister, Mr. Paul Evans Aidoo has said.

“The Regional Coordinating Council will no longer tolerate any form of activities which could degenerate into lawlessness and insecurity.

“I urge all illegal miners operating in the Region to end their activities, or the security agencies will descend on them and flush them out.”

Mr. Aidoo said illegal miners in the region should regularise their activities by registering their businesses with the Minerals Commission.

He said the activities of illegal miners affect the livelihoods of mining communities because they do not pay taxes to the government, or pay compensation for farm lands they destroy.
 

He appealed to mining companies to use the appropriate channel to secure the assistance of security agencies in their efforts to protect their concessions, to avoid confrontations.
 
Mr. Aidoo told this to representatives of Ghana Chamber of Mines, the Minerals Commission, Municipal Chief Executives, traditional rulers, and assembly members from Tarkwa and Obuasi at AngloGold Ashanti’s first national Town Hall meeting held  in Tarkwa in the Western Region.
 
Kwesi Enyan, Managing Director, AGA (Ghana) Obuasi Mine, revealed that the mine is currently faced with a growing number of illegal mining activities within its Obuasi and Iduapriem concessions.

“The issue of illegal mining has in recent times become a major challenge to deal with in our operational areas, especially at the Obuasi mine with illegal miners encroaching on the mining concessions. It is a very dangerous practice and it is affecting our operations.”

The impact of illegal mining activities, he said, comprises sinkholes, collapse of surface infrastructure, destruction of retaining pillars underground, and potential flooding due to arbitrary holes.

Others include damage and corruption of potential or remnant resources and reserves for future mining; destabilisation of mine infrastructure; and the disruption of production by theft of water, compressed air and electrical lines.  

Mr. Enyan promised that AGA will collaborate with the Minerals Commission and Chamber of Mines to curb the menace of illegal mining operations on its concessions.

Dr. Toni Aubynn, Chief Executive Officer of the Ghana Chamber of Mines, called on the government to strengthen its resolve in tackling the nuisance of illegal miners.

“Illegal mining should no longer be considered business as usual; and while the Chamber supports the participation of Ghanaians in the mining value chain, the illegality around a large number of their operations and the negative impact on the environment is totally unacceptable,” he said.

Weak cedi pushes July inflation up

A weak cedi resulting in increased cost of imported foods pushed the annual inflation rate up for the fifth month in a row in July.

The rise to 9.5 percent from 9.4 percent the previous month highlights mounting price pressures in the economy, but was slower than analysts expected.

 The slight increase still keeps inflation within the  targetted band of single-digit inflation this year, but far from the low 8.3 percent recorded in the same period last year or the high of 20.50 percent seen in July 2009.

"The exchange rate depreciation has made some imported foods more expensive and their weight on inflation is huge," said Ebo Duncan, a director at the Ghana Statistical Service.

Harvests in the coming months should ease food inflation, but spending linked to elections due in December and an 18 percent public sector salary wage increase, backdated for the months of Jan-April and due to be paid out in August, means inflationary risks remain stacked to the upside, analysts said.

"Inflation in local food products at 4.9 percent was lower than that of imported food products at 9.1 percent," Duncan said.

Non-food inflation was at 12 percent, with transport recording the highest rate of increase at 20.6 percent.
The overall monthly change was 0.7 percent for July 2012, compared with 1.4 percent for June 2012.

Seven sub-groups in the non-food group recorded inflation rates higher than the group beverages of 12.0%, with the clothing and footwear group being highest contributors.

Central Region recorded the highest inflation rate of 11.6%, while Upper East and Upper West had the lower rate of 5.3%.

Meanwhile, Reuters reports that as one of the world's top cocoa producers and Africa's second-biggest gold producer behind South Africa, Ghana -- which started producing oil in 2010 -- has been attracting huge inflows of foreign investments, fuelling its economic growth.

Yvonne Mhango, sub-Saharan Africa economist at Renaissance Capital, said the increase in inflation was "very modest" given the cedi had depreciated by 29 percent against the dollar in the year to July.

"We expect inflation to be in the early double-digits at (the end of 2012)," Mhango said, adding that any further slip by the cedi is likely to lead to a rate hike in September.

"If the cedi exhibits further weakness in the following weeks, the MPC meeting may be compelled to take action and hike by about 50 basis points," she said.

The central bank is expected to hold its monetary policy committee meeting next month.
The bank raised prime interest rate by 50 basis points to 15 percent in June, the third rate hike this year in its quest to fend off mounting inflation and stabilise the local cedi currency.

The meeting will begin on September 10, review the health of the economy, and take decisions most likely to affect the cost of borrowing from banks.

This will be Dr. Henry Kofi Wampah’s first major task since taking over as acting Governor of the Bank of Ghana, following the appointment of Kwesi Amissah-Arthur as Vice President.

Analysts will be keenly looking out for strategies that Dr. Wampah, who is expected to be in the hot seat till the end of December, will come up with in managing the dwindling fortunes of the cedi.

The cedi has being recording some marginal gains against the dollar on the interbank market in the past few days.

This is the first time the local currency has recorded some gain against the dollar in a while, after stabilising for about two months.

 Currency analysts say the appreciation could be due to the decline in demand for the currency by corporate entities.

Fast -track review agreement

The Ghana Chamber of Mines has asked government to fast-track the review and renegotiated stability agreement to guarantee investor confidence in the country’s mining regime.

“We think that the committee established by government to review and renegotiate all mining agreements must work faster, because investors are very sensitive to instability.

“Investors need to be assured that the fiscal regime will not let them down. It is important that government work on that. What investors are looking for is stability in the regime over a period of time.

“Investors apply a lot of speculation and this requires planning, so they want assurance that the regime will not change every year,” the Chambers’ Chief Executive Officer, Dr. Toni Aubynn, told B&FT in an interview in Accra.

Early this year, government set up a seven-member national renegotiation team led by academic and jurist Prof. Akilagpa Sawyerr to critically review, re-negotiate and redesign the entire mining regime so as to ensure the state derives maximum benefit from the sector.

The first task of the committee is to review and re-negotiate any part of the stability agreement between the Republic of Ghana and any mining company that is not in the best interests of the country.

The team’s second task is to revise the manner of granting stability agreements, and the third to redesign any existing or draft agreement to ensure that it yields better social and economic returns for the country.

The team will be assisted by a local resource team and advised by international mining experts in discharging its duties.

After government gave indication last year of its intention to renegotiate contracts with mining companies, some miners had hoped to count on the stability agreements which contain fixed clauses and conditions to shield them from any sweeping revisions.

Among the changes were a review of the corporate tax-rate for the industry from 25 to 35 percent, the imposition of an extra 10 percent windfall tax, and a reduction in the capital allowance rate from what was sometimes as high as 80 percent to 20 percent for five years.

At least two miners, Anglogold Ashanti and Newmont, have signed such agreements with the government that freeze taxes, royalties and other conditions over 10-15 years, and have said they do not expect to be immediately affected by the new rules.

Anglogold Ashanti Limited, which signed a stability agreement with the state in 2004, has said it will not scale-back planned investments at the Obuasi mine, its biggest operation in Ghana, despite the tax-changes -- which include an increase in the corporate tax from 25 to 35 percent, a windfall-profit tax of 10 percent and changes to capital allowance rates.

Anglogold believes it will remain productive for at least the next 30 years.
When early indication of the government wanting to review the mining regime and contracts was given two years ago, Newmont said the company had reminded government of its stability pact, but was nonetheless “willing to “talk”.

‘Pre-trading of stocks distorts prices’

The Ghana Stock Exchange’s (GSE) pre-trading operations have been challenged, as not conforming to global stock exchange trading standards and having a tendency to distort share prices.

“It is not done anywhere as far as I know; there’s no pre-trading time before the official trading on the bourse at any of the active trading platforms in the global financial industry.

“It is something they should just do away with because we are growing and we need to emulate international best practices,” Kwabena Antwi-Situ, Manager for Audit and Advisory at consulting firm Deloitte Ghana, made this observation in an interview with the B&FT in Accra.

While the official time of opening of the GSE for trading is 10:00 am, the bourse runs a daily pre-open trading session from 9:30 am till the official opening, a practice that it says affords dealers increased contact hours with their clients during the trading day and boosts liquidity.

It is also meant, according to the GSE, to afford non-resident investors in time-zones different from Ghana’s greater opportunity to do business with their local brokers.

But Mr. Antwi-Situ, speaking at a one-day capacity-building workshop organised by the Association of Chartered Certified Accountants (ACCA) Ghana and Deloitte for financial reporters, said the practice is not just alien to the global stock-trading industry but also distorts share prices.

“At the end of the day your closing price should be the same as your opening price (on the next day). But because of the trading that goes on before the official trade, you find some of the companies having their closing prices (on the previous day) not the same as their opening prices (at the start of official trading the next day).

“This practice distorts the price you knew as at yesterday, based on which you would have made a decision,” he said.

Speaking on the reason for the workshop, Mr. Norman Williams, Head of ACCA Ghana, said it formed part of the institution’s strategic development partnership with the media to promote financial sector development.

“ACCA recognises the value that effective finance functions can bring to every organisation. Whether in times of economic growth, recession or gradual recovery, finance professionals need to provide the information required by managers to make strategic decisions and achieve day-to-day operational success.

“Each member of the finance team has an important role to play; whether striving to be an influential business partner, meeting financial reporting requirements or delivering efficient transaction processing.

“The challenge is to create the appropriate finance function structure and provide the necessary support to enable each individual deliver their role most effectively.”

ACCA is the global body for professional accountants, offering business-relevant and first-choice qualifications to people who seek a career in accountancy, finance and management.

It has a 154,000-member base with 432,000 students in 170 countries. ACCA’s office in Ghana was established in 1997.

 It has more than 9,000 students and about 1,500 qualified members and affiliates in the country.

Gold production peaks at 64 percent

Gold production rose 64 percent in the first quarter of 2012 as higher prices led companies to boost operations, Minerals Commission’s Chief Executive Officer Mr. Ben Aryee has disclosed.

Output in the period rose to 1.53 million ounces, with prices averaging US$1,689 per ounce in the first quarter from US$1,389 per ounce for the same period last year.

  “High gold prices are motivating mining firms to increase production. New companies have also come on-stream.

 The higher rates make it profitable for mining companies to mine low-grade ore,” Aryee said.

Meanwhile, the Ghana Chamber of Mines expects a rise in 2012 gold production, after full-year gold production in 2011 declined marginally.

Ghana Chamber of Mines Chief Executive Officer Dr. Toni Aubynn, told B&FT in Accra:

“Gold output last year came down two to three percent compared to the year before, and the decline could have been deeper but for the fact that Australian miner Adamus Resources poured its first gold in January last year.

“Two more mines are expected to come on-stream this year and we also anticipate that Adamus will increase its production. So we are going to see production go up this year,”

  Meanwhile, Mr. Daniel Owiredu, President of the Chamber, predicted a mixed outlook for the country’s mining industry this year, expecting gold to sustain its good performance in the global market while bauxite and manganese exports could fall as a result of a decline in demand.

“The coming year looks promising for the mining industry. Additional production from new mines and the prospects from the Owere Mines are expected to bring in increased production.

“The expected higher volumes of mineral production and the strengthening of gold prices are expected to result in increased mineral revenue, with a corresponding increase in mineral royalties and corporate-tax payment to government,” Owiredu said.

In the first half of 2011 the country produced 1,497,023 ounces, up 3 percent over the same period of 2010 -- with revenues jumping 31 percent to US$2.2billion on the back of higher gold prices.

Output was originally rising in 2011, but in the end shrunk since a number of firms focused on longer-term maintenance and expansion projects rather than maximising existing production.

Stiffer punishment for illegal miners

The Minerals Commission is seeking to amend existing small-scale mining laws to impose stiffer punishment on any individual that engages in illegal mining.

Presently, the law stipulates that anyone who engages in illegal small-scale mining be fined 14,000 penalty units. A unit is valued at GH¢12. “Efforts will be made to seek amendment of the law to enhance the level of punishment.

We think that insufficient sanctions in the laws covering illegal mining is part of the problem. “We are proposing that illegal mining should be made an offence, and that the punishment should not be a fine but offenders must be made to serve a jail-term without bail.

“We want the equipment used by the illegal miners to be confiscated to the state,” Mr. Ben Aryee, Chief Executive Officer of the Minerals Commission, disclosed to the Business and Financial Times after a media briefing in Accra.

So far, Chinese, Indians, Russians, Spaniards, Burkinabes and other West African nationals have been found involved in the illegal mining business.

“Some of our chiefs go to the extent of taking as low as GH¢20.00 before illegally awarding lands to these foreign illegal miners operating in their areas.”

Mr. Aryee expressed regret at the various Municipal and District Assemblies (MDAs), as well as the resource-rich communities, for doing little to assist the Commission and other regulatory bodies to arrest the foreigners engaged in illegal mining.

Risk to national security

Illegal mining has become a security menace to the country, and it must be dealt with decisively. Foreign illegal mining operations have serious implications and also come with national security dimensions.

For instance, these foreigners carry weapons and have security dogs to terrorise locals who dare challenge them.

The proliferation of small-arms in such communities could lead to their use for other purposes, such as armed robbery and other violent acts.

They could also be used in instances such as chieftaincy disputes and reprisal attacks from the local communities, which result in killing or maiming of foreigners.

There is also the issue of extensive pollution of water sources by their operations, especially through dredging. Rivers like the Ankrobra, Bonsa, Pra, Offin and Birim are seriously polluted with toxic chemicals such as cyanide and mercury.

These negative developments have prompted government security apparatus such as the National Security, Bureau of National Investigations (BNI) and the Ghana Police Service to intensify their protection and monitoring mechanism on the mining lease sites belonging to the multinational firms to minimise the impact of their operations and activities on the mineral reserves, which has the potential of increasing the nation’s revenue and improving the economy.

A national task-force -- comprising National Security, Ghana Immigration Service, Minerals Commission, Chiefs, and the Municipal and District Chief Executives of the mining communities -- has been tasked to monitor operations of the foreign illegal small-scale mining operators and try to stem it as quickly as possible.

Traditional authorities, landowners and farmers among others, must desist from illegally apportioning land for illegal mining and rather work with regulators to grant mining licences in appropriate locations; thus ensuring that the potential benefits are realised in an optimum manner, taking account of the physical as well as social environment, in a framework of good governance.

“We do not have a choice in this matter. The fight against illegal mining, especially with foreigners involved, is one we must win or else risk losing our land, society and national psyche. Let’s all pitch in and we will succeed.

“While illegal mining (including foreign participation) has assumed national proportions, a sustainable solution can be achieved within a local context, since the activities are localised and start small,” he emphasised.

Mr. Aryee urged all stakeholders to get on board, since no one can remain passive any longer, adding that this is an appeal for all to come together and call upon regulators like the Mineral Commission, Environmental Protection Agency and Water Resources Commission to account for their stewardship in managing the country’s resources.

Multinational mining companies as a matter of urgency need to improve on their corporate social responsibility programmes in the communities where they operate. Their activities need to be visible and dignified to the appreciation of inhabitants.

The Chamber of Mines needs to be proactive in developing achievable strategies and policies for operators of the giant mining firms to direct their social programmes toward developing local indigenes to guarantee the future of the youth and growing generation in the community.

It is an appeal for the Ministry of Land and Forestry, Local Government and Rural Development and the Attorney Generals Department to collaborate and ensure total eradication of the illegal small-scale mining operators’ activities and institute enforceable punishment, to deter perpetrators of such activities which are affecting growth of the industry.

Statistical data

Mining on a small-scale basis is still a viable and desirable economic activity that can provide livelihoods for large numbers -- especially in remote, deprived areas with sometimes very little else in terms of alternatives.

There is no reliable statistical data on illegal mining; it is believed that these activities have significant impact on mainstream mining operations.

Last year, gold production from the activities of small-scale gold mining -- both legal and illegal sources -- totalled approximately 800,000 ounces, representing 23 percent of the total gold production in the country, available data has shown.

It is seen as a vibrant and significant sub-sector of the mining industry in the country, accounting for about 10 percent of total annual gold output and over 60 percent of total annual diamond output.

These activities have not only bred problems of social, economic, and environmental nature; they also absorb more employment than any formal mining sector, and reach those who live at the lower-end.

Although total employment figures for the sub-sector are far from accurate, it is estimated to employ between 100,000 and 300,000 people -- mostly unskilled rural labour.

Year       Number of Small-Scale Mining Licences Issued

2002                             1

2005                          17

2006                          70

2010                         270

2011                         235

2012                         53

By the formalisation through passage of the Small Scale Gold Mining Law PNDCL 218 -- the provisions of which have been expanded and incorporated into Act 703 of 2006 -- today there are two types of miners operating on small-scale basis: those with licences and operating legally, and those without licences that are operating illegally, on any particular piece of ground sized up to 25 acres.

Small-scale mining is reserved for Ghanaians who are over 18 years and exhibit the capacity to venture into the business to obtain permit from the commission through the Ministry of Lands and Natural Resources after satisfying all the necessary documentation.

After many decades of prohibition of small-scale gold mining in Ghana, government legalised it in 1989 in order to stem the ever-present state of conflict associated with it as well as the smuggling of precious minerals across our borders to neighboring countries, while formalising the immense socio-economic potential.

This legalisation has resulted in a tremendous increase in mineral production from the small-scale mining sector.

Small-scale miners are required by law to be registered in order to work on concessions to which they have legal access, and are subject to regulation by either the Environmental Protection Authority (EPA) or the Ghana Minerals Commission, or both.

‘Withdraw mining licences’

Government should withdraw mining licences of mining companies engaged in cyanide spillage, Abraham Amaliba, a lawyer at the Centre for Public Interest Law (CEPIL), a rights-based NGO has said.

He called for the repeal of Section 17 of the Minerals and Mining Act which permits mining companies to divert, impound, convey and use water from rivers, streams, underground reservoirs or watercourses within the land granted as a concession.

The penalty imposed on mining companies for polluting water-bodies should take into account the quantity of fish killed. Other offences such as degradation of lands should attract a severe fine that would serve as a deterrent.

Government requested nearly US$5million in compensation from Newmont Gold Mining Limited for spilling cyanide at its Ahafo gold mine in October 8, 2009 -- which resulted in water contamination and fish mortality.

Mr. Amaliba was making a presentation in Accra at a two-day workshop organised by Third World Network and aimed at educating stakeholders on the developments in the country’s mining reforms.

Speaking under the topic “Policy Dialogue on Mining Reforms: Comments and Suggestions from Mining Communities-Kenyasi, Obuasi and Tarkwa”, Mr. Amaliba proposed: “Government should not have the sole right to determine which land should be leased out for mining purposes.

  “Land owners and community members should have a say as to whether their lands should be leased out for mining purposes. “Land use plans should be put in place so that “no-go areas” will be clearly demarcated, and settlements would be included in these areas where mining is prohibited.

“In any future law on mining, it is requested that government seeks the needs and concern of mining communities so as to input into the law.” Commenting on compensation, he suggested that in calculating the compensation to be paid for losing the use of water-bodies, and degradation of the land should be factored into the compensation package.

“Downstream effects should be included in compensation principles since mining sometimes deprives the community of the use of their only sources of drinking water.

“There must be free prior-informed consent of the landowners before any mining activity can take place. As owners of the land, they have a right to know the purpose for which their lands have been taken away from them -- and to either consent to it or refuse to consent to it.”

He explained that mining has not benefitted local people: rather, it has negatively affected communities -- citing pollution of water-bodies and the destruction of farmlands.

“Mining companies whose activities affect livelihoods should provide alternative sources of livelihood which are similar to what was destroyed by the company and also provide social amenities.

“Baseline surveys must be conducted by the Environmental Protection Agency to assess the health status of the people -- and the state of their buildings as well -- before concessions are granted.

“This will then be used by the community as evidence to approach the mining companies when the community is affected by the negative impact of the mining companies,” Mr. Amaliba emphasised.

GRA deepens tax compliance

The Ghana Revenue Authority (GRA) Self Assessment Policy Document aimed at guiding and encouraging voluntary tax compliance has been unveiled.

The policy which forms part of the ongoing tax reforms exercise is aimed at simplifying and modernising the tax system and also enhancing taxpayers’ compliance and reducing cost.

It will ensure that all taxpayers will be able to assess their tax liabilities and file a return on the self-assessed tax to go on the self-assessment scheme within the next five years.

Mr. George Blankson, Commissioner-General of GRA, said: “There is need for strong a audit unit backed by modern and efficient techniques to boost confidence in the system, and that all these must be backed by financial resources and expertise to deliver on the goal.

“The self-assessment policy will also help to curb the tendency for “unofficial negotiations” between taxpayers and administrators for self-gain. This policy has been recognised all over the world as the best vehicle for determining and accounting for tax liability.”

Mr. Blankson said both taxpayers and administrations will also be saved from the inconvenience of over-paid taxes and the need for refunds.

“Some of the benefits to be derived from implementation of the policy include voluntary compliance by taxpayers in the modern tax administration, and also savings to the revenue authority from the administrative costs associated with provision assessments,” he said.

Dr. Larbi Siaw, Tax Policy Advisor and Head of Policy Unit at the Ministry of Finance and Economic Planning, explained that the self-assessment -- which requires taxpayers to calculate their tax burden themselves -- will help improve cooperation between taxpayers and the administrators.

Mrs. Perpetual Dafour appealed for support and cooperation of all stakeholders in GRA’s bid to reform and streamline tax administration, and urged them to honor their tax obligations to boost nation’s quest to attain a high level of development.

As part of the reforms in revenue administration, the GRA is linking with the Registrar-General’s Department (RGD) electronically under the e-Gov. project to ensure that GRA has access to the database of the RGD to access the details of registered businesses to provide easy tracking for tax purposes.

In connection with this, new Taxpayer Identification Numbers were issued to registered businesses and individuals.

The Ghana Revenue Authority Act, 2009 (Act 791) received Presidential assent on December 31 2009, and has been passed to establish the Ghana Revenue Authority (GRA).

Its passage will integrate the management of domestic tax and customs divisions and modernise domestic tax and customs operations through the review of processes and procedures.