Small-scale mining must create employment for locals -- PwC

Government needs to open the small-scale mining sector up properly, so that many more jobs can be created for Ghanaians, Mr. George Kwatia, PricewaterhouseCoopers (PwC) Ghana, Tax Partner and Mining Leader for West Africa, told B&FT.

“When the Chinese issue came up, everybody started thinking negatively. But l think that if we can get a certain sector of our economy which hitherto was not generating employment to the levels that we see it today, then there is a problem.

“Yes, we may have laws. The laws are saying that this sector is for Ghanaians, but these are Chinese coming in to work. If all these foreigners can come in and get employment in this sector, then it is an eye-opener for us to know that small-scale mining sector can actually generate huge employment.

“Therefore, we need to put regulations and proper monitoring in place to make sure that our own people get the employment and not the foreigners,” Mr. Kwatia disclosed.

Mr. Kwatia was speaking at the launch of PwC 2013 Mine Report in Accra, and said the current challenge the mining industry is facing with regard to Chinese nationals engaging in illegal mining calls for adequate regulation, including the enforcement of existing rules -- not only of the industry but also of the economy. 

"The presence of the Chinese in Ghana should demonstrate to us that there are significant opportunities within the country," he said. 

“I hope that Government will not close the small-scale mining sector down, but open it up and put it to proper use for people who need employment.  The laws back Ghanaians to work in that area, why are we not empowering Ghanaians to be able to work? That is what Govt should look at now,” he said.

Mr. Kwatia observed that the issues affecting the industry in Ghana are not materially different from those facing the industry globally.

“The typical inputs of the sector unique to Ghana are specific costs -- such as high electricity and fuel cost, as well as the adverse impact of load-shedding and power-cuts on mining operations.

“Besides, there is high-gearing of mining companies in order to preserve investment capital and capital repayments in the face of Government policy on carried interest,” he said.

Mr Kwatia said there is uncertainty in the investment climate of the country, as Government is beginning to question the existing concessionary fiscal regime offered to mining companies, including seeking to renegotiate stability agreements which had been in place for years.

He added: “There is a high tax cost as Government seeks to introduce additional taxes such as National Stabilisation Levy and Windfall Profit Tax in the face of declining gold prices.”

Mr. Kwatia said that the way forward for mining companies is to focus on operational efficiency in order to reduce cost, adding that expenditure control will become one of the key indicators that boards and investors will be watching.

Mr. Felix Addo, Country Senior Partner, was happy about the establishment of a Mining Centre of Excellence in Ghana.

He said PwC. in servicing clients in the Africa Region, is seeking to establish three hubs within Africa to house and drive mining excellence.

Mr. Addo said Ghana, South Africa and Tanzania have been considered as most appropriate locations for these hubs.

He said that Ghana was chosen as the location to drive mining excellence within the West Africa Region.

Mr. Addo said having had several years of mining activities, Ghana is well-positioned to bring value-added solutions to the mining industry operating in the sub-region.