Mineral Development Fund bill passed

Parliament has passed into law the Mineral Development Fund (MDF) bill 2014, to provide the legal basis for disbursement and management of abandoned royalties received by government.

The bill will allow for establishment of a mining communities development scheme where proceeds from royalty payments and development funds of mining companies, as well as other relevant sources, will be paid into.

Currently, royalties paid by the mining companies hover around 9%.  About 4.95% is meant for the Metropolitan, Municipal and District Assemblies (MMDAs); 2.25% for stool lands, while 1.80% is for the Traditional Council. 

The purpose of the bill is to establish a MDF to address the development challenges affecting communities by setting aside a higher proportion of royalties for development projects.

It introduces the mining community development scheme to directly sponsor socio-economic development in communities where mining operations take place, or that are affected by mining activities.

The fund will provide financial resources for the direct benefit of mining communities, holders of interest in land, as well as traditional and local government authorities within mining areas.

Sources of monies for the fund as stipulated in the bill include 20% of mineral royalties received by the Ghana Revenue Authority (GRA) on behalf of the republic from mining leases in respect of the mining operations of the holders, monies approved by Parliament, grants, donations, gifts and monies from investments made by the fund’s Board.

The bill also prescribed guidelines for rolling-out corporate social responsibility projects, set health and safety standards, tackle environmental issues and resolve issues relating to blasting activities of mining companies, among others.

 The government of Ghana in 1993, by an Executive Approval, established an MDF meant to provide funds for communities which host mining operations to undertake development projects that mitigate the effects of mining on the environment, and support the operating budget of mining sector institutions and some specific mineral-related projects.

 But after several years of existence, the fund has not been used for the purpose it was established to achieve, hence the legislation to back it in order to avert misappropriation.