US$770m mining sector investment inflows

Total investment inflow into the mining sector in 2010 was US$770million, up from the US$762million that was recorded in 2009, the latest Ghana Chamber of Mines figures have revealed.

According to the Chamber, the investment came from producing, exploration and support service companies.

Cumulatively, the investment inflow into the sector from 2000 to 2010 stood at approximately US$6.2billion.

“The year looks promising for the mining industry. Additional production from new mines -Adamus Resources and Owere Mines - as well as the prospects that Owere Mines will increase production beyond the marginal output increases arising out of existing mine expansion projects,” said Daniel Owiredu, President of the Chamber, during its General Annual Meeting (AGM).

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

He explained that mining firms have to spend huge sums of money to secure their concessions due to the illegal mining menace in the country.

Regarding the review of mining contracts, Owiredu said: “Since mining agreements provide certainty to the investor, the Chamber is looking forward to its members concluding the discussions with government expeditiously - having due regard to the fact that commodity prices such as those relating to gold are cyclical.”

The total mineral revenue rose significantly from US$2.93billion in 2009 to US$3.73billion in 2010, representing an increase of 27 percent - mainly on the account of healthy price of gold, although the other minerals also recorded increases in prices during the period.

The mining sub-sector grew remarkably, by 11.2 percent compared to the 6.8 percent it recorded in 2009. By this growth performance, the industry came second behind the electricity sub-sector which grew by 16.7 percent in 2010.

In 2010, mining companies returned about 68 percent of the US$3.7billion mineral revenue to the country through the Bank of Ghana (BoG) and the private commercial banks.

An average of 20 percent was repatriated to the country through BoG and the remaining 48 percent through private banks. This ensured that the country receives considerable foreign exchange from the mining sector to support the nation’s foreign currency transactions.

Last year, the industry spent US$ 865million, representing about 27 percent of its total funds to procure inputs locally - including diesel and electrical power.

In addition, the mining sub-sector contributed about GH¢520 million to the Ghana Revenue Authority (GRA), representing 21 percent of total GRA collections in 2010.

The sector also paid GH¢242 million in corporate tax to the GRA, representing 24 percent of the total company tax collected last year.

During the year under review, Gold Fields’ Tarkwa mine maintained its position as the leading producer of gold in Ghana after recording an increase in output by about 11 percent, from 664,515 ounces in 2009 to 735,034 ounces in 2010.

Cumulatively, the Gold Fields Group produced a total of 962,786 ounces in 2010 compared with the 867,020 ounces produced in 2009. This represents an increase of 11 percent over the same period.

The total output of the AngloGold Ashanti Group decreased by 12 percent from 571,295 ounces in 2009 to 502,103 ounces in 2010. Output at Golden Star Wassa reduced significantly, by 18 percent from the 223,843 ounces recorded in 2009 to 183,930 ounces in 2010.

Production at the Kinross Chirano Mine increased significantly, by 32 percent to 240,293 ounces in 2010 compared to the 182,463 ounces it recorded in the previous year.

The output of Newmont’s Ahafo mine was 546,000 ounces in 2010. This represents an increase of 2 percent on the 533,000 ounces it produced in 2009.

Mike Allan Hammah, Minister of Lands and Natural Resources, indicated that government is willing to dialogue with the mining industry to find suitable ways of addressing challenges in the mining sector.

He said: “As joint partners in the development of the country, we also need to reflect and exchange views on the evolving developments in the mining industry in order to enhance the partnership as we move into more challenging times.

“I call for the type of dialogue which will enable us to push the mining agenda in a more focused, coordinated and sustainable manner.”