Friday, June 15, 2012

Soaring mineral revenue

Bullish gold prices within the past year have led to a 28 percent increase in mineral revenue of mining companies for the 2011 financial year.

The increase in gold prices from US$1,219 per ounce in 2010 to US$1,583 per ounce in 2011 positively impacted of the profit margin of mining companies operating in the country.

Ghana Chamber of Mines data shows that mineral revenue increased from US$3.72billion in 2010 to US$4.78 billion in 2011.

Expectations of the mining sector, currently dominated by foreigners, to create much-needed jobs have led to agitation for more local content in the sector.

Industry players have called for strengthening the capacity of local mining firms and assistance for them in mobilising resources to explore and execute contracts to ensure active local participation in the mining sector.

They say a deliberate and sustained local-content and capability-development policy, backed by legislation and enforcement mechanisms -- and not just resorting to appeals or pleas to mining exploration and production companies, is the truest way of ensuring active local participation.

Government is currently looking to establish a Minerals Development Fund (MDF) and local- content framework that will align mining operations with the needs of the country to drive economic development.

The two bills currently before Parliament are designed to ensure an appreciable level of local participation and guarantee the state of a certain percentage in windfall profits of mining companies from a significant increase in gold prices.

“In exercise of its prerogative, government increased the taxes and introduced a windfall profit tax. Although government had not clearly defined the details of the proposed windfall profit tax, the sudden announcement not only adversely affected values of mining stocks held on international bourses but also informed some mining companies to hold back some significant  investment decisions in the sector,” President of the Ghana Chamber of Mines, Dan Owiredu, said in a statement issued in Accra last week.

 The MDF will establish a Mining Community Development Scheme into which proceeds from royalty payments and development funds of mining companies will be paid.  The funds mobilised will be used by a Local Development Committee exclusively for developing infrastructure projects in mining communities.

“The mining industry’s favourable impact on the economy and contribution to the overall growth of the economy and Ghana Revenue Authority’s collections positively stimulated economic activity as the proportion of mineral revenue returned to the country increased appreciably from 68% in 2010 to 75% in 2011,” Mr. Owiredu added.

source: B&FT

No comments:

Post a Comment