Ghana is pushing ahead with a new sliding-scale gold royalty scheme to increase the country’s portion of mining profits as global bullion prices rise, despite resistance from certain foreign governments and large mining corporations.
The new policy, which goes into effect on Tuesday, replaces the country’s current flat 5% royalty rate for gold mining with a price-linked scheme that will boost the state’s earnings as gold prices climb.
According to information reviewed by Reuters, under the system, gold mining companies will pay royalties of up to 12% when the price of gold hits $4,500 per ounce.
The shift occurs at a time when worldwide markets are seeing gold prices above $5,000 per ounce.
The policy is a part of a larger attempt by Ghana and a number of other African nations to increase their revenue from natural resources in the face of rising commodity prices worldwide.
Leaders in the mining industry and a number of diplomatic embassies have criticised the move, fearing it will deter investment in the industry.
Reuters revealed last week that the US, China, and a number of Western governments had launched an uncommon cooperative campaign to get Ghana to stop the program.
Isaac Tandoh, the chief executive officer of the Minerals Commission, told Reuters that Ghana would move forward with the change in spite of the opposition.
Over the weekend, he stated, “They met us, they are not against the review in principle.”
He clarified that although foreign missions had voiced reservations over the highest 12% royalty rate, they had not objected to the larger change in policy.
He claims that other diplomats suggested Ghanaian authorities reject the idea that the maximum royalty rate should only be applied when gold prices hit $5,000 per ounce.
A sliding-scale royalty regime for lithium production will be implemented under the new system in addition to gold, with rates varying from five to twelve percent based on market pricing.
While other minerals would still receive a flat royalty rate of five percent, lithium royalties will be based on values between $1,500 and $3,200 per metric tonne.
Leaders in the industry have cautioned that investment choices may be impacted by the increased royalty regime.
Future mining operations in the nation may be jeopardised by the legislation, according to chief executives of some of the biggest gold mining corporations in the world.
Concerns regarding the possible effects on the sector have also been voiced by the Ghana Chamber of Mines.
Kenneth Ashigbey, the company’s CEO, told Reuters that the strategy will “dry up new projects and output.”
Mr. Tandoh, however, brushed off concerns that Ghana would become less competitive in the international mining market.
According to government modelling, the sliding-scale system would balance increasing state income with preserving fair profit margins for investors, he said.
Additionally, Mr. Tandoh contended that minor adjustments in operating expenses were not as important to investors as regulatory certainty.
Source: newsthemegh.com