Ghana's Gold Mining Tax Hike Sparks Investment Fears

Ghana, Africa's top gold producer, is planning a sweeping overhaul of its mining tax and royalty framework, a move that industry leaders warn could deter investment and curb production. The proposed changes include scrapping long-term investment stability agreements with major miners and significantly increasing royalty rates.

The country's main mining industry body, the Chamber of Mines, expressed serious concerns on Monday, arguing that the reforms risk making Ghana less competitive on the global stage.

A New Fiscal Regime for Mining

Under the government's plan, long-standing stability agreements with key players like Newmont, AngloGold Ashanti, and Gold Fields will not be renewed. The country's mining regulator stated these reforms are designed to increase state revenue and penalize companies that abuse their license terms.

A draft bill, expected to reach parliament by March, outlines a dramatic shift in royalties:

• Proposed Rate: Royalties would start at 9%.

• Sliding Scale: The rate could climb to 12% if the price of gold reaches $4,500 per ounce.

• Current Rate: This is a substantial increase from the current range of 3% to 5%.

Industry Warns of Stalled Projects and Job Losses

The Chamber of Mines, which represents major mining firms, acknowledged the logic behind a sliding-scale royalty system that allows the government to benefit from higher gold prices. However, it cautioned that the current proposal is too aggressive.

"We understand the rationale behind a sliding scale, but the structure must strike a sweet spot where government secures sustainable revenues while the industry continues to expand and reinvest," said Kenneth Ashigbey, the chamber's chief executive. "The current proposal does not strike that balance."

The organization warned that the new tax structure would push Ghana's effective tax rate higher, potentially leading to stalled projects and job cuts. The chamber did not offer a specific counterproposal.

The Existing Tax Burden

Ghana's large-scale miners already face a complex tax structure. The Chamber of Mines highlighted that companies currently pay several levies on gross revenue, not just profit, including:

• A 3% growth and sustainability levy.

• A 3% to 5% flat royalty rate.

• A 35% corporate income tax.

• An 8% dividend tax.

• A 10% free carried interest for the state.

Calls for Negotiation Over Cancellation

Instead of cancelling stability and development agreements outright, the Chamber of Mines argues they should be reviewed and improved. The organization emphasized that a competitive and predictable fiscal regime is crucial for attracting and sustaining long-term investment.

The chamber noted that it welcomes the ongoing consultations with Ghana's lands and natural resources minister. However, both the Minerals Commission and the Lands and Natural Resources Ministry have not yet responded to requests for comment on the industry's latest statement.