Business News of 2014-07-07

Cocoa farmers unhappy with mining companies

Cocoa farmers in mining host communities have expressed their displeasure about what they call “blatant cheating” by mining companies in arriving at insignificant compensations for the destruction of cocoa trees in mining concessions.

Mining companies pay one-off compensation of between GH¢9-17 per cocoa tree. But the cocoa famers have vehemently argued that the money is totally insignificant in the face of the long economic life-expectancy of cocoa trees.

According to the cocoa farmers, a cocoa tree can yield between a quarter to half a 64kg bag of cocoa beans per year, continuously, up to over 50 years. A 64kg cocoa bag sells at over GH¢200 and a cocoa tree per its life-expectancy should be valued at not less than GH¢2,000 -- but mining companies pay a maximum of GH¢17 per tree.

The situation, the poor farmers believe, is a clear case of short-changing -- thereby subsidising the mining companies. During a sensitisation workshop held in Sunyani, the farmers blamed crop valuers whom they allege are always in bed with mining companies for the “cheating” that has plunged farmers in mining communities into extreme poverty.

The one-day workshop was organised by WACAM for mining stakeholders to deliberate on the limitations of minerals and mining law of Ghana, and also build a strong relationships between regulatory agencies and mining communities.

Addressing the participants, Mrs. Hannah Owusu-Koranteng, Associate Executive Director of WACAM, said Section 29 of Minerals and Mining Act, 2006, Act 703 has a provision that allows companies to retain a minimum of 25% in their offshore accounts for capitalisation after sale of minerals. The law does not provide a ceiling as to how much mining companies can retain in their offshore accounts. This has given some companies the leeway to keep as much as 80-100% in their accounts for recapitalisation.

“Meanwhile, there are provisions for recapitalisation in that same section 29 where any costs incurred by the companies -- from exploration to production -- are paid to them. Should companies be retaining huge chunks of earnings in offshore accounts, then they must not enjoy extensive exemption of duties in their importation of equipment and other materials.”

Mrs. Owusu-Koranteng said: “The extensive exemptions granted the mining companies were inserted there to attract foreign direct investment, but the generous fiscal incentives are rather only serving to attract foreign mining companies to deplete our mineral resources at a faster rate -- which in turn results in increased mining legacies including pollution of water-bodies, displacement of communities among others”.

She noted that “granting mining companies the right to transfer almost all earnings on minerals to offshore accounts is inappropriate. It denies the country of much needed capital for economic growth and development. In a bid to ensure retention of capital in the country, it is proposed that the percentage of earnings that can be kept offshore should not be above 50%”.