How US, China are fighting to stop Ghana from implementing new gold royalty regime - Report

A number of Western governments, including that of the United States and China, are reportedly putting pressure on the government of Ghana not to implement a new royalty regime for the exploration of gold in the country.

According to a report by reuters.com, the government of Ghana wants to replace its fixed 5% royalty on gold exploration with a sliding scale between 5% and 12% linked to bullion prices as part of efforts to increase the revenue the country generates from its gold resources.

However, this move is facing stiff opposition from the West because of fears that it could harm some of the world's biggest miners.

The report indicated that key players in the sector have said that the new regime, which could take effect in less than a week, would make Ghana one of the continent's most expensive jurisdictions for gold exploration and could reduce the profits of the world's biggest miners.

It added that even though Ghana, which is Africa’s largest gold producer, has offered to cut an existing levy due to the introduction of the new royalty regime, the Western companies, which have submitted low counter-rates, are still opposed to the regime, saying it is “too aggressive”.

The report stated that aside from the US and the Chinese governments, diplomatic missions from the UK, Canada, Australia and South Africa have also given the government of Ghana pressure not to implement the new regime, which some industry executives have described as an “unusually high-level response to a fiscal proposal”.

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"This is the first time I've seen the diplomatic community get involved at this scale," a senior industry source is quoted to have said by reuters.com.

It also indicated that these missions have met Ghana’s Minister of Lands and Natural Resources, Emmanuel Armah-Kofi Buah, and presented a joint document outlining concerns to him, adding that the group is also seeking to meet Ghana’s Minister of Finance Dr Cassiel Ato Forson.

"The heads of missions expressed concern that the operating environment of the mines will be challenging," one executive was quoted to have said.

It was also stated in the report that Chief Executive Officers (CEOs) of global mining firms like Newmont, Gold Fields, AngloGold Ashanti and Perseus have all expressed their displeasure over the new regime to the government of Ghana.

Their Chinese counterparts, including CEOs of Zijin, Chifeng and Shangong Gold, have also registered their protests formally with the Association of China–Ghana Mining, writing to the Chinese ambassador to Ghana that the new regime would threaten the viability of these companies.

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