Business News Fri, 14 Sep 2007

Govt urged to increase royalties to mining communities

Accra, Sept. 14, GNA - Ms Joyce Aryee, Chief Executive Officer of the Ghana Chamber of Mines (GCM), on Friday advocated that 30 per cent of royalties paid to Government by mining companies should be returned to mining districts.

She said the current 10 per cent paid to the mining districts by the Government was woefully inadequate for the stimulation of infrastructural development in those communities to attract other service sectors to improve the well-being of the people. "Mining should be seen as a catalyst for economic and social growth wherever it goes. Development in mining areas would boost the development of Ghana.

"But this level of royalties that goes to these communities cannot aid in infrastructural development that would promote growth", she said. She suggested to the Government to use 10 years to 15 years to develop infrastructure in mining areas to attract other sectors of the economy to ensure sustainable growth.

Ms Aryee made the suggestion when she called on the new Minister of Lands, Forestry and Mines, Mrs Esther Obeng-Dapaah to voice out the concerns of the Chamber.

Of the total royalties paid by the mining companies, Government retains 80 per cent; 10 per cent goes to service the Mineral Development Fund and the remaining 10 per cent paid to mining communities. But out of the 10 per cent paid to mining communities, the Office of the Administrator of Stool Lands charged with disbursing the amount retains one per cent of it to cover administrative charges, and the remaining nine per cent is commuted to 100 per cent and disbursed to beneficiaries.

District Assemblies take 55 per cent; the traditional councils receive 20 per cent and stools receive 25 per cent, and thus the proportion of the total mineral revenue that goes directly to the five mining districts represents only 4.95 per cent of total mineral royalty payments.


Ms Aryee appealed to the Ministry to impress on the Government to speed up efforts to revamp the rail transport system in the country since the Government and the economy stood to make substantial gain from mining companies that desired to use rail transport.

She said most of the country's bulk mining companies had had to complement the more economical rail haulage with transporting ore to the Takoradi Port for export by relatively expensive road transport; that posed several challenges to them.

"There is so much to be derived from mining if the rail network in the country is revamped," she said.

Ms Aryee also proposed that some of the funds from the Millennium Development Fund should be used to promote small-scale mining to mitigate the activities of illegal miners to preserve the environment. She said small-scale mining, if encouraged would generate a lot of jobs and called on the Government to deliberately promote the implementation of the law on small-scale mining. Ms Aryee said the GCM was also concerned with the Value Added Tax (VAT) law that required that exploration companies paid VAT on their inputs when these companies did not have outputs from which VAT inputs could be claimed.

She said since exploration was a very high risk investment, charging VAT on their inputs was tantamount to taxing high-risk capital, and expressed the hope that the issue would be resolved. Mrs Obeng-Dapaah promised that the Ministry would look at their concerns and find ways to address them. She commended the mining companies for the efforts they were making to improve the conditions of the mining communities and stressed the need for other sectors of the economy to also partner the mining companies to develop the communities. 14 Sept. 07

Source: GNA