Mining companies should not threaten government – Amin Adam

Mining companies in Ghana have been advised not to threaten government by saying they will cut their investment. Instead, they have been asked to negotiate for better terms.

Speaking exclusively to ghanabusinessnews.com at the Africa launch of the 2013 Resource Governance Index this week in Accra,?Mohammed Amin Adam of the Africa Centre for Energy Policy said, “mining companies should not threaten government in the sense that government is pursuing fiscal reforms to ensure that Ghana captures more of the rents from the exploitation of the minerals.

"Companies are threatening they will reduce their investment. But where will they go? Because wherever they go, same fiscal reforms are being pursued. I expect the report to ginger Africans to hold governments accountable to how mineral resources are used. It is our legitimate right to demand more from mineral resources.”

According to him, South Africa is proposing 50% capital gains tax and 20% windfall tax. Ghana is introducing 10% windfall tax and they are threatening to withdraw their investment, according to Adam.

He said, “there are other countries that are pursuing bigger reforms and mining companies are even promising to invest more in those countries. Rio Tinto, a mining group is investing in Guinea. In spite of the bigger reforms in Guinea, they are there to stay. So to threaten our government that, they will reduce their investment because of the fiscal reforms is not good for the industry.”

Tanzania has doubled royalty on metals from 3% to 6%. Zambia for instance increased corporate tax from 20% to 30% and Ghana has increased it from 25% to 30% so it is not only Ghana which is doing it. Other countries around Ghana which are resource rich nations are equally also doing that, he revealed.

Adam believes that, companies must sit down and negotiate with government for better terms that will serve the interest of the industry but also of the people who are suffering from the exploitation of this minerals.

Ghana has signed on to the Open Government Partnership and the Extractive Industries Transparency Initiative (EITI) which now includes both petroleum and mining revenues but Mrs. Philomina Johnson of the Integrated Social Development Center (ISODEC) who was present at the launch says EITI hasn’t been effective due to the absence of the Right to Information Law.

The Resource Governance Index measures the quality of governance in the oil, gas and mining sectors of 58 countries worldwide. Each country on the Index was judged on four criteria – legal framework, transparency levels, checks and balances and its broader governance context.

Ghana ranks 15th out of 58 countries and earned the highest score in sub-Saharan Africa, reflecting major reforms to improve competition and transparency in the mining sector.

By Pascal Kelvin Kudiabor