Opinions Wed, 16 Oct 2013

RE: Ghana Now Unattractive To Investors

Rejoinder To Dr Tony Aubynn’s: Ghana Now Unattractive To Investors

Lawrence M Kofi Akakpo, mining & research engineer and mathematician (retired senior lecturer)

Dr Aubynn’s assertion that Ghana is no longer attractive to investors in a presentation that appeared in Business News of Thursday, 12 September 2013 and further in Ghanaweb URL: http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=285608&comment=9676633#com cannot be allowed to stand unanswered. It contained too many factual and analytical inaccuracies, if not deliberate attempt to pull wool over the eyes of Ghanaians and the world at large. Even the basic data were wrong which was deliberate; else his analysts are numerically illiterate. Dr Aubynn is the Chief Executive Officer (CEO) of Ghana Chamber of Mines (GCM). His words should carry honesty and integrity else he demeans the office he heads, and his personal self. I will go about my analysis of what he said, point by point using mainly his own figures in the presentation, data from GCM annual published reports and locally published newspaper reports to disprove almost everything that he said.

“Ghana now unattractive to investors”! Which investors in the gold mining industry who want to leave or are cutting down on their production capacity? Dr Aubynn should be ashamed of himself making such cheap dishonest statement, unworthy of CEO, especially making the statement in Brong Ahafo whose gold is being the most looted in the country if not in the world by: Newmont Gold, International Finance Corporation (IFC) of the World Bank Group and their cohort of international banks. I challenge him to name a single gold or any other mining company in the country which wants to pack up and go or is cutting down on its production because of tax. Pack up and go to where? The usual cheap scare tactics by spin doctors! We Ghanaians on the whole should have lovely feast if there is a single gold mining company operating in the country which wants to leave. He knows he was making untruthful statement if not telling deliberate lie. I have dossier of his deceptive statements and false statistics on Ghana’s mining industry going back to 2003.

Most of the data in his presentation appeared in the Daily Graphic feature article, published under the title: Putting the Mining Debate in Perspective, on April 12, 2013 after a workshop was organised by GCM for the journalists. The article was almost 100% positive and approval of the mining companies’ operations in the country – citing how they are the highest tax payers in the country, etc. Immediately I saw the article, I easily saw Dr Aubynn’s handiwork all around it. I wrote a rejoinder to the article, pointing out the propaganda and the inaccuracies and/or inconsistencies in the figures presented and that the journalists had been taken for a ride. The author was not amused! He came back to me on the same day he received my rejoinder via email. He was abusive; among other things that he was multi-award winning journalist and I should keep away from talking about propaganda. He sent a 7-point rebuttal of my rejoinder and that it could not be published as it exceeded the number of words allowed by the corporation in feature article. I should reduce the words and represent it, like professor and his student. I wrote back telling him that he was behaving like mouthpiece of GCM, quoting somebody’s data as if it was his own independent research work and they were all wrong. He asked for debate but was not expecting any, let alone a comprehensive rebuttal of the lies he was told and started “to behave like someone caught with his trousers down”. I further reminded him that: there is shortage of gold deposits in the world. The miners are in Ghana and West Africa because the region is among the few in the world with gold deposits to extract at low costs (low wages, low environmental protection and reasonably cheap energy cost).

The two main stream newspapers in the country, Daily Graphic and The Ghanaian Times seem not ready to publish anything critical about the mining companies. None of my 3 critical rejoinders, one in The Ghanaian Times and two in Daily Graphic was published. I do not want to speculate why.

Let me put it on record here once for all that, cocoa farmers in the country are the highest tax payers and have been doing so for over a century now. They do not have the propaganda machinery to put their case across and tell lies on their behalf, so nobody seems to know of their great contributions. Besides, they hardly consume any energy resource from the formal sector. They are by far the highest source of employment in the country and also produce food to feed the nation. There is African saying: if lions have historians, hunters will cease to be heroes. So Dr Aubynn, please stop your highest tax payer propaganda, right from now! Cocoa beans are taxed at source (through the locally fixed price mechanism) so the farmers do not have the luxury of the miners who manipulate costs and revenues in the so-called creative accounting for tax payment purposes.

Now, let us come to details of Dr Aubynn’s data provided on taxation. He said corporate tax component has also been increased from 25 percent to 35 percent in 2012, representing a 40 percent increase.

How many mining companies are affected by the 35% tax? Only one, Gold Fields Ghana Limited! Newmont Gold, AngloGold Ashanti, etc. are not affected because of the ill-conceived and misapplied Stability Agreement in Ghana’s Minerals and Mining Act 2006 (Act 703). In the 31 December 2012 Daily Graphic, Mr Pierre Coussey, the Country Manager of Gold Fields Ltd in Ghana said in the past GFL paid over USD 300 million in direct and indirect taxes to the governments. USD300 million is a lot of money and that is what GFL and its spin doctors want Ghanaians and the world to hear and to know. If however the amount is put in the right context, it is pitifully nothing. From 1993 when Gold Fields returned to Ghana to December 2011 on investment of about USD1billion, GFL’s declared and estimated revenues from its two gold mines in Tarkwa area totalled USD 7.004 billion (or USD7,004,000,000) making the payment of USD 300 million to Ghana being only 4.29% of the total revenue it earned from the extraction of our gold. In 2012 Gold Field Ghana Ltd earned revenue of USD1,456,500,000 and paid total tax including: workers income tax, royalty, tax on profit, dividends on Ghana’s 10% stake in the company, etc. of USD250,000,000. That made only 17.2% of the revenue from extracting our gold. That is what came from the highest tax payer. According to Dr Aubynn, the mining companies paid total taxes of GH¢ 1.46 billion in 2012. That was USD 788,336,900. From estimated revenue of USD 5,194,040,862 from gold alone and as about 5% of the annual minerals revenues, come from diamond, bauxite and manganese, the total revenue from the minerals was about USD 5,453,743,000. The total tax paid (including: royalty, tax on profit, workers’ PAYE, dividend on shares and even workers national insurance, etc.) was only 14.45%. Daily Graphic of February 27, 2013 Newmont took a full page colour advertisement to tell Ghanaians all it wants us to hear and see from the benevolent gold producer. All the taxes including everything it has paid came to a mere 12.3% of the value of our non-renewable gold resource taken away in 2012 and left Ghana with about 400 million tonnes of dangerous wastes permanently.

May I also remind him that when the mining companies were paying only “3%” royalty and no corporation tax, they never paid the meagre 3%. Between 2001 and 2010, the highest paid royalty was 2.91%, that was in 2004 and lowest paid was 2.21% in 2009, with average of 2.57% over 10 years.

Dr Aubynn declared in his presentation that gold produced in 2012 was 96.8 tonnes. That converted into 3,112,217 troy ounces and was all time record production for Ghana. Average gold price for the year was US Dollars (USD) 1,668.92 per troy ounce. That made the estimated revenue of USD 5,194,040,862 or USD5.194 billion. The mining companies with marketing strategists should earn far more than the average price. Dr Aubynn for propaganda purpose used the highest temporary price of gold in 2012 for the price of gold of USD 1,791.75 (achieved on 5th October) for his analysis. If I use that price, the revenue from Ghana’s gold in 2012 would have been USD 5,576,314,451 (or USD 5.576 billion) but I am for the truthful facts and do my analysis based on professional norms not for propaganda, so I use the revenue derived from average gold price.

Dr Aubynn further stated: “Mining companies returned about USD 3.2 billion, representing 73 percent of their mineral revenue through the BoG and the commercial banks in 2012 against the statutory requirement of a minimum of 25 percent”. There are two aspects to the statement in quotes.

1. If USD 3.2 billion represented 73% of the revenue for the mining companies, it means the total revenue for all minerals (gold, diamonds, bauxite and manganese) in 2012, was USD 4.4 billion. I have just shown above that the revenue from gold alone was USD 5.2 billion. Besides, from GCM’s own 2011 Annual Report, revenue from gold alone was USD 4.63 billion. Bearing in mind that production in 2012, was 6.4% higher than that of 2011 and gold price in 2012 was 6.1% higher than that of 2011. Yet, Dr Aubynn’s total minerals’ revenue in 2012 is 4.3% less than revenue of gold in 2012. Who can believe any word from such analytically and morally bankrupt person? Doc, it is high time you learn basic arithmetic (also now referred to as numeracy). What do you take Ghanaians to be, idiots? Please stop the cheap propaganda and lies devoid of any substance! I am a mining engineer and want Ghana’s gold industry to flourish in the interest of the minerals owners (Ghanaians) and the investors but all you want are the interest of the investors and your own pocket, subverting Ghana’s interest. That is unworthy of a Ghanaian! 2. Dr Aubynn and the cohorts returned 73% of the total revenue through Bank of Ghana (BoG) and the commercial banks. What a cheap meaningless propaganda! He knows there is no way anybody can find out from BoG or from which commercial banks what the mining companies returned after selling our gold? What question do we ask? I challenge him to provide the details. Because the mining companies have been accused of taking home as much as 80% of their revenues, he dreamt a figure and produced it. I thought as a spin doctor guru, he would have had better dream than the childish one he had produced.

Dr Aubynn and cohorts who are unscrupulously looting Ghana should shut up and stop treating Ghanaians like dimwits. I take exception to some of the lies he propagates as facts. He has been on this for over a decade now and enough should be enough!

Columnist: Akakpo, Lawrence M Kofi