Interview: Sulemanu Koney

particularly heavy-duty equipment, in Ghana?

SULEMANU KONEY: Most mining companies procure heavy-duty equipment and vehicles from the original equipment manufacturers, who may have a local office or representative in-country. In this regard, mining companies are somewhat insulated against the bottlenecks that are associated with clearing goods from the port, as the in-country office usually clears the equipment on the company’s behalf. However, importing other mining supplies remains an enduring challenge. The Minerals and Mining Act of 2006 provides a framework, known as the mining list, for importing inputs consumed by the mining sector. Specifically, the regime exempts mining companies from duties on the items on the list.

This is envisaged to be a seamless and efficient way of clearing mining-related supplies. What infrastructural improvements can be made to help reduce operational costs?

KONEY: Since August 2014 the electricity supply to mining companies has often been interrupted, either through planned load shedding or unanticipated cuts in power supply. To sustain their operations, most mining companies have been compelled to expand their emergency generation plants, or to procure additional power from independent power producers. Additionally, while the railway sector has significant economic potential, years of underinvestment have dampened its ability to act as a catalyst for development. Producers of bulk minerals, particularly bauxite and manganese, continue to haul their output to the port via the more expensive road network.

To what extent does the small-scale, informal mining sector help support the industry?

KONEY: Regulated small-scale mining has the potential to contribute tremendously to the mining industry’s growth. In 2014 the artisanal, small-scale sector accounted for about 34% of total gold output. This far exceeded the combined output of leading Ghanaian gold companies Gold Fields and Newmont. Aside from accruing revenue for individual operators and their dependants, small-scale mining also provides an additional source of foreign exchange to finance the import demands of the country. Furthermore, the Minerals and Mining Act of 2006 restricts the smallscale sector to Ghanaians only, intending to facilitate the participation of local citizens in mining and the transition of small-sized mines into medium or largescale ones. While there are some well-run small-scale mines, the majority operate outside the law.

How has the rise in royalty and taxation rates impacted capital expenditure by mining firms?

KONEY: In the last few years, the fiscal regime in the mining industry has altered significantly. For instance, the corporate tax rate was adjusted upwards from 25% to 35%, and the royalty rate also changed, from a variable 3-6% to a fixed 5% rate. This coincided with an upturn in gold prices, resulting in greater benefits for the government. These fiscal rates hikes effectively shifted investable resources from companies to the state – a major flaw in the mining sector’s price-insensitive fiscal regime. As a result, most companies had to scale down capital investments.

What regulatory improvements could make the mining sector more attractive to investors?

KONEY: Primarily, regulatory institutions need to coordinate their activities to reduce turnaround time in issuing permits, as permit delivery delays have financial implications for both the state and mining companies. Recently, to consolidate its regulatory role, the Minerals Commission moved its inspectorate division to its head office. In the near future, the Chamber of Mines looks forward to having a onestop regulatory system housed on the same premises.