Interview: Toni Aubynn
How competitive is Ghana for mining investment?
TONI AUBYNN: Ghana remains a highly competitive base with regards to foreign mining investment, but it has been under pressure recently. Some neighbouring countries have been following Ghana’s path to attract mining investment over recent years and are benefitting from recent changes in the country’s tax framework. Ghana benefits from its geological history, a solid human capital base as well as political stability, which all remain selling points. However, one can see that from an exploration standpoint, resources are moving out to the so-called “greenfield areas” in Burkina Faso, Côte d’Ivoire and Liberia. In this regard, Ghana needs to re-examine its competitiveness levels. At times, only the announcement of eventual policies can scare away investment, which has been the case recently. Exploration has been particularly affected. Ghana is largely a gold mining country by value, which exposes us to vicissitudes of international price. This dependency is affecting the industry, due to the recent fall in gold price, especially within the first half of the year. We need to not over-flog the issue of the 10% windfall profit tax, as the state has yet to implement it and grounds for doing so have diminished. We expect the state to continue to be responsive to addressing the mining industry’s needs.
What regulatory changes are needed to improve supervision in the sector?
AUBYNN: President John Dramani Mahama has taken a very resolute stand on illegal mining activities, which will result in two benefits: stamping out illegality within the sector while transforming it into a legal business and secondly, preserving certain aspects of mining for Ghanaians. The next step is to think about how to ensure a smooth transition from an illegal informal system to legal, well-structured mining operations; these are critical areas that all of us, including the large-scale operators, should work on together with the government. If small-scale mining becomes more environmentally friendly and organised, it will be a significant contributor to Ghana’s economy. If properly regulated, it should solely differ from larger scale operations in terms of actual scale. Small-scale miners should be required to follow all the same legal rules, such as paying taxes and maintaining environmental standards.
Some of the smaller scale miners illegally enter territories of larger mining companies, which not only results in increased security challenges, but also dilutes the value of the resources those companies have legally acquired. It is important that the image of the industry is kept clean. Therefore, illegal mining activities need stronger supervision to ensure they do the right thing.
If done properly, small-scale mining has huge potential for employment creation, since the entry and exit requirements are not as rigorous. Current estimations point to between 1m-1.5m small-scale miners in the country, which is a significant number, especially when one considers that, on average, one employed Ghanaian effectively feeds five other people.
How can more junior companies be encouraged to undertake exploration work?
AUBYNN: The government should encourage exploration activity of less exploited minerals. The excessive focus on gold makes us vulnerable. We should look at bauxite, manganese and industrial minerals. The government is keen on developing the oil sector, but mining has fed the nation for years and will continue to do so for years to come. The country’s oil and gas should be seen as a complement, not a substitute to mining.
What are the biggest challenges mining companies face when operating in Ghana?
AUBYNN: The country needs to address the infrastructure deficit, namely the railway, power and energy systems. Fortunately, the government has announced that around $500m of a China Development Bank loan will go to railway development. Once the issues of transportation and power are solved, we will likely see a game changer, notably for bulk mineral production.
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