Ghanaian Forum calls for major mining reforms

Published by MAC on 2012-10-16
Source: Statement, Reuters, Xinhua

Villagers demand compensation from US, Canadian companies

Statement by the National Coalition on Mining (NCOM) at the Instance of the 6th Annual National Mining Forum Held at New Abirem in the Birim North District of the Eastern Region, Ghana

Introduction

The National Coalition on Mining (NCOM)* holds this year's Annual Mining Forum on 3rd October, 2012, at New Abirem in the Birim North District of the Eastern Region.

Organized annually, the forum serves as an important platform to press home demands for changes to address the challenges in Ghana's mining sector to ensure optimal exploitation of the country's mineral resources.

The theme for this year's forum is "Obtaining an adequate share of mineral revenue and utilizing it in equitable and transparent manner".

This is informed by developments in the country and across the African continent in respect of reforms in the mining sector.

In the 2012 budget, the Government of Ghana announced new fiscal initiatives aimed at enhancing Ghana's abysmal share of revenue from our mineral resources. It has also constituted a team to review the mining regime and renegotiate existing stability agreements which is commendable.

Throughout Africa, countries are reviewing their mining codes to ensure "transparent, equitable and optimal exploitation of [Africa's] mineral resources to underpin broad-based sustainable growth and socio-economic development" as contained in the African Mining Vision (AMV).

The AMV was adopted by Heads of State and Government of the African Union in February, 2009. These reviews and sweeping changes across the continent and the world are motivated by soaring minerals and metals prices that have resulted in corporate profits skyrocketing.

Unfortunately for African governments and people, their share of the mineral wealth and profits has been minimal. More importantly, other associated benefits including higher levels of employment and income generation through linkages and value addition have been elusive.

Disruption of livelihoods by mining activities through large scale acquisition of lands, and inadequate and delayed payment of compensation constitute some of the ways in which mining activities negatively affect communities.

Furthermore, failure on the part of mining companies and regulatory agencies to mitigate the negative impacts of the mining activities such as cyanide spillage, blasting, water and air pollution have substantial negative impacts on people living in the mining communities and the environment at large.

This year's forum is therefore aimed at providing a platform for policy dialogue to ensure the speedy realization of the African Mining Vision which the Government of Ghana is committed to in addition to the government's own policy objectives in the mining sector.

The focus on revenue could not be better timed given the recent boom in the global mining industry and the relevance of finance towards the realization of the AMV.

Optimizing Mineral Revenue

Over the past few years, Ghana has introduced certain initiatives in the mining sector to ensure that "benefits from mining to the country are maximized, sustained, and distributed equitably to the people of Ghana".

These initiatives included fixing royalty rate at 5%, ring-fencing of mining projects, increase in corporate tax rate from 25% to 35%, re-introduction of windfall tax - albeit at a lower rate of 10%, and renegotiation of stability and other mining agreements.

NCOM has been and continue to be of the view that "these steps are part of a set of actions that are urgently needed to improve the contribution of the sector to the economy and people of Ghana".

This is partly because these initiatives fall short in returning the fiscal regime to its 2006 level when gold prices were around US$600 per ounce.

Gold prices have hovered beyond US$1,600 per ounce for most part of the year and continue to increase on regular basis. It is therefore urgent that the minimal steps identified by the government are implemented with immediate effect and additional steps taken to ensure equity in sharing of mining revenue.

Transparency

With the advent of Extractive Industry Transparency Initiative (EITI), some gains have been made in respect of the level of transparency in the mining sector. I

It is gratifying to note that a regulation has recently been passed to check transfer mispricing.

This regulation, based on the arms length principle in the Internal Revenue Act, 2000 (Act 592), empowers tax officials to be privy to transactions conducted between multinationals and their affiliates. In this year's budget, the government indicated that Ghana loses some US$36million annually in the mining sector alone as a result of transfer mispricing.

However, there is more room for improvement.

Proponents of the EITI admit that the primary focus of the initiative has been rather narrow in focus and would require substantial improvement to ensure greater transparency along the entire mineral value chain.

Support for such improvement has also come from the former UN Secretary-General, His Excellency Kofi Annan, who in an article in the New York Times, September 14, 2012, called on African governments to pass necessary regulations that will ensure total transparency in the extractive sector.

It is important to note that in an Action Plan adopted by African Ministers in 2011, governments committed themselves to integrate mineral resources governance, including existing transparency initiatives, to the African Peer Review Mechanism.

They also committed themselves to the development of instruments that domesticate relevant provisions on transparency and public participation in International Conventions such as the Protocol of Free Prior Informed Consent with respect to communities affected by mining

Our Demands

On the basis of the above, we call on the Minister of Finance and Economic Planning to:

1. Take immediate steps to expunge stability and related clauses in our mining laws and set a ceiling of 25 per cent on foreign exchange earning that can be retained by mining companies in an account outside the country;

2. Urgently finalize regulations for parliamentary approval to enable collection of re-introduced windfall tax to take effect in 2012;

3. Widen the range for royalty tax from current 3%-6% (which has been fixed at 5% by a regulation) to 5%-15% and transparently implement this new flexible regime;

4. Reconsider a substantial state participation in mining that can enable optimization of mining benefits, adopting the example of Botswana;

5. Increase taxes paid by mining entities to local authorities such as ground rents and property rates and ensure that all mining companies pay these taxes;

6. Re-engage all stakeholders in the extractive sector to discuss and make substantial changes to the current EITI bill to broaden the focus to cover the entire mineral value chain and get it passed to ensure total transparency in the extractive sector, particularly the mining sector; and

7. Work with other government departments and local authorities to develop guidelines that ensure that mining revenue ear-marked for local authorities are utilized equitably and transparently.

In addition an understanding must be reached to ensure that part of this revenue is spent on retooling other economic sectors such as agriculture through the provision of certain inputs and infrastructure such as irrigation.

Conclusion

We conclude our statement by offering our full support to the Ghana Mineworkers Union (GMWU) and their call on the government to ratify the International Labour Organization (ILO) Convention 176 on Health and Safety in the Mines.

Throughout the continent, regulatory and institutional framework that ensures owner responsibility for health and safety, in addition to guaranteeing the rights of workers to refuse or move away from areas deemed unsafe or potentially unsafe, are at an embryonic stage and weak.

We call on all African governments to ratify the ILO 176.

We also express our deepest and heartfelt condolences to the bereaved families and all the people of Southern Africa over the killing of scores of mineworkers at Marikana in August 2012, and add our voice to the numerous calls for justice to be done to the people who met their untimely death.

*The National Coalition on Mining (NCOM) is a grouping of non-governmental organizations, representative communities affected by mining and individuals engaged in extractive sector advocacy, in particular mining. It has over one hundred members across mining concessions in the country. Third World Network-Africa is the secretariat. For further information, contact the secretariat.

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Press Briefing by Concerned Citizens of Sefwi and Affected Farmers in the Chirano Gold Mines Operational Area

Statement

11 October 2012

Good Morning Ladies and Gentlemen.

We, Concerned Citizens of Sefwi and affected farmers in the Chirano Gold Mines operational area, are meeting you before we proceed to the Ministry of Lands and Natural Resources to present a protest note to the Minister for the immediate payment of our compensation-in-arrears since 2004 by Chirano Gold Mines Company Limited.

This protest note has become necessary because of the frustration of farmers currently reaching bursting point.

The leadership of the affected farmers has come under immense pressure as a result of the long delay in getting the compensation paid. The continuous building of this pressure threatens the existing process that aims at solving this impasse amicably, with unpredictable but certainly disruptive consequences for the operations of the mining company.

The company is also being notified that it risks losing the lands back to the farmers if the payment is not effected immediately in accordance with the Land Valuation Division's recommendation.

A brief background of this impasse is useful at this moment. On the 3rd of April 2004, the Government of Ghana granted Chirano Gold Mines Company Limited a Mining Lease and the company subsequently started gold production in October 2005.

Between 2004 and 2006, the company paid compensation to some farmers based on GHC2.5 per matured cocoa tree after falsely representing to the farmers (who are mostly illiterate) that the Government of Ghana's approved rate of compensation was GHC2.3 per matured cocoa tree.

The government in 2003, acting through the responsible agency (Land Valuation Board), had approved a crop compensation rate of GHC5.22 per matured cocoa tree.

We therefore took the matter which borders on fraudulent and deceitful actions by the company to the Sefwi Wiawso High Court in 2006. The company knowing that they will lose the case requested for out of court settlement. We peacefully agreed to the company's request.

Unfortunately for us, the company did not stick to the process and deployed some delay mechanisms just to drag the process.

In 2007 we again took the matter to the Fast Track High Court in Accra (KWESI ACKAAH & OTHERS VERSUS CHIRANO GOLD MINES LTD - SUIT NO. AHR/67/2007)

The case was in court when, in 2009, the then Minister of Lands and Natural Resources (Hon. Alhaji Collins Dauda) intervened in the matter in accordance with the Minerals and Mining Act 2006 (Act 703) and initiated a process to get the matter settled out of court.

We again, but painfully, agreed to set aside our court proceedings which we believed could have handed us favourable results.

In that process, the Land Valuation Division (LVD) was requested by the Minister to present a report including recommended compensation to the affected farmers which was produced by the LVD. Subsequently, the Minister, in a letter dated May 16, 2012, directed the LVD to take necessary action to ensure payment of the recommended compensation to the affected farmers.

The LVD through a letter dated May 17, 2012 advised Chirano Gold Mines Company Limited to immediately pay all compensation assessed as provided in a payroll produced by the LVD, taking due cognizance of earlier payments made in relation to the compensation claim.

This advice has not been heeded to by the company. Instead, it has, once more, reverted to its delay tactics and has been dragging its feet since then.

We wrote to the current Minister (Hon. Mike Allen Hammah) on August 23, 2012, and urged him to take necessary actions (which could include withdrawal of the company's license) to ensure immediate payment of the compensation-in-arrears.

The situation has not changed much as our compensation-in-arrears continue to be in arrears whilst the company keeps digging the gold. Clearly the company's delay tactics is yielding enormous benefits for them.

The company has been, and continues to be, the sole beneficiary of this delay tactic as farmers keep struggling to make ends meet after our farms were destroyed and lands seized to pave way for the company's mining activities. The following table illustrates how the company has performed over the period. 

Year 2010 is omitted because on the 17th of September, 2010 ownership of the mining company changed hands from Red Back Mining Inc to Kinross Gold Corporation, making data gathering from these companies for the year extremely difficult.

However the fact that the mining company has been doing very well over the period is very clear. Its production levels have been steadily increasing in an environment of rising gold prices.

Brothers and sisters, no condition is permanent. We therefore cannot continue struggling whilst the company keeps reaping soaring profits as gold prices skyrocket.

We have therefore decided that if the Chirano Gold Mines Company Limited does not act quickly for the compensation-in-arrears recommended by the Land Valuation Board to be paid immediately the lands will be taken back for our age old sustainable farming activities.

This is the key message we are dispatching to the Minister, a copy of which will be sent to the company.

Issued on Thursday 11th October, 2012 at the Press Centre, Accra

Endorsed By

Mr. Kwasi Ackaah Akoti
Nana Kwame Gyankye Chirano
Nicholas Ennin Etwebo
Hon. Joseph Amoah Akoti/Paboase
Hon. Mathew Obiri Agyarko Etwebo, Anyinasie, Sorano
Nana Addae Abraham Etwebo
Kwasi Kobi Akoti
Nana Mark Ampem Akoti
Nana Kwame Sah Etwebo
Nana Amankwa Chirano
Mr. Padmore Kumah Akoti
Prince Eric Amoako-Atta Sefwi

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Ghana probing death of Chinese boy during miner round-up

Reuters

15 October 2012

ACCRA - Police in Ghana are investigating the death of a 16-year-old Chinese boy killed during a crackdown by security forces on illegal gold mining, the deputy foreign minister said on Sunday.

Security forces arrested 100 Chinese nationals during the round-up in the gold-rich Ashanti region near Ghana's second largest city, Kumasi, on Friday, a Chinese diplomat said.

"We have received reports about the death of a 16-year-old boy of Chinese nationality. It is regrettable, and the government has ordered an investigation into the incident," Chris Kpodo said, adding that he had met with China's ambassador about the incident.

"We will also be granting the ambassador a diplomatic access to visit the detainees and speak with them," he added.

The Chinese diplomat at the embassy in the capital Accra said the boy, known as Chen, was shot dead while trying to flee.

"It is very difficult to determine how it happened so we are eager to get a full report from the Ghanaian authorities," the diplomat said.

Ghana is Africa's second biggest producer of gold after South Africa, producing over 1.6 million ounces of the precious metal in the first half of this year.

As gold prices have hit record levels in recent years, the sector has been increasingly plagued by illegal diggers, however, including a rising number of undocumented Chinese immigrants.

Around 30 Chinese miners were deported from Ghana last month, officials said. (Reporting Kwasi Kpodo; Writing by Joe Bavier)

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A Minister turns into PRO for mining company

Livelihood & Environment Ghana

3 September 2012

Ahafo - Brong Ahafo regional minister, Honourable Kwadwo Nyamekye Marfo, has turned into being the public relations officer (PRO) for Newmont Ghana Gold Limited, a US multinational gold mining company operating in Ahafo in the Brong Ahafo Region of Ghana.

In an interview with Adom FM during a visit of the parliamentary press corps to the regional coordinating council, the minister spoke like PRO rather than minister.

He described communities within the operational areas of Newmont Ahafo project as a major obstacle to the company. He described demands made by mining affected communities as unreasonable and beyond the reach of the company. He however, praised Newmont for fulfilling its corporate social responsibilities.

Unfortunately, the minister failed or ignored the environmental, social and economic problems that mining affected communities often complain about as a result of the Newmont operations.

Communities in the Newmont Ahafo gold project area are confronted with water polluted with harmful substances including cyanide.

Some communities go through 24 hour noise and dust pollution and others have their buildings cracked or totally collapsed because of vibration from blasting.

Individuals, families and households have suffered various degrees of human rights violations arising from the activities of the company. Some have lost lives and others have suffered severe disabilities.

Little or no compensation has been paid for farmlands, farms and properties destroyed by the company. In addition, cost of living in small towns near the mine has risen dramatically due to the influx of economic migrants brought about by mining.

For example, the cost of renting a single bedroom has risen over 1,000% over the last four years. Food stuffs and other commodities which used to be cheaper in Kenyasi and the surrounding communities have become scarce and expensive. There is also increased pressure on existing social amenities due to the influx of economic migrants into the area.

The minister's choosing to ignore these important livelihood challenges is not surprising. It is very common for mining companies and political elite to line up ogether in opposition against marginalised social groups, in particular communities affected by mining. Newmont is in Ahafo to make profit and the state machinery including political elite must be used to achieve and maximise their profit.

In 2011, Newmont declared a profit of $600 million after having edged out hundreds of farmers from access to livelihood. The minister's praises was for a company that has made so much money from poor people, not least the concerns of the poor.

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Ghana's new tax regime ruffles mining firms

by Justice Lee Adoboe

Xinhua

4 October 2012

ACCRA - Mining firms operating in Ghana have expressed concerns about a new mining tax regime introduced by the government, which they claim might drive them out of business.

In its 2012 budget, the government introduced a 10 percent Windfall Tax, and increased the corporate tax for mining firms from 25 percent to 35 percent in addition to the changing of royalties from a sliding three to six percent to a fixed five percent in 2010.

Managing Director of Liebher Mining Ghana Limited Dale Clayton believes the new tax regime will drive investors away from Ghana' s mining sector.

"Ghana has huge prospects in mining but it is making some mistakes that Australia made in the past and suffered for it. Tax uncertainty can cause the laying off of staff as happened in Australia," Clayton asserted.

A director at the Ghana Chamber of Mines, Sulemanu Koney, supported the position of the mining firms on the new tax regime.

He said tax uncertainty could force firms to leave the country, and called for a stability arrangement between government and the miners.

But a member of the steering Committee of Ghana Extractive Industries Transparency Initiative (GHEITI), Steve Manteaw, believes the mining firms are only creating unnecessary fear and panic over the new tax regime.

He explained that "the re-introduction of the windfall tax is meant to tax only the extra income made by the mining firms beyond their estimated income. The tax is not an extra tax, but tax on extra profit so if you do not make extra profit, you are not obliged to pay."

Manteaw advised the mining companies to rather negotiate on the threshold of the extra income calculation to determine the level at which a mining firm was considered to have made extra profit, above which the windfall tax would be charged.

In Ghana, royalties on mining have been between three and six percent, with the mining companies paying the lowest figure since 2004 at a time an ounce of gold was selling for 400 U.S dollars on the world market.

Government has since 2010 proposed to charge a fixed royalty of five percent but the mining firms are accusing the government of bad faith.

"The introduction of the windfall tax means government is becoming wiser; but companies are always known to be averse to payment of tax. Even for Ground Rent which is 0.5 Ghana cedis per acre, these companies would rather hire lawyers for thousands of dollars to fight for them not to pay these meager fees," said Manteaw.

He also argued that it was not true that the introduction of the windfall tax would cause mining firms to leave Ghana because gold is a scarce commodity with only five African countries having the resource.

Manteaw argued that it was still better for mining firms to mine gold in Ghana than in a place like Mali, where mining was carried out in the desert with 100 percent thermal power, and without port facilities and required manpower resource.

Ghana has a mix of electricity from hydro, thermal and others, with port facilities and very highly capable human resources that are even imported by Mali.

"Arguments that the mining companies will leave Ghana because of the windfall tax are too simplistic," he added.

Manteaw advised the government to ignore the complaints by the companies and let them carry out their threat to leave Ghana if they so wished.

"Once government learns to shift from the dependence on mining revenue, they can afford to allow the minerals to remain in the ground because it is not a perishable product," Manteaw stated.

"Mining has serious environmental consequences and so government must not pander to the whims of the mining firms," he cautioned.

IMF's Ghana country assessment team led by Christina Daseking, which visited Ghana last year, advised the government to raise more revenue from the mining sector as was done in other parts of the world.