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FIRST EDITION OF AFRICA’S MINING WEEK ACTIVITIES IN WEST AFRICA (SAMAO), OUGADOUGOU, BURKINA FASO.

22-24 SEPTEMBER, 2016

JERRY AHADJIEMINERALS COMMISSION, GHANA

GHANA’S MINING FRAMEWORK AND INVESTMENT ATTRACTIVENESS

Location Map

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Overview of Ghana’s Mining Sector

Traditional

Minerals

• Gold, Bauxite, Manganese & Diamonds

• Others: Iron Ore, Limestone, clays, kaolin, granites, solar

salt etc.

Mining Sector

Investment

• Some US$ 15.6 billion invested in mining sector (1983-

2015) & has become highest gross foreign exchange

earner.

Gold

Production

• 2nd in Africa after South Africa and 9th in the World

• Produced 134 MT of gold (4.3 million oz. in 2014) & 113 MT

of gold (3.63 oz. in 2015)

Sector

Contribution

• 14% of Govt. Revenue (Domestic Tax ) in 2015, 27% in 2012

• Employs some 22,000 people (large scale mining sector) &

about 1 million in small scale mining.

Status of

Mineral

Rights

• As of December 2015, 265 local and foreign companies

held Prospecting/Reconnaissance licenses. Additionally, 13

large scale mines are currently operating in the country.

MINING SECTOR ENVIRONMENT

• Ghana has the requisite environment that serious investors need.

This includes:

– Availability of abundant mineral resources with geo-scientific

data which is continuously updated;

– Political and macroeconomic stability;

– Attractive investment framework,

– Well structured institutions to reduce corruption &

bureaucracy; and

– Improved mineral cadastre to increase transparency in the

management of our mineral resources.

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OVERVIEW – MINERAL PRODUCTION TRENDS

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

PR

OD

UC

TIO

N [

Un

its]

Minerals

Trends in Traditional Mineral Production

1990

1995

2000

2005

2010

2015

CONTRIBUTION TO TOTAL MERCHANDISE EXPORTS BY KEY SECTORS

OVERVIEW: MERCHANDISE EXPORTS

SOME EXPLORATION AND MINING COMPANIES OPERATING IN GHANA

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Asanko mine expected to boost the country’s economic growth by creating jobs for the local people and generating revenue for government

A New Gold Mine Commissioned

A New Gold Mine Commissioned

FRAMEWORK FOR MANAGING MINING IN GHANA

• 1992 Constitution [Section 257 (6)]

• Minerals Commission Act, 1993 (Act 450)

• Minerals and Mining Policy of Ghana

• Minerals and Mining Act, 2006 (Act 703) & Regulations

• Water Resources Commission Act, 1996 (Act 522)

• Forestry Commission Act, 1999 (Act 571)

• Environmental Protection Agency Act, 1994 (Act 490) & Regulations

• Mercury Act, 1989 (Act 217)

• Land Policy of Ghana

• Environmental Policy of Ghana

Framework to ensure contribution to the SDGs

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• The Policy and Regulatory Environment

– Developed Minerals & Mining Policy which has SD as its guiding

principle

• Basic Geo-scientific Data Availability

– Ensure Availability of geo-scientific data – both in the form of

airborne geophysical and geological surveys

• The Legal Framework/Regime

– A fair, stable regime based on Good Governance (Act 703)

– Regime that ensures reasonable revenue to Govt. & Investors

– Regime that demands environmental protection & Remediation

– Regime demanding integration with local economy

REGULATOR’S ROLE

SOME POLICY INITIATIVES

The Minerals and Mining Policy of Ghana seeks to establish a frameworkfor sustainable development: Some key policy initiatives being undertakeninclude:

– Cleaning of Mining Cadastre: Open Grounds for Exploration

– Ensuring a good balance between the incentives to attract investors

and benefits that accrue to the country

– Integration with the Rest of Ghana’s Economy and Value Addition to

Minerals.

– Diversification of Minerals Exploited

– Reforms in the Small Scale Mining Sector• Amendment to Act 703: Act 900 (Allows for confiscation of

equipment)• Re-categorisation of mining underway

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Cleaning of Mining Cadastre

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Concession map

Ensuring a Balance Between Incentives

and Benefits

• In ensuring a win-win situation for all stakeholders, acomprehensive review of the mining fiscal and regulatoryregime has been carried out.

Leading to:

• Predictability and stability of fiscal incentives over time;

• Transparency and a level playing field for all companies;

• Broad and active Stakeholder Engagement; and

• International Competitiveness

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INTEGRATING MINING TO REST OF ECONOMY

– Local Content Regulations passed to integrate mining to rest of

economy

– Manufacturing of Inputs and Services for the Mining industry

– Value Addition, production of jewellery, adding value to

Bauxite and Manganese

– Development of Local Procurement List (throughStakeholder Collaboration)

• 19 Goods & Services Identified for procurement locally

• In 2015, 78% of Goods & Services procured under theLocal Procurement List.This is equivalent to US$184million.

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INCREASE LOCAL CONTENT IN THE MINING SECTOR

Currently 19 Goods & Services are being procured locally.

These include:

– Grinding Media,

– Explosives,

– Cement and Cement Products,

– Electric Cables,

– Quick and Hydrated Lime,

– HDPE & PVC Pipes and

– General Lubricants,

– Tyre Rethreading Etc.

Diversification of Minerals Produced

• Diversification of Minerals Produced

– To ensure that economy does not suffer in times

of weak gold prices,

– Explore occurrence of Copper, Lead Zinc, Nickel,

Lithium etc.

– Upscale solar salt production to take advantage

of the enormous market in West Africa

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IMPROVING THE COST OF DOING BUSINESS

– Mineral Concession Cadastre being developed with support

from Australian Government.

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On-line Repository Launched

• Web-based portal where all data recorded in the

MCAS pertaining to mineral rights and related

revenues are published

• System designed to enhance transparency,

effectiveness, accountability and compliance in the

management of mineral rights

• Portal could be accessed via:

http://Ghana.revenuesystems.org

ENHANCED MINING PORTAL

September, Africa DownUnder, 2015. PERTH, Australia

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Ghana Mining Portal – www.ghana-mining.org

FISCAL REGIME

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GHANA’S FISCAL AND REGULATORY FRAMEWORK

LAWS, REGULATIONS & GUIDELINES:

• Minerals and Mining Act, 2006 (Act 703) as amended;

• Minerals (Royalties) Amendment Act, 2010 (Act 794) ;

• Internal Revenue Act, 2000 (Act 592) as amended and associated regulations;

• Value Added Tax Act 1998 (Act 546) as amended and associated regulations;

• Customs and Excise (Duties and Other Taxes) Act, 1996 (Act 512);

• Transfer Pricing Regulations, L.I. 2188, 2012

• Mining List.

• Income Tax Act, 2015 (Act 896)

Applicable Taxes and Fees Include:

• Corporate Income Tax

• Mineral Royalties

• Personal Income Taxes (“PAYE”)

• Withholding Taxes

• Annual Mineral Rights Fees

• Customs Duties

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Ghana’s Mining Fiscal Regime

Imposts/Benefits Provision

Mineral Royalty Rates:

Royalty base

5%, Gross market value of mineral sale

Application Fees As prescribed in regulations (L.I. 2176)

Surface Rentals

Annual Ground rent:

Annual mineral rights fees:

(Prescribed: GHC15/Acre

Payable to Minerals Commission, prescribed

Income Tax Rate:

Capital allowances:

Allowable losses:

35%

20% for 5 years for mining

5 years Carry forward

Import Duty Concessionary rates for Plant, Machinery & Equipment

exclusively for mining

Value Added Tax Machinery apparatus & appliances designed for

mining(Mining list) exempt

Free Carried Interest 10%

Current Fiscal Regime

Imposts/Benefits Provision

Transfer Pricing

Regulations, L.I. 2188,

2012

Regulations require taxpayers to demonstrate

that all transactions between them and their

related entities are carried out at arm's length

[Effective Date: July 27, 2012]

Withholding Taxes:

Income Tax Rates

Interest – 8%

Dividend – 8%

Royalties – 10%

Management and Technical Services fees –

20%

Goods & Services (Residents) – 5%

Goods & Services (Foreign) – 15%

Non-Resident Individual -20%

Current Fiscal Regime

Current Fiscal Regime: Others

• Stability Agreement:

– To Protect Mineral Right Holder for up to 15 Years from adverse

fiscal effects of future changes.

• Development Agreement:

– For Investment > US$500million on terms of Stability

Agreement, plus more favourable terms than existing law

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OPPORTUNITIES IN THE MINING SECTOR

– Cleaning Up of the Concessions Map

– Value Addition to Bauxite and Manganese

– Iron Ore Deposits

– Solar Salt (Best Climatic Condition in the Sub Region)

– Industrial Minerals

• Decorative Stones.

– Service and Engineering Sector

– Activated Carbon Production

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INVESTMENT OPPORTUNITIES

• Gold Refinery and Value Added Products

– Ghana produces over 4 million ounces of gold per

annum. Setting up a refinery could serve other gold

producers in the sub region

–• Integrated Bauxite-Alumina – Aluminium Industry

– Over I billion tonnes with about 300 million tonnes

of contained aluminium.:

– Deposits: Awaso, Kibi, Nyinahin and Mt.

Ejuanema.

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OTHER INVESTMENT OPPORTUNITIES

• Iron and Steel Development

– (i) Opon-Mansi lateritic iron deposit;

– (ii) the Shieni sedimentary iron deposit; and

– (iii) the Pudo titaniferous-magnetite deposit

� Solar Salt

Best climatic conditions for Solar Salt production in West

Africa. 500 km of shoreline. The “White Gold”.

Chlor-Alkali Industry

Utilisation of salt to produce caustic soda, soap and

detergent industry but also for the production of alumina

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OTHER INVESTMENT OPPORTUNITIES

• Industrial Minerals: Potential for domestic use

• Service and Engineering Sector

– There are several companies in Ghana providing support servicesincluding; contract drilling, assay laboratories, contract miningand geological consultancies to mining companies.

– Using Ghana as a base, these companies have ventured andexpanded their activities into the West African sub-region.

– Government has through incentives encouraged such companies.

• Activated Carbon– Coconut Husk raw material is readily available

• Decorative Stone:- High quality Granites as floor tiles.

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MINE SUPPORT SERVICES

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MINE SUPPORT SERVICES

September, Africa DownUnder, 2015. PERTH, Australia

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Good Governance Practices

• EITI Complaint

• KPCS

• African Mining Vision

• ECOWAS Directive on Harmonization of Mining

Policies

• Inter-Governmental Forum (IGF) on Mining,

Metals and Sustainable Development

• Voluntary Principles on Security & Human Rights

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CONCLUSION

• Availability of Geo-scientific Information

• Good Governance Institutions

• Good Infrastructure

• Most Stable Politically

• A Commonwealth Nation

• Common Law Legal System

• Hospitable People

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GHANA: GREAT NATION,

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