Higher royalty regime to take effect this month unless amended
Miners warn new regime may squeeze less profitable mines
By Maxwell Akalaare Adombila
DAKAR, Feb 3 (Reuters) - Ghana's finance minister has offered to cut a mining levy by two percentage points to help push through a new gold royalty regime that mining companies warn could deter investment, the head of the miners lobby has told Reuters.
Africa's top gold producer wants to replace its flat royalty rate with a sliding system of 5%–12% to capture more value as prices surge.
The new gold royalty regime, which adds about one percentage point for every $500 rise in the gold price similar to the system in Burkina Faso, will take effect 21 days from Tuesday unless parliament amends it. Ghana's gold mining companies want the rate reduced.
The Chamber of Mines CEO Kenneth Ashigbey told Reuters on Monday that, after recent talks, Finance Minister Cassiel Ato Forson instead proposed cutting a fee known as the growth and sustainability levy.
"We asked that the 3% levy be removed entirely, but the minister is offering to take off only two points," Ashigbey said.
Ghana's finance and mines ministries did not immediately respond to requests for comment.
A government source familiar with the talks confirmed that the minister had proposed the two percentage-point levy cut.
The source said the finance minister told companies he was open to dialogue, though parliament could still pass the royalty amendment as it is unless the ministry submits an alternative.
MINERS BEGAN PAYING HIGHER TAX AFTER FAILED RESISTANCE
The GSL was doubled to 3% last year. Producers refused to pay but later complied while talks continued, the mining sector regulator told Reuters in January.
As for the new gold royalty regime, Ashigbey said miners wanted a range of 4%-8%, with one percentage point earmarked for a development fund for host communities.
He said the chamber also wants wider royalty price bands, arguing that the government’s thresholds trigger higher rates too easily, which could squeeze higher-cost or less profitable mines.
Ashigbey said the chamber is seeking urgent engagement.
“The question is whether government wants revenue on a sustainable basis or just in the next few years before investments move elsewhere," he said.
(Reporting by Maxwell Akalaare Adombila; Additional reporting by Emmanuel Bruce; Editing by Robbie Corey-Boulet and Jan Harvey)
((Maxwell.Adombila@thomsonreuters.com; +233205362647;))