Stability privileges to mining coys to be cut to 5yrs
Adnan Adams Mohammed
Mining companies operating in the country and enjoying privileges under stability clauses will by next year see a cut in the number of years to five (5) from fifteen (15) as captured in amendment proposals of the Minerals Commission.
The Commission which is currently undertaking stakeholders’ validation of its proposals for the amendment of Minerals and Mining Act, 2006 (Act 703) proposed a reduction of the upper limit of the stability period of 15 to 5 years under Article 48(1).
A stability agreement, which are signed between the government of Ghana and companies, normally freezes mineral royalty and other tax-rates paid by a company over a 10- to 15-year period creating a situation where very little of the windfall earnings of a beneficiary company accrue to the state.
“Ghana’s stability clause is the clause is the most generous in the world”, Lawyer Martin Ayisi, Dep. CEO (Promotion & Development) at the Minerals Commission indicated at a workshop organized by the Natural Resources Governance Institute (NRGI) for CSOs in Accra yesterday.
The stability agreement seeks to protect the investment of the companies due to the risk of mining and it being an expensive venture. However, it is not all mining companies that have such agreements, since they started operations in Ghana.
According to the Minerals Commission, out of the several mining companies operating in the country, only three (3) gold mining companies (Anglogold Ashanti, Newmont Ghana and Goldfields Ghana) have the stability clause.
Currently, Tanzania has upper limit of 10 years of stability agreement while DR Congo give a maximum of five (5) years for stability agreement now reduced from 10years previously. These provides enough basis for Ghana to also achieve the changes it is proposing.
In 2015, the Government of Ghana announced its intention to review stability agreements between the state and all mining companies operating in the country.
It then proceeded to set up a seven-member team headed by Prof. Akilagpa Sawyerr to review, re-negotiate and redesign the entire mining regime agreements so that the state derives maximum benefit from the sector.
As part of their duties, the team was asked to review and re-negotiate any part of the stability agreement between Ghana and any of the mining companies in the country in the best interests of the country.
Also, the negotiation team was to revise the manner of granting stability agreements, and redesign any existing or draft agreement to ensure that it yields better social and economic returns for the country.
But while answering some questions from journalists in Accra, Prof. Sawyerr said, “There have been difficulties since we started this negotiation. This is simple because our existing mining laws are not in favour of this country at all.” Adding that, they are trying to give a better deal for Ghana.
According to him they have realised that Government at times raise resources from some mining companies for developmental projects and this has affected their negotiation, even though they are trying to make the companies to understand why the need for renegotiation of the stability agreement.
However, the mining companies have said that the changes to the mining sector stability agreement would put their investments at risk. They are of the belief that the government is trying to make things difficult for them.
A stability agreement normally freezes mineral royalty and other tax-rates paid by a company over a 10- to 15-year period creating a situation where very little of the windfall earnings of a beneficiary company accrue to the state.