Mining firms want tax formula reviewed

Mining companies have called on government and the Ghana Chamber of Mines to come up with a tax formula that will ensure sustainability in the industry.

The taxes, coupled with the falling price of gold and the cost of operation, are having a toll on the mining companies, according to Neale Laffin, Managing Director of Golden Star Bogoso/Prestea Limited.

“The most expensive country to do business in Africa is Ghana due to the tax regulations. The cost of everything has increased. We are guided in the way we work. I am happy though that the windfall tax has been dropped.”

If the tax formula is reviewed, businesses could be sustained, he observed. Government wanted to re-introduce a 10 percent windfall tax this year on profits of companies, but the plan has since been abandoned. He was speaking to members of the Journalists for Business Advocacy (JBA) during a three-day tour of some mining areas at Tarkwa.

The price of gold on the world market hovered between $1600 and $1700 per ounce but currently stands at $1300 per ounce. Mr. Laffin observed that the reduction in international gold prices in the first quarter of this year affected their revenue and future projects of other companies. He said mining companies have had to adopt internal measures such as reducing spending and cost of mining.

On the issue of ‘galamsey’ operations on their concessions, the Manager commended the Military Task Force for a good work done, noting that illegal mining activities are under control. At Goldfields Ghana Limited, Michiel Van Der Merwe, General Manager, who shared similar sentiment, said “we are not against tax payment. We want it for the development of the country but there is the need for a Tax Stability Agreement.”

Mr. Der Merwe indicated that the company has put in place certain measures including cutting down 20 percent operational costs to sustain the business. He also stated that the company would additionally close down its heap leach mine site.

If the gold price does not improve, the company would be forced to lay off workers or close down its operation. It is very expensive to lay off workers since redundant workers would have to be paid three months salary multiplied by the number of years they have worked, he averred.

At Abekoase, a community of over 400 people within Gold Fields’ concession, a potable water supply system with three fetch points had been constructed by the company. The people called on the authorities to allow them to fetch water free of charge.

Some residents, who spoke to this paper, said they were unable to pay the GH¢0.05 per bucket, which was used to buy fuel to pump the water. According to them, the company should shoulder that burden because it had destroyed their water bodies.

Abdel-Razak Yakubu, Community Affairs Superintendent, who took the journalists round, said the residents should pay the fees to promote the maintenance culture.