Solid Minerals
Ghana plans to introduce mining windfall tax bill
…Mining is major contributor to government revenue
…Gold sector says wants taxes reduced as prices fall
…Ghana is Africa’s number two gold producer
ACCRA – Ghana plans to present a mining windfall tax bill to parliament, Finance Minister Seth Terkper said on Tuesday, in a move likely to set up a clash between a hard-pressed industry and government’s need for increased revenue.
Ghana is Africa’s number two gold producer and the commodity accounted for 27 percent of the country’s foreign exchange in 2012 and contributed more than $700 million to state coffers, according to data from Ghana Chamber of Mines.
But the government of President John Mahama is under pressure to show investors it can control a budget deficit forecast at 10.2 percent by the end of 2013 and which the government wants to reduce to 8.5 percent next year.
Terkper’s announcement came during Tuesday’s annual budget speech to parliament in which he described how government could raise revenue and curb spending.
“A committee is reviewing all stability agreements, incentives and the windfall profit tax that could not be passed in 2012,” Terkper said.
“In due course, government will re-introduce the bill in parliament after completion of the consultations with all stakeholders,” he said.
A previous bill that sought to impose a 10 percent mining windfall profit tax was introduced in 2012, Terkper said, but it was not considered by parliament and later withdrawn.
The West African state’s economic boom is often attributed to its new oil wealth but its gold exports were worth $5.6 billion last year, nearly as much as oil and cocoa combined.
Even so, the industry is feeling the strain this year as a result of a slump in gold prices.
Two of its leading mines, AngloGold Ashanti’s Obuasi and Gold Field’s Demang mine, operate at a loss. Other mines have closed while the level of mining exploration has dropped, industry leaders say.
To redress the situation, mine executives have urged the government to reduce corporate taxes from 35 to 30 percent and assess royalties on a sliding scale related to profitability so companies that do not make a profit don’t pay royalties.
The announcement will hurt an industry that already faces a heavy tax burden because of royalties, income tax, Value Added Tax increased on Friday by 2.5 percentage points to 15 percent, and steep power prices, one mining executive said.
“It would be a disaster. Nobody would come to open a mine in Ghana,” said one industry executive who declined to be identified because he is not authorised to speak publicly.
Razia Khan, head of Africa research at Standard Chartered, described Terkper’s announcement as “positive” for the overall economy, though she wanted to more detail about its implementation in the context of lower gold prices.
“Ghana has long grappled with how to improve the fiscal take from the mining sector, given the stability agreements in place,” Khan said in an email.
– REUTERS
Business
Nigeria set to boost Naira value and foreign reserve with local gold production, as Tinubu receives gold bar
IN a significant move to strengthen Nigeria’s economy, President Bola Tinubu received a symbolic gold bar on Sunday from the Minister of Solid Minerals Development, Dele Alake.
This gesture marks the commencement of the National Gold Purchase Program (NGPP), aimed at boosting the naira’s value and enhancing the country’s foreign reserves.
Minister Alake expressed gratitude to President Tinubu for his support of reforms in the solid minerals sector.
He highlighted that the NGPP, which involves sourcing gold from artisanal and small-scale miners and refining it to meet the London Bullion Market Association’s Good Delivery Standard, will substantially contribute to Nigeria’s economic stability.
Alake stated “This initiative will significantly increase our foreign reserves and strengthen the naira. The refined gold will be supplied to the Central Bank of Nigeria, marking a crucial step in our economic strategy.”
The presentation also underscored the first commercial transaction under the NGPP, establishing a centralized gold purchasing system that integrates small-scale miners, cooperatives, and production units across the nation.
This program is expected to provide a structured market for gold, fostering economic growth and stability.
He said, “The successful completion of the first commercial transaction clearly demonstrates the National Gold Purchase Program’s effectiveness. It has increased the nation’s foreign reserves assets and shown that using the Nigerian Naira to purchase a liquid asset traded in United States Dollars, such as gold, is a viable strategy. This transaction has also underscored the potential of the National Gold Purchase Program to enhance fiscal and monetary stability.”
Alake added that the initial commercial transaction under the program resulted in a +US$5 million boost in Nigeria’s foreign reserve assets.
The transaction involved refining over 70 kilograms of gold to meet the London Bullion Market quality standard and aggregating locally mined gold, thereby infusing approximately NGN6 billion into the rural economy.
President Tinubu expressed appreciation for the Ministry’s accomplishment in advancing the government’s goal of economic diversification by acknowledging and displaying the symbolic gold bar
The Nigerian Government has threatened to come down heavily on foreigners sponsoring bandictory as a way of sustaining illegal mining activities in parts of the country.
The warning was handed down in Abuja by Minister, Solid Minerals Development, Dr Oladele Alake, while receiving a delegation of the Nigeria-China Chamber of Mines led by its National President, Dr. Olugbenga Ajala.
Details of these were contained in a statement released by Head, Press & PR, Ministry of Solid Minerals Development, Alaba Balogun over the weekend.
The statement cited, Dr Alake, thus, “The government will come down firmly on these unscrupulous foreign operators sponsoring banditry to perpetrate illegal mining: let me use this medium to appeal through you to tell those sponsors to desist or face the full wrath of the law.”
According to Dr Alake, the Ministry is committed to establishing a multi-agency task force that will end the activities of illegal miners and their collaborators.
The Minster made it clear that the FG had given illegal miners a 30-day-ultimatum to legitimise their businesses, quit Nigeria or incur the wrath of the law.
According to him, this will help “to streamline and structure the Small-Scale Artisanal Miners for maximum yield to the Federal Government.”
The delegation paid a courtesy call on the Minsiter at the Ministry’s headquarters in Abuja.
By Edozie Obasi-Eze
Amidst heightening uncertainties in the domestic petroleum products market characterised by scarcity and irregular pricing, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has declared that there’s no intention to review pump prices upwards.
This was contained in an advisory issued by General Manager, Corporate Communications, NMDPRA, Kimchi Apollo.
He stated that the Nigerian National Petroleum Corporation Limited (NNPCL) had imported PMS with current stock levels sufficient for 34 days.
In an attempt to address panic buying and speculations which have seen price of Premium Motor Spirit (PMS) oscillate between N180-N250 in the Lagos area, Apollo assured that there was enough quantity of the product in the country already.
He said, “Consequently, marketers and the general public are advised to avoid panic buying, diversion of products and hoarding.
“In keeping with the Authority’s responsibilities as outlined in the Petroleum Industry Act (PIA), the Authority assures the public that it would continue to monitor the supply and distribution of petroleum products nationwide, especially during this holiday season.”
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