Chamber of Mines chief executive officer (CEO) Kenneth Ashigbey cautioned on Tuesday during a day’s mining for development forum that Ghana risks losing mining investments to its neighbors due to the growing uncompetitiveness of the country’s mining framework.
Ashigbey noted during the forum themed “Strategic Mining, Value Retention, and Development” that the reason Ghana became the number one mining investment destination and leading gold producer in Africa was the competitiveness of its existing framework.
But, according to him, the country is beginning to lose that attractiveness due to certain new developments which are beginning to erode confidence in the country’s mining sector.
The CEO pointed out that, despite the government’s decision to exempt mining exploration from value-added tax payments, there has not been a positive response from the investor community, which is concerning, because of the high fiscal demands imposed by the government on mining companies.
The sliding scale adopted by the government for royalties paid by mining firms, according to the CEO, increases the government’s take from mining firms close to 60 percent, which begins to make the country’s framework uncompetitive.
He pointed out, “The government’s take has become very high, making Ghana unattractive to investors,” adding that neighboring countries with more competitive frameworks are beginning to attract investments away from Ghana, which is risky for the country’s development.
“Because you are a competitor within a highly competitive environment, and capital is fungible. So, even Ghanaian capital would not necessarily come to Ghana because they are Ghanaians. Ghanaian capital would want to go into places that give them excellent returns on their investments, and again, foreign investment is likely to do the same,” he cautioned.
Besides that, he said the recent discussions about renewal of mining leases are also beginning to give a warning signal to investors about the security of tenure in Ghana’s mining sector.
“For every mine, because mining is capital-intensive and long-term in nature, it needs patient capital, so once the investors put in patient capital, they are not worried about high taxes as much as they are about the uncertainty and the changes in the investment environment,” he noted.
He urged the government to take steps to ensure that Ghana maintains its number one spot in mining investment and retention on the continent.