In a bid to reduce barriers to entry and amplify foreign direct investment within the mining industry, the President of the Chamber of Mines, Joshua Mortoti, has called upon the Ghanaian government to consider exempting exploration companies from taxation, particularly during the exploration phase.
Mortoti, speaking at an Editors Forum in Accra, underscored the financial stress inflicted on exploration firms due to high land-holding costs and various taxes, emphasizing that the high costs coupled with the inherent risk of exploration further compound the challenges faced by these firms. The Chamber's stance rests on the premise that by removing such taxes, the burden of exploration would be lessened, subsequently encouraging foreign investment and participation in the mining sector.
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A critical point raised by Mortoti reflects the substantial fiscal burden borne by exploration firms even before commercial viability is established. Under the current fiscal regime, exploration companies are obligated to make payments, often amounting to a significant portion of their invested capital, before any commercial find is made. This, Mortoti contends, presents a significant obstacle to entry for exploration companies, ultimately hindering the exploration potential of the country and yielding negative implications for the overall mining industry.
Dr. Koney, the Chief Executive of the Ghana Chamber of Mines, emphasized the pivotal role played by the mining sector in contributing to the country's economic development. Remarkably, the sector's fiscal payments in 2022 amounted to GH¢6.82 billion, with an additional GH¢435 million in dividend payments. The mining industry has also solidified its position as a primary contributor to the country's foreign exchange reserves, significantly exceeding contributions from other key export commodities.
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Moreover, Dr. Koney highlighted the positive strides made in promoting local content within the mining sector. Local content, a key area of focus for the Chamber, has been a subject of vigorous advocacy, showcasing the commitment of the mining industry to fostering indigenous participation and enhancing local economic development.
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Despite the passage of the Minerals Development Fund (MDF) Act in 2016, Dr. Koney noted a delay in fully implementing the law, particularly regarding the disbursement and management of ceded royalties from mining companies. This delay, coupled with challenges in revenue collection, underscores the urgency for a comprehensive and effective approach to ensure the timely and transparent utilization of funds allocated for developmental initiatives within the mining sector.
The Chamber of Mines' call for tax exemption aims to recalibrate the financial landscape for exploration, aiming to attract increased investment and alleviate the financial stressors encountered by exploration companies. As the discourse surrounding fiscal policy and the broader role of the mining industry in national development evolves, the considerations and suggestions put forth by the Chamber of Mines underscore the complexities and nuances inherent in fostering a conducive environment for sustainable mining growth.
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