September 25, 2017

Minister calls for transparency in negotiation of mining contracts

Ghana’s Minister for Lands and Natural Resources, Alhaji Inusah Fuseini, has called for mining contracts negotiated between governments and mining multinationals to be conducted in a spirit of truth and transparency and to ensure a fair and equitable distribution of benefits for all stakeholders.

The Minister advocated that critical issues surrounding the cost of production, fiscal and tax regime as well as other components of the investment environment should be discussed in a frank and open manner to forge a beneficial and sustainable partnership for the investor, government and local communities.

Alhaji Fuseini was contributing to a Commonwealth Mining Network Roundtable in London, UK, organised by the Commonwealth Business Council on the topic ‘Making Mining in Africa Work for All’.

The event was held as part of the ‘Africa Mining On Top London Summit’, explored how governments and the private sector could work together effectively to achieve the shared goals of revenue maximisation and economic empowerment.

The Minister explained that the government of Ghana was committed to ensuring that mining becomes a blessing and not a curse by integrating the sector fully into the Ghanaian economy with requisite forward and backwards linkages boost value addition and ensure a fuller participation of local communities in the industry.

To enable government to maximise returns from corporate taxes and royalties, Alhaji Inusah, revealed that government was deepening the fiscal and regulatory regime to ensure that operators make more returns on their investment to attract more mining multinationals into the country.

The Lands and Natural Resources Minister indicated that there was a critical need for mining companies to strike a balance between profit maximisation and the development of local communities in a way that will ensure that economies of such mining communities continue to thrive after the closure of the mine.

He called on mining companies to work harder to secure and maintain their “social licence” not only by honouring royalties and other tax obligations, but should also provide social infrastructure and impart basic skills to local communities through their corporate social responsibility programmes.

“Such programmes will help promote government’s local content agenda, build capacity of local communities to support the operations of mining companies and help manage expectations of the local communities,” said the Minister.

The discussion which also highlighted on other pertinent issues impacting on government-investor relationship, observed that concerns over the negative impact of mining on the environment have heightened in recent times in view of challenges with water availability brought about by the growing effects of climate change.

Mining multinationals operating in Africa were therefore urged to learn more about requisite mitigation measures of climate change to enable them to response appropriately to environmental challenges as they would have done in their countries of origin.

The meeting also underscored the need for African governments and regulatory authorities to publish and administer the granting of mining licenses in a clear and transparent manner and desist from the arbitrary withdrawal of such licences.

It was also announced that the Mining Model Development Agreement, had been developed as tool to assist governments to negotiate mining contracts with investors.

The roundtable which was attended by captains of the mining industry, financers, mining-related organisations was attended by government ministers from Cameroon, Kenya, South Sudan, Zambia, South Africa and Botswana.

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