ghana chamber of mines and aubynn

7/29/2019 Ghana Chamber of Mines and Aubynn

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www.ghanachamberomines.org

Ghana Chamber

of minesWk


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WorkingtoGetherGhanas resource industry is regulated by

the government but it is a complex business.For nearly 110 years, the Ghana Chamber of

Mines has been working to create the rightbasis for addressing key issues relating to

the role of mining in national development

Ghana Chamber of mines


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ana has been one of

leading gold producers

he world for centuries


Its not quite one year since Dr Toni

Aubynn was appointed as the new chief

executive officer of the Ghana Chamberof Mines. Dr Aubynn comes with wide

experience of the industry that isGhanas life blood, having spent over 20

years in leadership within the countrys

resource industries. Right now, Ghana ispreparing for an offshore oil bonanza that

could double its economic growth rate,

but its no accident that the countr y usedto be called the Gold Coast. Ghana has

been one of the leading gold producers i n

the world for centuries; andwith prices at an historic

high, the minerals thatcome out of its minesand

these include manganese,

diamonds and bauxiteare going to sustain

the economy for a long

time to come.The Chamber has a

diplomatically sensitive job to do in bringingtogether the interests of government and

the private companies that extract the

minerals. It was set up by the governmentand is supported as a voluntary private

sector employers association representingcompanies and organisations engaged in

the minerals and mining industry in Ghana,

funded entirely by its member companies.These fall into three categories.

Represented members are drawn fromthe producing companies, both indigenous

and global and include the major operators

of gold, manganese and bauxite mines;pre-production, contract mining and

exploration membership caters for the

other first tier companies, while any

company involved in the supply chain canbecome an afliate member.

The commercial interests of the members

in no way conflict with the nationalinterest, but it is possible for legislators

to interpret the high prices obtained forminerals on the international exchanges

as high prots for the operators. The 2012

budget presented to Ghanas parliament inDecember brings in a 10 per cent windfall

tax on miners, who will also be subject to

a corporate tax increase,raising rates from 25 per

cent to 35 per cent. Capitalallowances, which used to

start at 80 per cent in the

rst year and 50 per centin a declining balance, are

to be slashed to a uniform

20 per cent for ve years,a particular challenge for

those undertaking expansion projectsand new entrants. It will discourage small

mining enterprises from getting off the

ground. I think the key challenge forthe industry is to help the stakeholders,

including the government, understand thecomplexity of the business, says Aubynn.

It is tempting, he agrees, to look at the top

line and conclude that prots must followrevenues, but the extractive industries also

face heavy capital investment demands as

well as rising costs. It is well known that thetax regime has an inuence on investment

decisions, and many Chamber membersare uneasy that the proposed measure

23%

Gold production by illegal

mines in Ghana


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l threaten upcoming projects as well

discouraging new entrants. To take just

e company, Gold Fields is planning somebillion of expansion and reinvestment

thin Ghana and with extraction costs

eady higher than in many otherisdictions; but Nick Holland, the CEO

Gold Fields, has already described thew tax structure as unsustainable.

On the other hand, Ghana has long

en seen as one of the safest places forvestment on the entire continent of

rica, and that has a lot to do with having

avourable tax regime, Aubynn believes.he new tax proposals are a response

the perception that the industry was

aking super prots and from a broader

perspective on the part of politicians

that Africa is not getting enough from

its mineral resources. These perceptionsare fed into government policy and led to

signicant increases in taxes which our

members have to deal with. That is one ofthe key challenges that we face today.

The situation is not yet xed in stone, andthe signs are that the government is coming

to realise the negative impact of the new

tax proposals. Aubynn has had meetings todiscuss whether a windfall tax is really the

best way to raise the industrys contribution

to the economy without impacting inwardinvestment. The measures appear to have

been a nnounced without consultation orwarning, leaving the Chamber of Mines to

vision of improved educational facilities

The key ChallenGe for The indusTry is

To help The sTakeholders, inCludinG

The GovernmenT, undersTand The

ComplexiTy of The business

negotiate a pragmatic and workable solution.

Perhaps the most important stakeholders

in Ghanas mining industry are the peoplewhose lives are affected, negatively or

positively, by mining operations. One

thing they would all agree on is that whileemployment and trade are stimulated at a

local level, the communities are not seeinga fair share of mining revenues ploughed


back into their schools, roads and social

amenities. Most of the benets you see are

the ones provided by the mining companies.Even the local authorities refer communities

to the mining companies rather thanshouldering the responsibility themselves.

Of the royalties paid by the companies on

every ounce they extract, only ve per centis currently returned to these communities,

and we believe that this should rise to at

least 30 per cent.But dont just hand the money over to

the local administrators, he counsels. Itis essential that the money is linked to

specic projects that are agreed by the

authorities, the companies and above all,the communities themselves. That way they

can see the benets of improved housing,

schools, roads and healthcare facilitiessustained by money from the states share

of mineral revenues. The draft MineralsDevelopment Fund Bill 2010 aims to

address the need to set a higher proportion

of royalties aside for development projectsto be undertaken in mining communities,

but the bill contains many ambiguities.

Where employment is concerned, miningdoes better than many other sectors though.

When banking moves into new areas ittends to bring its human resources with it:


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bauxiTe produCTion is in serious

disTress beCause The rail link TakinG The

ore To The harbour is noT workinG

the case of mining only at the higher

vels do you need to bring in talent from

tsidemost of the labour comes from themmunities around the mine. The levelcommitment is therefore highall the

ore reason for the community benetsbe tangible.

Other challenges for the industry arefrastructure and logistics. Ghanas

owth is a headache when it comes to

pplying so many new customers withergy, and intermittent supplies are a

nstant problem. While the road network

s improved, rail has deteriorated and isurgent need of modernisation. Bauxite

oduction went down signicantly lastar simply because of problems with bulk

nsportation. Rio Tinto sold off its 80 per

nt stake in Ghanas bauxite mine at Awaso2009 citing poor infrastructure as one

the major reasons for its move. Bauxite

oduction is in serious distress becausee rail link taking the ore to the harbour

not working. Aubynn says the sameght may befall magnesium production.

But the work of the Chamber is not

about re-ghting. There are massiveportunities, and one that is clearly very

ar to Aubynns heart is to increase thevolvement of local entrepreneurs in

the industry, both as small miners and assuppliers. Two examplesactivated carbon

and grinding balls for the miners ball

millsexemplify the opportunity. Ghanastill imports activated carbon despite the

fact that product made from coconut shell

(and theres plenty of that a long the coast)is superior to activated carbon from other

sources. Given the right incentive, a wholenew industry is waiting to be developed, he

says. And steel balls are nowbeing produced locally from

scrap metal that used to be

exported. Here is anotherchance for local operators

to add value in the supply

chain, he says. Some ofour members are already

getting their suppliesfrom local manufacturers:

initially there were quality issues but I

understand these are being overcome.The Chamber of Mines is actively working

with the government and other agencies togrow local input to the mining supply chain.

The Chamber has signed a memorandum

of understanding with the World Bank andthe Minerals Commission (MINCOM), the

regulatory agency for theminerals sector in Ghana, to

support local participation

in the mining industry. Somesuccess has been had in

transportation and logistics,

he continues: companiesthat used to be self-sufcient

are now outsourcing theirstaff transit requirements.

He identies steel fabrication and limeproduction for cement as work that need

not be sourced outside of Ghana. We have

identied 29 product areas which we think

are amenable to local participation. Wewant to get Ghanaians involved, but we

are realistic about the need for time andfor the continued involvement of overseas

Mining operations


29

Number o product areas

identifed as amenable to

local participation


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our vision is quiTe Clear: inCrease

loCal parTiCipaTion in The indusTry

To a siGnifiCanT level

ppliers. We wont sacrice efciency

the altar of import substitution! Butr vision in this direction is quite clear:

crease local participation in the industry

a signicant level.

He wants to bring as many as possible ofese independent suppliers into afliate

embership of the Chamber, as a meansspreading best practice and giving them

cess to training. This is quite separate from

the need to address Ghanas unregulated

mining sector. Though who knows: manyof them may end up under the Chambers

umbrellain an ideal world, most of them!

These are the Galamsey or artisan minersthat make up an estimated 60 per cent of

Ghanas mine operators.

Let us be clear: artisanal and small-scale mining was legal ised in 1986. We are

talking here about opportunists working

ning companies support more community initiatives than the local authorities do

outside the legal framework. Whetherthis is a problem with implementation or

with t he way the law is framed, it has anadverse effect on the whole society. We

have seen young people dying, trapped by

rock falls or machines, as well as thingslike environmental degradation through

unregulated use of chemicals, notablycyanide and mercury and direct discharges

into river courses.

Because this activity is unregulated, thereis no redress in law. And Ghana loses anincalculable amount of revenue. Last year

illegal mines produced 23 per cent of Ghanastotal gold production but paid nothing in tax

or royalties to the government. I think it issomething we need to look at as a nation,

says Aubynn. I am fully supportive ofencouraging Ghanaians to participate in

mining even if through the artisanal andsmall-scale route but it needs to be properly

supervised and regulated to minimise

these negatives. He enjoys nothing morethan talking to entrepreneurial Ghanaians,

giving support and advice on establishingand growing their businesssuch people,

he believes, represent the future of the

industry in Ghana every bit as much as theglobal mining companies.

ealth outreach at a mining community

For more information about

hana Chamber of Mines visit:




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# 22 Sir Aru korsah oad, Airport

esidential Area, Accra

P. . Box 991, Accra

+0302 -760652, 761392, 761893


ghana chamber of mines and aubynn

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