Ghana is pressing ahead with a new sliding-scale gold royalty regime aimed at increasing the country’s share of mining revenues as global bullion prices surge, despite opposition from some foreign governments and major mining companies.
The new Ghana gold royalty policy, which takes effect on Tuesday, replaces the current flat five per cent royalty rate for gold mining with a price-linked system that will increase the state’s earnings when international gold prices rise.
Under the framework, gold mining companies will pay royalties of up to 12 per cent when the price of gold reaches $4,500 per ounce, according to details reviewed by Reuters. The change comes at a time when gold prices are trading above $5,000 per ounce on international markets.
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The reform forms part of a broader strategy by Ghana and several other African resource-producing nations to capture a larger share of revenue from their natural resources amid rising global commodity prices.
However, the policy has drawn criticism from several diplomatic missions and mining industry leaders who fear it could discourage investment in the sector.
Last week, Reuters reported that the United States, China and several Western governments had mounted a rare joint effort to persuade Ghana to halt the policy.
Despite the pushback, the Chief Executive Officer of the Minerals Commission, Isaac Tandoh, told Reuters that Ghana would proceed with the reform.
“They met us, they are not against the review in principle,” he said over the weekend.
He explained that while foreign missions had expressed concerns about the top 12 per cent royalty rate, they had not rejected the broader policy shift.
According to him, some diplomatic representatives proposed that the highest royalty rate should only apply when gold prices reach $5,000 per ounce, a suggestion Ghanaian authorities declined.
In addition to gold, the new system will also introduce a sliding-scale royalty regime for lithium production, with rates ranging between five and 12 per cent depending on market prices.
The lithium royalties will be linked to prices between $1,500 and $3,200 per metric tonne, while other minerals will continue to attract a flat royalty rate of five per cent.
Industry leaders have warned that the higher royalty regime could affect investment decisions.
Chief executives of some of the world’s largest gold mining companies have cautioned that the Ghana gold royalty policy could undermine future mining projects in the country.
The Ghana Chamber of Mines has also raised concerns about the potential impact on the industry.
Its Chief Executive Officer, Kenneth Ashigbey, told Reuters that the policy would “dry up new projects and output.”
However, Mr Tandoh dismissed fears that Ghana could lose its competitiveness in the global mining sector.
He said government modelling suggested the sliding-scale structure would strike a balance between boosting state revenues and maintaining reasonable profit margins for investors.
Mr Tandoh also argued that investors were more concerned about regulatory certainty than modest changes in operational costs.