Investment Opportunities

INVESTMENT OPPORTUNITIES

Emphasis on investment promotion has been a major objective of the industry with a shift to a comprehensive vision that facilitates greater exploitation of Ghana's industrial minerals.

Investment opportunities in the industry are in the areas of exploitation or production and industrial processes. They include:

a. The production of industrial minerals for both local and international consumption
b. Applications/processing of industrial minerals in the areas of construction, ceramics, paints, electronics, filtration, plastics, glass, detergents and paper.

Production
a. Companies to set up refinery facilities to serve the local industry for value-added products.
b. Companies to exploit and produce solar salt. Potential exists for the utilization of part of the salt to produce caustic soda which is a raw material for the soap and detergent industry. The chlorine co-product can also be used as water treatment chemical and also serve as raw materials for the production of various health and sanitation chemicals.
c. Companies to produce clinker for the mining industry. Demand for clinker is estimated at over one million metric tons per annum.
d. Companies to exploit the extensive deposit of granite to produce high quality floor tiles.
e. Companies to produce dimension stones for the building industry
f. Suppliers to supply salt for the local market.

Engineering and Services
a. Service companies to provide support services, including contract drilling, assay laboratories, contract mining and geological consultancies to mining companies in the country.
b. Companies to set up manufacturing plants and machinery for the mining industry.
c. Companies to set up downstream production facilities to manufacture key input for the mining industry. Examples, mill balls, drill bits, cyanide and activated carbon.

INVESTMENT INCENTIVES

Specific incentives to the sector include:

a. Depreciation 75% of the capital expenditure incurred in the first year of investment and 50% of the declining balance in subsequent years
b. Investment allowance of 5% in the first year only
c. Losses in each financial year not exceeding the value of the capital allowance for the year may be carried forward. Capitalization of all pre-production expenses approved by the authorities when the holder starts development of commercial mining.
The Holder of a Mining Lease is also granted the following Benefits:
a. Exemption of staff from out of Ghana payments of income tax relating to furnishing accommodation at a mine
b. Immigration quota for expatriate personnel free from any tax imposed by government for the transfer of foreign currency out of Ghana
c. Exemption from the selective alien employment under the selective alien employment decree

Ghana's Minerals and Mining Act 2006, Act 703 has added some significant aspects to the country's commercial law and they are:
a. Expenditure on exploration and development may be capitalized in accordance with regulated amortization provision for tax relief
b. Capital allowances have been designed to shorten the pay-back period and include 75% write off of capital in the first year and 50% annually thereafter on a declining balance
c. Retention of a proportion of revenue in foreign currency account for use in acquiring essential equipment and spare parts required for mining operations which would otherwise not be readily available without the use of such earnings
d. Exemptions from import duties on imported plant and equipment

 

The Market

Industry Composition

Globally, Ghana is renowned for four (4) important mineral resources, namely gold, diamonds, manganese and bauxite. The minerals extractive industry had fifteen (15) major large scale mining companies operating in 2015. Out of these, thirteen (13) produced gold whilst one (1) each produced bauxite and manganese. Below is a table of these companies and their type of mining operation

NO.

COMPANY

TYPE OF COMMODITY

SURFACE OPERATIONS

UNDERGROUND OPERATIONS

1

Golden Star (Wassa) Ltd.

Gold

 

2

Golden Star (Bogoso/Prestea) Ltd.

Gold

 

3

Gold Fields Ghana Ltd.- Damang Mine

Gold

 

4

Gold Fields Ghana Ltd. - Tarkwa

Gold

 

5

AngloGold Ashanti Iduapriem Mine

Gold

6

AngloGold Ashanti Obuasi Mine

Gold

7

Med Mining Company

Gold

 

8

Chirano Gold Mines Ltd

Gold

9

Newmont Ghana Gold Ltd–Ahafo Mine

Gold

10

Mensin Gold Bibiani Ltd

Gold

11

Perseus Mining Ghana Ltd.

Gold

 

12

Adamus Resources Ltd.

Gold

 

13

Newmont Golden Ridge Ltd. Akyem

Gold

 

14

Ghana Bauxite Company Ltd

Bauxite

 

15

Ghana Manganese Co. Ltd.

Manganese

 

Additionally, there were over three hundred registered small-scale mining groups and ninety mine support service companies. The small-scale mining industry is reserved for Ghanaians.

Minerals Prospecting  

The Minerals Commission issued 1,261 permits in 2015 compared to 1,366 in 2014 to regulate various mineral operations as detailed below

OPERATION

No. OF PERMITS

 

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Total

Mining Operating Permit

29

5

1

0

35

Salt Operating Permit

3

0

1

0

4

Clay / Kaolin Operating Permit

0

0

1

0

1

Quarry Operating Permit

52

16

5

7

80

Sand / Gravel Winning Permit

91

14

18

3

126

Gold / Diamond Digging Permit

47

28

28

9

112

Prospecting Permit

37

38

9

6

90

Permit to Purchase Explosives

57

20

8

4

89

Permit to Store Explosives

112

19

6

0

137

Permit to Transfer Explosives

91

95

111

73

370

Explosives Transport

3

0

0

0

3

Explosives Manufacture

4

0

0

0

4

Mining Services Operating Permit

109

26

29

8

172

Explosives Truck / Van Operating Permit

37

0

1

0

38

Mercury License

0

0

0

0

0

TOTAL

672

261

218

110

1,261

  

2015 Production Summary 

The year 2015 witnessed a mixed performance in the production of the traditional minerals. Gold and Diamonds production witnessed a significant fall in production whilst manganese and bauxite saw increases in production. A total of 3,623,740 ounces of gold was produced representing 18.96% decrease over 2013 production of 4,471,573 ounces.

Small scale miners’ contribution to total national production amounted to 1,031,176 ounces (28.46%). The reduction in production was mainly attributed to the poor performance of the gold price on the world market during 2015.

Diamond production for the review year was 174,364 carats. This represents a significant decrease of 27.72% over 2014 figure of 241,235 carats. In 2015, a total of 1,014,605 metric tonnes of bauxite was produced compared to 798,114 metric tonnes in 2014. This represents an increase of 216,491 metric tonnes (27.13%) over the previous year. Manganese production also increased marginally by 2.01%, from 1,531,394 metric tonnes in 2014 to 1,562,769 metric tonnes in 2015.

Investment Inflow into the Mining Sector

Total Direct Investment into the mining sector in 2015 amounted to US$965 million. Out of this, US$862 million (89.33%) went into mining; US$84 million (8.70%) was spent on exploration projects, whilst US$19 million (1.97%) was spent by Mine Support Services Companies.

Table below shows investment inflow by type of activity from 2000 to 2015.

Year

Producing Mining (US$m)

Exploration (US$m)

Mine Support Service (US$m)

TOTAL

2011

703.80

242.00

24.50

970.30

2012

1,170.90

246.20

26.90

1,444.00

2013

896.70

235.10

22.30

1,154.10

2014

796.00

135.00

19.40

950.40

2015

862.00

84.00

19.00

965.00

The figures above shows a considerable dip in investments into the mining sector, especially in exploration and production operations. The major reason was the declining gold price. Among companies that invested significant amounts in the Ghanaian mining sector were Newmont Ghana Gold Limited, Adamus Resources Limited, GoldFields Ghana Ltd, Chirano Gold Mines Ltd and Perseus Mining Company.

Employment

There was a marginal decrease in the mine labour, from 21,922 in 2014 to 19,956 employees in 2015.  This is as a result of the decline in gold price on the global commodities market. This is expected to dwindle further in 2016 unless the metal price goes up. It is noteworthy that, out of the total mine labour of 19,956 employees in 2015, expatriates represented 1.5% (291) compared to 1.6% (342) of a total mine labour of 21,922 in 2014. 

 

 

Investing in Ghana's Mineral Processing Sector

Sector  Overview

Ghana is endowed with substantial mineral resources and has a well-established mining sector, which has grown considerably in recent years to represent an important pillar of the Ghanaian economy.

The general slowdown in the mining industry however resulted in medium and micro impacts in terms of loss of employment and other local socio-economic contributions, as operating mines and exploration companies restructured to cut cost in the face of falling gold price. The mining sector contributed GH¢1,285 million to Government revenue in 2015 as against GH¢1,193 million in year 2014. This represented an increase of 7.79% over the previous year’s figure. Pay As You Earn (PAYE) from the mining sector contributed GHC 478.1 million in 2015 as against GHC 291.73 million in 2014 representing a 63.88% increase. In 2015, a total of GHC 485.63 million was paid as mineral royalties. This represents a 3.24% increase over the 2014 value of GHC 470.37 million. It is however worthy to know that, cooperate income tax paid by mining companies decreased by (25.28%) from GHC 429.53 million in 2014 to GHC 320.94 million in 2015. 

In 2015, mining sector contributed GHC 1,285 million (14.14%) of a total Domestic Revenue Collection of GHC 9,091 million. It is worthy to note that, though revenue generated from the mining sector has been on the steady assent, the contribution of mining sector to total domestic tax collection has been declining. Figure 4.4 illustrates the trend of contribution of mining sector to total Domestic Tax collection over past ten (10) years.

Earnings from minerals exported during the year 2015 amounted to US$ 3,322.61 million compared to US$ 4,516.29 million earned in year 2014. This shows a decrease of 26.43%. The unfavorable price of gold, Ghana’s flagship mineral, on the international commodity market which resulted in a decline in gold production accounted for the decrease in revenue.  Of the total earnings from mineral exports in 2015 (US$ 3,322.61), gold accounted for US$ 3,212.59 million (96.68%), bauxite brought in US$ 41.06 million (1.24%), whilst diamonds contributed US$ 4.22 million (0.31%) and Manganese racked up US$ 64.74 million (1.95%)

In year 2015, data from the Bank of Ghana indicate that total merchandise export earnings were US$10,356.70 million compared to US$ 12,983.16 million in year 2014. The contribution of minerals to the earnings for the year was 32.0% of the total merchandise exports.  

 

Regulatory Framework

Minerals and Mining (Amendment) Act, 2015 (Act 900)

Working together with the Ministry responsible for Mines, the Attorney-General’s Department and the Parliamentary Select Committee on Mines and Energy, the Minerals Commission drafted an amendment to Act 703, which the Hon. Sector Minister submitted to Parliament. The amendment relates to provisions of royalty payments and punishment for offences in engaging in illegal mining. 

The amendment has been passed and its main focus is to ensure that illegal small-scale mining (galamsey) is criminalised and its perpetrators punished severely to deter others from undertaking such activities. Hopefully, this will help bring some sanity into the sector.

Local Procurement Issues 

Under the Minerals and Mining (General) Regulations, 2012, (L.I. 2173), mine support service providers, holders of mineral rights and holders of licence to export or deal in minerals are required to submit a 5-year Procurement Plan to the Minerals Commission for approval. In the preparation of the Procurement Plans, companies are required to take into account the requirements of a Local Procurement List of goods and services with Ghanaian content, which the Commission shall make available annually to the mining industry.

Working together with the Chamber of Mines and other stakeholders (including the Association of Ghana Industries), the Minerals Commission identified and added eleven (11) products (goods/services) to the existing local procurement list. The current updated list (Second Edition) comprises nineteen (19) goods/products which shall be procured in Ghana. The list is as provided in the table below.

Table I: Local Procurement List

No

Products (Goods/Services)

1

Grinding media

2

Explosives (emulsion)

3

Cement and cement products/Grout

4

Quick and hydrated lime

5

Electrical cables

6

High Density Polyethylene (HDPE) and Polyvinyl Chloride (PVC) pipes

7

Retreading of Tyres

8

General Lubricants

9

Bolts and Nuts

10

Crucibles

11

Plastic Sample Bags

12

Calico Bags

13

Bullion Boxes

14

Chain Lining Fencing, Wire netting, Barbed wire etc.

15

Conveyor rollers

16

Metal/PVC core trays

17

Overalls and work cloths

18

Haulage Services

19

Catering Services

 

Other Developments

The Ministry developed Minerals and Mining Policy of Ghana to promote diversification to lesser known minerals, and linkages between the mining sector and other sectors of the economy. In 2017, the Ministry will facilitate approval and implementation of the policy. This is expected to increase local content participation, among others.

Additionally, the Ghana Geological Survey Authority Act, 2016 (Act 928) was passed by Parliament to enhance new mineral discoveries throughout the country and diversify the country’s mineral resource base from the traditional minerals.

The Ministry is developing a fully-fledged computerized mining cadastral system to ensure accountability and compliance in the management of mineral rights to boost investment. When completed in 2017, investors can apply for mineral rights online, and conduct cartographic searches in District Offices.