Bloomberg News

Ghana Mining Chamber Sees Investment Drop as Tax Talks Continue

March 01, 2012

Mining companies in Ghana, Africa’s second-largest gold producer, are reviewing expansion plans and investments as talks with the government over plans to boost taxes, the Ghana Chamber of Mines said.

“Most of the companies have adopted a wait-and-see attitude,” said Toni Aubynn, chief executive officer of the group, in an interview yesterday in Accra, the capital. “Some companies said they are facing difficulty with their boards approving funds for further investment and expansion.”

Finance Minister Kwabena Duffuor in November raised the corporate-tax rate on mining companies to 35 percent from 25 percent and introduced a windfall tax of 10 percent in the West Africa nation’s budget statement for 2012.

In December, Gold Fields Ltd. (GFI) said Ghana’s tax plan could force it to halt expansion plans and on Feb. 17, Chief Executive Officer Nick Holland said the company is “cautiously optimistic” on achieving a “win-win situation” for the government and miners. Producers including AngloGold Ashanti Ltd. (AU) and Newmont Mining Corp. (NEM) also operate in Ghana.

“If investors fail to put in money to expand their projects or start new ones then going forward there will be fewer producing mines” and the industry won’t be able to create jobs, Aubynn said.

Ghana relies on gold, oil and cocoa for most of its export income.

The planned policy is not “anti-investment,” Deputy Finance Minister Seth Terkper said by phone yesterday. “Ghana still has some incentives that make the sector attractive to investors.”

The chamber is holding talks with the government about the planned tariff increases, Aubynn said.

“Our people are well informed and know that the windfall tax had worked perfectly in other places too,” said Terkper.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.


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