Ghana’s abundant resource in gold produced $23 billion in earnings from 2013 to 2016, but only $1.7 billion for the country’s coffers, according to a newly released report by the African Centre for Energy Policy in Ghana.
Titled “Golden Days for Newmont,” the report said the U.S.-based Newmont Mining Corporation paid less than $500 million (US) in taxes to the government of Ghana from 2003 to 2012.
The yawning gap between export earnings and royalties to the government was documented as far back as 2008. Gold accounted for 40 percent of exports in that year, with a value of $2.2 billion, whereas the government received only $116 million in taxes and royalties from mining firms, which is less than 4 percent of the country’s total tax take, according to The Economist news magazine.
Low dividends from gold happened at a time when the price of the commodity was good, the energy group charged.
Ghana’s mining agreements have drawn criticism over the years from community activists, including Friends of the Earth, the Wassa Association of Communities Affected by Mining and Third World Network, among others, because, in their view, the communities barely saw any benefit from the mines.
Newmont’s gold mining in particular has come under harsh criticism, with accusations of displacement of communities, spoiling the environment and triggering labor strife because of low wages.
Last month, Ghana announced a new deal with Newmont. “It’s a win-win situation … We’re both happy,” Minister Nii Osah Millshe said in a radio interview. Under the new terms, Newmont would make some upfront payments of up to $27 million, a small fraction of the alleged underpayment. They will also pay more in royalties to Ghana when gold prices go up and pay less, proportionately, when gold prices drop.
But gold prices have been falling since 2011 in part because of a stronger dollar and China’s falling currency, leading some analysts to doubt that gold has hit bottom or could reach new highs in the next two years.
A particularly unpopular part of Ghana’s standard mining contract has been the Stability Agreements, which deny government the power to make changes to the original contract.
Ghana’s economy is set to slow for the fourth consecutive year, according to African Development Bank statistics, but the government must, under the terms of a new IMF loan of $114.6 million, impose new taxes, including on gasoline.
The tax hikes will also affect Ghanaians who earn income abroad and will now be taxed on the full amount at home. Previously only income earned in the country was taxed.