Brewing steadily in the Ghanaian media is the story of an apparent back door deal signed between the Government of Ghana (GoG) and Goldfields Ghana Ltd. The growing campaign by Civil Society to ensure transparency in a Development Agreement signed between the two parties is being led by The Third World Network – Africa (TWN). The TWN describes Goldfield’s development agreement with the government of Ghana as illegal, because it purports to grant Goldfields royalty and corporate tax rates more favourable than what is set out in the relevant legislation in Ghana. According to the Coordinator of TWN-Africa, Dr. Yao Graham, the agreement signed over the Tarkwa and Damang mines of Goldfields is “flawed, immoral, illegal” and a “short change” of the Ghanaian people.
The Act of the Deal
Under the deal, Goldfields will enjoy a 3% reduction in Ghana’s corporate tax rate and a change in the royalty rate to range between 3% – 5%, effective January 2017. According to the deal, when the price for an ounce of gold is $2,299 dollars, the company will be required to pay 5% as royalties and could pay as low as 3% when the price of gold is at $1,300 dollars. In view of this new agreement, the TWN disclosed that with the price of gold hovering around $1, 895 in 2011 and having dropped since, Goldfields might demand that they pay less than the limited royalty rate.
Twisting the Law
The signing of a Development Agreement between GoG and a mining company under the Minerals and Mining Act demands that the Minister in charge of mineral resources can only enter into a such an agreement under a mining lease with a person or company where the proposed investment by the company (in this case Goldfields) exceeds Five Hundred Million United States Dollars. As things stand, Goldfields has not proposed any new investment of USD500 million in Ghana’s mining sector as required by the law.
Speaking in an interview with an Accra based radio station, Joy Fm, Tony Aubynn, Chief Executive of the Ghana Minerals Commission attempted to justify the development agreement by stating that “Goldfields is perhaps the single largest investor across the two mines (Tarkwa and Damang) so they qualify by our own laws to sit with the Minister and get into a development agreement.” This argument however is misleading. The law does not require a mining company to come into Ghana and exploit our resources and on the back of the assets acquired in retrospect, hold itself as qualified for a development agreement. However, the law clearly necessitates a prospective investment proposal of USD500 million be made; in order to qualify for such an agreement, and Goldfields is not bringing in no such money. As such, any move to grant them such an agreement can only amount to a misapplication of the law
It’s a Juicy One for Goldfields
The trimmings for Goldfields cannot get any better when one considers the fact that the stability (development) agreement granted the company will ensure that for 15 years, it will not be affected by subsequent changes to laws relating to exchange control, transfer of capital and dividend. The company will also not be affected, by any new enactment, order or instrument that exists at the time of this so called stability agreement.
Meanwhile, No Guarantees for Ghanaian Workers
The main reason government and its agents cite for signing this stability agreement with Goldfields is to save as many as 2000 jobs. This they believe would be the number of people rendered jobless in the event that Goldfields decide to fold up, due to falling gold prices on the global market. Despite the preceding argument, the government went ahead to sign the development agreement with no guarantees that all 2000 jobs should be maintained by Goldfields. According to TWN, “Goldfields has also not made any commitment to save 2000 jobs at the Damang mines.”
As such, despite the signing of this agreement, Goldfields is at liberty to still lay off Ghanaian workers at will; that is, if business does not go according to their projections. So where is the guarantee for the Ghanaian worker in all these?
Parliament was in on the Action?
Revelations from TWN indicated that on the 17th of March, parliament waived a 48 hour notice period, tabled a motion and unanimously adopted the Goldfields agreement without debate. Dr. Graham considers the move as an abuse of process as Ghana’s mineral resources are being handled as personal properties for a few people in government. TWN demands that since the Mines and Energy committee of parliament held that the terms of the law had been met and based on that information parliament unanimously passed a motion that granted a development agreement to Goldfields, government must be heard and it must give justification which is consistent with section 49 of the Minerals and Mining Act, which provides the framework for entering into such a development agreement
Expert Advice Kicked to the Curb
Goldfields’ development agreement also contravenes the recommendation of the Mining Contract Review Committee, set up by this same government in 2012, chaired by Professor Akilagpa Sawyerr, to review existing contracts and to make proposals for future stability and other developments in the gold mining sector. The Committee recommended that the royalty rate should be 5%.
Coalition on Mining to the Rescue?
It is obvious that a lot remains to be answered regarding this deal. Meanwhile, the National Coalition on Mining has kicked against the Goldfields deal and is expected to start a full blown campaign to reverse it.