Ghana is well endowed with substantial mineral resources, the major ones being gold, diamond, manganese and bauxite. The country also has significant unexploited deposits of iron ore, limestone, brown clays, kaolin, mica, columbite-tantalite, feldspar, silica sand, quartz, salt, etc. The commercially exploited minerals in Ghana include gold, manganese, bauxite and diamond. At the end of 2018, Ghana became the largest producer of gold in Africa, beating South Africa for the first time, with an output of 158 tonnes. GDP from mining in Ghana for the first quarter of 2019 was GHS6,949 million and increased to GHS7,247.54 million in the second quarter.
The mining industry, particularly gold production, is a major attraction for foreign direct investment in Ghana. Gold is mined mainly in the Ashanti, Eastern, Western and Northern regions of Ghana. Some of the key players in the gold mining sub-sector are AngloGold Ashanti, Gold Fields, Newmont, Golden Star and Kinross.
Mining operations in Ghana are categorised into large-scale and small-scale (including artisanal) mining and are regulated under a legal framework covering core mining legislation and policies as well as laws and policies on environment, business, investment, spatial planning, local government and other general legislation. Minerals found in Ghana are owned by the President in trust for the people of Ghana who, through the Minister of Mines and Natural Resources (the Minister), grants rights for the exploitation of minerals. No person is permitted to conduct mineral activities, including reconnaissance, prospecting, exploration, or mining in Ghana, unless that person has obtained a licence from the Minerals Commission and other related permits, consents and authorisations from State regulatory agencies responsible for the environment, spatial planning and local government. This applies to all persons, regardless of the interest they may hold in the land on which the minerals activity is being undertaken.
Ghana subscribes to the African Mining Vision (AMV), as such Ghana’s current Minerals and Mining Act (as amended) and its regulations, as well as the National Mining Policy, for the most part aligns with the principles of the AMV.
Ghanaian law is based on English common law. The key laws regulating the mining sector in Ghana are the 1992 Constitution, the Minerals and Mining Act, 2006 (Act 703) (as amended by the Minerals and Mining (Amendment) Act, 2015 (Act 900), the Minerals Commission Act, 1993 (Act 450), the Environmental Protection Act, 1994 (Act 492) and the Land Use and Spatial Planning Act, 2016 (Act 925)).
In addition to the core mining industry laws, there is other subsidiary legislation which provides regulation for specific areas set out in the principal enactment. This includes:
Under Ghanaian law, ownership of land is separate from ownership of minerals found in land. The 1992 Constitution of the Republic of Ghana vests ownership of all minerals in their natural state, throughout the country, the exclusive economic zone and an area covered by the territorial sea or continental shelf, in the President of Ghana in trust for and on behalf of the people of Ghana. Therefore, private landowners do not have title to the minerals found in their land and as such require licences from the government to prospect for or mine the minerals that may exist in their land.
A minerals right is only granted in respect of the minerals underneath the land and does not automatically transfer ownership of the surface rights to the mining lease-holder. Therefore, the owners of land are entitled to exercise surface rights over portions of these lands in accordance with customary law unless the surface rights have also been properly acquired from the owners. The Minerals and Mining Act provides for compulsory acquisition of land by the President of Ghana where privately owned land is required to secure the development or utilisation of a mineral resource. However, in the event of compulsory acquisitions, the Minister is required to ensure that there is prompt payment of fair and adequate compensation to all displaced persons and persons whose interest in the land is affected by the acquisition.
The state is the owner, grantor and regulator of all mineral rights. The state exercises its ownership and regulatory mandate through the Minister and the Minerals Commission. The Minister, on behalf of the President and on the recommendation of the Minerals Commission, may determine to grant, revoke, suspend or renew mineral rights. Following the conclusion of negotiations of the terms under which the mineral right is to be granted, the agreement becomes effective upon ratification by the Parliament of Ghana.
The state is entitled to 10% carried interest in all mineral operations. In some contracts, the state may be entitled to a “special share” that allows the government to veto certain decisions, eg, liquidation of the company. Also, the acquisition of shares in a mining company which results in a change of control of more than 25% of the shares of the mineral rights-holder or its holding company requires approval of the Minister.
The ownership right of the state is founded in the Constitution. Based on this, the President, through the Minister, may grant mineral rights to an applicant in accordance with applicable law. Mineral rights are expressed in contracts which become effective upon ratification by Parliament. A minerals licence or lease granted by the government has the status of property and may be transferred, assigned, mortgaged or otherwise encumbered in whole or in part with the prior approval of the Minister.
Mineral rights are granted by the Minister, who acts on the recommendation of the Minerals Commission on the basis of a contract negotiated by the government on a first-come, first-served basis. Mineral rights in Ghana are not granted by auction or tender. Three main types of mining rights can be created in Ghana; namely, the reconnaissance licence, prospecting licence and a mining lease:
An application for a mineral right (licence or lease) must be submitted to the Minerals Commission in the prescribed form and supported by the following documentation:
Upon receipt of a complete application, the Minerals Commission will review the application and submit a recommendation to the Minister within 90 days. Based on the recommendation of the Minerals Commission, the Minister will make a decision on the application and notify the applicant within 60 days of receipt of the recommendation of the Minerals Commission. Where the Minister is satisfied with the application, the terms of the licence or lease will be negotiated and signed by the relevant parties.
The Minerals Commission maintains a register of mineral rights which includes records of applications, grants, variations, assignment of mineral rights, transfers, suspensions and cancellations of mineral rights. The register is available for public inspection upon the payment of a prescribed fee. Members of the public may also be allowed copies of the records where required.
The tenure of contracts for mineral rights are generally guaranteed, subject to compliance by the mineral right-holder with the terms and conditions of the contract. The tenure of a mineral right and option for renewal or extension also depends on the nature of the activity to be undertaken. The Minister has the legal authority to suspend or cancel a mineral right where the holder fails to comply with the applicable law and/or fails to perform obligations under the contract.
Rights to Progress from Exploration to Mining
Prior to the expiry of a reconnaissance or prospecting licence, the mineral right-holder may exercise the option to apply for one or more mining leases in respect of all or any of the minerals stated on the licence and in respect of all or any one or more of the blocks which constitutes the reconnaissance or prospecting area. The rights required to conduct mining are a mining lease, a restricted mining lease to engage in mining for an industrial mineral and a small-scale mining licence for the conduct of small-scale mining.
Maintenance Requirements and Cancellation Procedures
A mining lease-holder is required to furnish the Minister, the Chief Inspector of Mines, the Minerals Commission and the Director of Geological Survey the following information at prescribed times to maintain its licence:
The Minister may cancel or suspend a mineral right on the following grounds:
The Minister is required to give notice to the licence-holder prior to cancellation or suspension of the licence. The notice allows the minerals rights-holder to remedy a breach of the condition of the mineral right within a reasonable period and, where the breach cannot be remedied, to show cause as to why the mineral right should not be suspended or cancelled.
The minerals rights-holder is generally in charge of the mining operation and exercises full control at all levels of the operation during the term of the agreement. As the resource owner, the government has a 10% carried interest in all companies with mining leases. In some cases, the state may be entitled to vote at general meetings and, where it acquires a “golden share”, may veto certain decisions like liquidation of the company. For a large mining company, it is customary for the state to nominate a representative to the board of directors. The licence-holder also exercises full control of recruitment, conditions of service of its employees and remuneration, subject to the applicable legislation.
Marketing and Transferability
A mineral right may only be transferred in whole or in part with the written approval of the Minister. The direct or indirect transfer of a mineral right is effective upon the written approval of the Minister. The Minister is legally bound to act reasonably in considering such applications and is prohibited from unreasonably withholding consent or giving consent subject to unreasonable conditions. Where the Minister does not give written approval within 30 days, the applicant may request the reasons for refusal of the application and is entitled to receive a response within 14 days.
Contracts for mineral rights contain covenants and conditions which require the mineral right-holder to conduct mining operations in a manner consistent with good commercial mining practices and in strict compliance with environmental standards and regulations. Mining companies are required to enter into a Reclamation Security Agreement (RSA) with the Environmental Protection Agency (EPA) to underwrite the environmental obligations under the mining lease. Under the RSA, companies are also required to submit periodic environmental reports to the EPA and provide security for reclamation in the form of cash and bank guarantees.
At the end of the life of the mine, the mineral rights-holder shall apply for a Certificate of Final Completion (CFC) from the EPA on completion of all reclamation actions approved by the EPA. The company will be released from all environmental obligations and liabilities on the date of final completion; however, the cash deposit component of the security will remain in place for a further three years and will be released on the third anniversary of the date of final completion, provided that there is no Acid Rock Drainage (ARD). Where there is ARD, the company will be required to provide remedial action prior to final release.
The EPA is the main government agency responsible for ensuring compliance with environmental laws. The EPA is a strong and effective institution and has extensive powers to ensure compliance with environmental regulations. Its functions include the formulation of policy on the environment, prescription of standards and guidelines and the issuance of environmental permits and pollution-abatement notices. An environmental permit is strictly required prior to undertaking all mining operations, including reconnaissance, prospecting and mining operations. The main environmental laws applicable to the mining operations are the:
Supplementary laws that support the main environmental laws are the:
The Environmental Permit is granted by the central government; however, the permitting process involves consents and approvals at the local government level (provincial) and the central government level (national). The key elements in the process include the following:
An environmental permit is valid for a period of 18 months, effective from the date of the issue of the permit.
Mining activities may be restricted or completely prohibited in areas designated as protected areas. These include water bodies, national parks, forest reserves, wildlife sanctuaries and coastal wetlands. Where mining is permitted within these protected areas, strict compliance with the terms of the environmental permits and local authority permits are enforced by the authorities.
Also, some mining leases may specifically set out information on sacred areas within the mining concession area. Protected areas include designated buildings, installations, a reservoir or dam, public road, railway or area appropriated for railway. Others include markets, burial grounds and cemeteries, or areas within a town or village or set apart for or dedicated to a public or religious purpose.
The government of Ghana encourages community engagement and collaboration between mining companies with local communities to ensure that the local economy is not adversely impacted by mining operations. In this regard, the Minerals and Mining Act guarantees a lawful owner/occupier of land within a mineral concession the right to (a) claim compensation for the disturbance of his or her rights over the land from the holder of the mineral right and (b) the right to graze livestock on or cultivate the land surface where the grazing or cultivation does not interfere with the operations of the mineral right-holder. The permitting processes also require mandatory community engagements to ensure that licence-holders obtain the buy-in of all stakeholders in the community prior to commencement of the project.
Ghana has put in place a system to redistribute a portion of its mineral income directly to the mining communities. Out of the total royalty payment, 20% is to be paid into the Mineral Development Fund established under the Mineral Development Fund Act to provide financial resources for the benefit of mining communities. The Board of the Fund oversees the full implementation of the Fund. The Act creates a Mining Community Development Scheme for each community, which is intended to facilitate the socio-economic development of communities in which mining activities are undertaken and that are affected by mining operations. In respect of distribution of the above amount (20%), half of this amount is to be transferred to public and research institutions that work on mining, the other half (10% of the total) transferred on a quarterly basis to the Office of the Administrator of Stool Lands, which dispenses it according to the following formula:
The Minerals Commission has also developed corporate social responsibility (CSR) and Community Development Agreements (CDA) guidelines for mining companies to support community sustainable development projects undertaken in mining areas. The Ghana Chamber of Mines has also adopted a policy where member companies set aside a minimum of USD1 out of every earning per ounce of gold and 1% of their net profit to develop their communities.
The Minister has a responsibility to ensure that the economic, social and cultural wellbeing of those affected by the mining operations are well catered for. To achieve this, the law provides for mandatory community consultation as a prerequisite for obtaining environmental permits for mining activity. The investor is primarily responsible for community engagements. Where the mining operations will affect the established rights in the community, a fair, adequate and prompt compensation is required to be paid for any disturbance caused to the surface rights of the owner. Any compensation payable must be approved by the Minister and the Land Valuation Division of the Lands Commission of Ghana.
There are no specially protected indigenous people or communities in Ghana. The law allows the owner or lawful occupier of land to retain the surface rights of the land to exercise surface rights over the land and appropriate portions of the land in accordance with customary law and or statute if it does not interfere with the mineral operations in the area (eg, right to graze livestock or to cultivate the land). The holder of the mineral right is also required to respect the rights of the owner and exercise its mineral rights subject to the surface rights of the owner or occupier of the land. Where the mining operations may be interfered with by the surface activities of the owner of the land, the owner of land is required to be compensated by the mineral rights-holder for that interference in their rights.
The Minerals Development Fund provides financial resources for the benefit of mining communities. The law provides for the creation of a Mining Community Development Scheme for each mining community which is intended to facilitate the socio-economic development of communities in which mining activities are undertaken which are affected by mining operations. Contributions into the Minerals Development Fund is mandatory for mineral rights holders.
Generally, the best examples are where mining operations are conducted in strict compliance with the terms and conditions of the mining licence or lease and the mineral rights-holder maintains a healthy level of engagement with the host community. In many areas with large mining operations, community leaders and management of the mining companies usually collaborate to develop projects and other initiatives for the benefit of the communities and to improve their collective livelihoods through sustainable development schemes and corporate social responsibility projects.
The operations of illegal small-scale miners on company concessions pose a great challenge for surrounding communities, mining companies and the government. The small-scale mining operations also pose individual health hazards and cause the pollution of water bodies and agricultural land, thus making the rivers unusable. There has been depletion of large tracts of arable lands because of alluvial mining without restoration of the land.
There are instances where owners of farmlands had their farms destroyed by investors who had acquired mineral rights without performing adequate due diligence on the land acquisition. Such cases have ended up in long litigation.
The government of Ghana (GoG) has over the years taken various steps to make climate change a significant item in the developmental agenda of the country. In this regard, Ghana adopted the National Climate Change Policy (NCCP) in 2014 with the objective “to ensure a climate resilient and climate compatible economy while achieving sustainable development through equitable low carbon economic growth for Ghana”. National resource management is a priority area in the NCCP, with the focus on increasing carbon sinks and improving the management and resilience of terrestrial, aquatic and marine ecosystems.
The Ministry of Finance has also created a Natural Resources, Environment and Climate Change Unit to oversee, co-ordinate and manage financing of and support to natural resources and climate change and green economy activities. The unit also facilitates the mainstreaming of climate change and green economy issues into national planning to promote sustainable development. There is a strict compliance and liability for breach of requirements related to climate change.
There is no specific legislation on climate change relating to mining in Ghana currently. However, the existing legislation contains provisions related to climate change. Under Ghana's environmental laws, there is a requirement to submit an Environmental Impact Assessment and periodic environmental reports in respect of economic activities that have an adverse effect on the environment. Failure to provide this may prevent a person from procuring the relevant environmental licences and permits. Mineral rights-holders are required to post a reclamation bond based on an approved work plan for reclamation to secure implementation of the work plan. There are also obligations related to the construction and location of tailings, waste product storage facilities and mine closures under the Minerals & Mining (Health, Safety & Technical) Regulations, 2012.
Corporate social responsibility in the mining sector in Ghana has over the years evolved to Community Sustainable Development Plans (CSDPs). CSDPs provide a framework under which mining companies work together with their host communities to develop projects that promote social and economic growth in communities. These initiatives enable the companies to focus on growing their core business while investing in the socio-economic growth of the communities. Examples of sustainable development initiatives are:
In Ghana each separate mineral operation is treated as an independent business, and the tax liability for the business is calculated independently from other sources of income. A mineral income tax of 35% is applicable on profits from mineral operations.
Minerals royalties at the rate of 5% are payable on the total revenue of minerals obtained by the holder of a mining lease. Other taxes, levies and imposts are:
The tax incentives available to the mining investor and projects include:
Also, the Minister may, as a part of a mining lease, enter into a stabilisation agreement with the holder of the mining lease subject to Parliamentary ratification. The stabilisation agreement ensures that the mineral right-holder will not, for a period not exceeding 15 years from the date of the agreement, be adversely affected by new laws or administrative directives and changes to the level and payment of royalties, taxes, fees and other fiscal imports, as well as laws relating to exchange control, transfer of capital and dividend remittance.
Businesses are required to pay tax on gains made on realisation of chargeable assets such as immovable property and other business assets. A realisation is deemed to occur where a person parts with the ownership of the asset, including when the asset is sold, exchanged, transferred, redeemed or surrendered. Where there is a realisation of chargeable assets, any gain derived is subject to an income tax (previously capital gains tax, which is now treated as income of the chargeable person). The gains made from the disposal of assets in the company is treated as an investment income of the company and included in ascertaining the chargeable income of the company from investment.
Also, an instrument transferring a mineral right is required to be stamped with the relevant statutory authority at a nominal amount.
The features that attract investment for mining in Ghana include:
With the exception of small-scale mining, which is reserved for Ghanaian nationals only, foreign investment is permitted in the mining value chain. Foreign companies are required to incorporate a Ghanaian company that shall be the holder of the mining licence. The minimum capitalisation requirement for incorporated companies depends on the nationality of the shareholders and the type of business it intends to carry out. The minimum capital categorisation is USD500,000 for wholly foreign-owned and USD200,000 for jointly owned foreign/Ghanaian ownership.
The minimum capital requirement may be met in cash or capital goods relevant to the investment. A foreign investor cannot engage in operations relating to mineral operations unless it commits to invest at least USD10 million in the operations.
International treaties or conventions related to the mining industry that Ghana has acceded to include:
Debt and equity financing are the main sources of finance available for exploration, development and mining. Ghanaian law allows an investor to source for funds either locally or on the international market to finance exploration, development and mining operations in the country.
Ghana’s capital market is regulated by the Securities and Exchange Commission and the Ghana Stock Exchange, which has the mandate to protect investors and maintain the integrity of the securities market. The Ghana Stock Exchange is the principal stock exchange in Ghana. The listing rules for securities (debt and shares) under the Ghana Stock Exchange generally apply to mining operations. Additionally, the acquisition of shares in a mining company that vests in a person, either alone or with an associate or associates, control of more than 20% of the voting power at any general meeting of the company or of its holding company requires the approval of the Minister. Currently, two international mining companies with subsidiaries and mining operations in Ghana are listed on the Ghana Stock Exchange: AngloGold Ashanti Ltd, of South Africa, and Golden Star Resources Ltd, of Canada.
There is also the Ghana Alternative Market, which is a parallel market to the Ghana Stock Exchange that focuses on small and medium-sized businesses with potential, including start-ups, and affords companies the opportunity to secure long-term capital, broaden their investor base and provide liquidity for their investors.
As is required of all encumbrances over mineral rights, the written consent of the Minister is required prior to the creation of security over mineral rights. The Minister is obliged to not withhold consent unreasonably or give consent subject to unreasonable conditions. Where the Minister does not give written approval within 30 days, he or she is required, upon a request by the applicant, to give a written reason for the failure to approve within 14 days of the receipt of the request for the reason.
Bauxite Mining Iron and Steel
The government of Ghana has commenced a programme for the development of an Integrated Aluminum Project that is a key component of the government’s industrialisation agenda and is expected to cover bauxite mining, alumina refinery and expansion of the existing aluminum smelter. The government has classified the bauxite to aluminium value addition as a strategic sector with the potential to have a multiplier effect on Ghana’s economy. Accordingly, the government commenced a process to promote private sector-led growth and development of the economy that seeks to engage the private sector to maximise the potential of all core and non-core investment areas of the sector. In line with the GoG’s objective, the Ghana Integrated Aluminium Development Corporation has been set up pursuant to the Ghana Integrated Aluminium Development Corporation Act, 2018 (Act 976).
Iron and Steel Ghana Integrated Iron and Steel Development
The Ghana Integrated Iron and Steel Development Corporation has recently been set up by the government to identify strategic partners to exploit the nation’s iron ore reserves and develop an integrated iron and steel industry with an emphasis on value addition.
Lithium in Ghana
The Minerals Commission has confirmed the discovery of lithium in Ghana and is currently exploring the commercial value of the mineral prior to comprehensive exploration activities. The lithium industry in Ghana is projected to grow in the coming years due to the rising green movement and the demand for electric vehicles and energy storage systems that use lithium-ion batteries, as well as the growing demand for its use in consumer devices.
Small-Scale Mining Law
A legislative instrument to regulate small-scale mining is currently at the drafting stage. The government has expressed the intention to resource and build the capacity of 14 mining courts in 2020 to expedite the adjudication of cases relating to illegal mining activities.
The Minerals Commission intends to pursue the passage of the Legislative Instrument for the implementation of the Community Mining Scheme by the end of 2020.
Beneficial Ownership Register
The Minerals Commission is collaborating with the Registrar General’s Department to develop and operationalise a Beneficial Ownership Register to curb corruption in the mining sector.
Directive on Financial Auditing of Producing Mining Companies
The Minister of Lands and Natural Resources recently issued a directive to the Minerals Commission to suspend the processing of all applications for extension of mining licences until a financial audit of all producing companies has been completed due to a lack of transparency in the operations of mining companies. The purpose of the audit is to enable the government to properly monitor content and the amount of gold extracted by the mining companies and exported out of Ghana.
African Mining Vision
Ghana subscribes to the African Mining Vision. Ghana’s current Minerals and Mining Act (as amended) and its regulations, as well as the National Mining Policy, for the most part aligns quite well with the principles of the AMV. The key legislative and policy initiatives that have been activated to improve the alignment include:
The increase in local content and local participation will continue in line with the government's policy focused on growing local technical and financial capacity in key sectors of the economy. Currently, the emphasis is on a preference for local products and employment of Ghanaians. The Minerals and Mining Act requires all holders of mining licences to, as much as possible, give preference to the employment of Ghanaians and also, in sourcing products for the purchase, construction and installation of mining facilities, mining companies give preference to:
In terms of recruitment and training of Ghanaians, applications for licences or a right to provide mining support service must necessarily be accompanied by a proposal that details how Ghanaians would be employed and trained by the investor.