Mining 2021

Last Updated January 21, 2021


Law and Practice


AB & David is a pan-African business law firm incorporated in Mauritius to serve clients engaged in business and projects in Africa. The firm operates from nine cities across eight jurisdictions in Africa and through “best friend” firms in 16 jurisdictions. The firm is able to assist clients in 24 African countries. The focus is simple: to ensure businesses and projects succeed in Africa by helping clients minimise the risks associated with doing business on the continent. Lawyers in the firm work exclusively on deals in the mining sector and understand and provide advice relevant to the client's business. With offices in Burundi, Ghana, Liberia, Rwanda, Uganda, Zambia and Zimbabwe, AB & David is able to pull together a cross-border team quickly to advise on a deal. The firm's mining practice covers project development and restructuring transactions, regulation and compliance.

Ghana is endowed with substantial mineral resources, the major ones being gold, diamond, manganese and bauxite. The country also has significant unexploited deposits of bauxite, 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 2019, Ghana grabbed the top spot from South Africa for gold production after mining more than 142.2 metric tonnes of gold in 2019.

GDP from mining in Ghana for the first quarter of 2020 was GHS7,044.03 million and decreased to GHS6,843.03 million in the second quarter. The decrease is partly attributable to the global travel restrictions put in place to manage the worldwide outbreak of COVID-19, with most buyers based in China and Zurich. The impact of the pandemic has not been significant on the production of gold, as there has been no suspension of production in Ghana.

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 subsector are AngloGold Ashanti, Gold Fields, Newmont Goldcorp, Golden Star, Asanko Gold and Kinross (Chirano mine).

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 the 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); the Minerals Commission Act, 1993 (Act 450); the Minerals Income Investment Fund Act, 2018 (Act 978); the Environmental Protection Act, 1994 (Act 492); and the Land Use and Spatial Planning Act, 2016 (Act 925).

  • The Constitution vests all mineral rights in the President on behalf of the people of Ghana and mandates that all agreements for the grant of mineral rights are subject to parliamentary ratification. It also provides for the establishment of the Minerals Commission.
  • The Minerals Commission Act sets up the Minerals Commission as the government agency responsible for the regulation and management of the utilisation of mineral resources, as well as the co-ordination and implementation of policies relating to minerals. The Minerals Commission is required to maintain a register of mineral rights.
  • The Minerals and Mining Act (as amended) provides the overarching framework for the grant of mineral rights and the basis for regulations covering health and safety, general operations, use of explosives, licensing, support services, compensation and resettlement. The 2019 amendment (Act 995) seeks to prevent foreign nationals from providing mining support services to small-scale miners. It also imposes punitive sanctions on the sale and purchase of minerals without a licence and the facilitation of small-scale mining by foreign nationals.
  • The Minerals Income Investment Fund Act establishes the Minerals Income Investment Fund, with a mandate to maximise the value of the income due to Ghana from its mineral wealth for the benefit of Ghanaians. The Fund will focus on monetising the minerals income accruing to the state in a beneficial, responsible, transparent, accountable and sustainable manner, and developing and implementing measures to reduce the budgetary exposure of the state to minerals income fluctuations.
  • The Environmental Protection Act sets up and empowers the Environmental Protection Agency (EPA) as the leading public body for protecting and improving the environment in Ghana, and for setting standards for environmental compliance and enforcement. The Act requires that all activities in Ghana that have the potential to adversely affect the environment must be subjected to environmental assessments by the EPA and an environmental permit must be issued in respect of such operations prior to the commencement of such operations.
  • The Land Use and Spatial Planning Act provides the legal framework under which the local authority responsible for the area in which the minerals activity is being undertaken may authorise and regulate mineral activities within its jurisdiction.

In addition to the core mining industry laws, there is other subsidiary legislation that provides regulation for specific areas set out in the principal enactment. This includes:

  • the Minerals and Mining (Health, Safety and Technical) Regulations, 2012 (L.I. 2182);
  • the Minerals and Mining (General) Regulations, 2012 (L.I. 2173);
  • the Minerals and Mining (Support Services) Regulations, 2012 (L.I. 2174);
  • the Minerals and Mining (Compensation and Settlement) Regulations, 2012 (L.I. 2175);
  • the Minerals and Mining (Licensing) Regulations, 2012 (L.I. 2176);
  • the Minerals and Mining (Explosives) Regulations, 2012 (L.I. 2177); and
  • the Environmental Assessment Regulations, 1999 (L.I. 1652).

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. The Minerals and Mining Act also reiterates this position that minerals in their natural state are vested in the President in trust for 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 leaseholder. 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.

By law, the state is entitled to 10% free carried interest in the rights and obligations of the mineral operations. In some contracts, the state may be entitled to a “special share” for no consideration that also requires the government’s prior written consent in respect of liquidation of the company and the disposal of a mining lease. The ownership of the 10% carried interest in the rights and obligations of the mineral operations does not preclude the state from any further participation in mineral operations that may be agreed with the mineral rights-holder. Also, the acquisition of shares in a mining company that 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 that 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 but by direct negotiations with the prospective holder. Three main types of mining rights can be created in Ghana; namely, a reconnaissance licence, a prospecting licence and a mining lease.

  • Reconnaissance licence – this is granted for an initial period of not more than 12 months and may be renewed not later than three months before the expiry of the initial term of the licence. The licence may be extended only once, for a period not exceeding 12 months.
  • Prospecting licence – a prospecting licence is granted for an initial period of not more than three years and may be renewed not later than three months before the expiry of the initial term for a further period of not more than three years.
  • Mining lease – mining leases are granted for an initial term of 30 years and may be renewed for a further period of 30 years.

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:

  • details of the financial and technical resources available to the applicant for the proposed mineral operations;
  • an estimate of the budget proposed for the operations;
  • details of the programme for the proposed mineral operations; and
  • details of the applicant’s proposals with respect to employment and training in the mining industry of Ghanaians.

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 that 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 is generally guaranteed, subject to compliance by the mineral rights-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.


  • A reconnaissance licence is granted for an initial period of 12 months and may be extended once only for a period not exceeding 12 months if the Minister is of the view that it is in the public interest to do so.
  • A prospecting licence is granted for an initial period of three years and extended for another three years.
  • A mining lease is granted for an initial term of not more than 30 years. This may be renewed for a further period of 30 years.

Rights to Progress from Exploration to Mining

Prior to the expiry of a reconnaissance or prospecting licence, the mineral rights-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 that constitute 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 leaseholder is required to furnish the Minister, the Chief Inspector of Mines of the Minerals Commission and the Director of Geological Survey the following information at prescribed times to maintain its licence.

  • Quantities of gold, diamonds and base metals won in that quarter, quantities sold and revenue received, and royalties payable for that period.
  • Results of its operations in the lease area. The report shall include a description of any geological or geophysical work carried out by the company.
  • Results of operations during any financial year, with an estimate of production and revenue to be obtained in the next financial year.
  • A report of the particulars of any proposed alteration to the company’s constitution, or a fresh issue of shares in excess of an amount equivalent to the stated capital of the company.
  • Submission of annual financial reports.

The Minister may cancel or suspend a mineral right on the following grounds:

  • failure to make required payments on the due date;
  • insolvency or bankruptcy;
  • knowingly making a materially false statement to the Minister in connection with the mineral right;
  • ineligibility to apply for a mineral right; or
  • failure to implement an approved mining programme for two or more years without good cause.

The Minister is required to give notice to the licence holder prior to cancellation or suspension of the licence. The notice allows the mineral 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.

Operating Control

The mineral 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 the rights and obligations 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, such as 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, who 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 that require the mineral rights-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 EPA to underwrite the environmental obligations under the mining lease. Under an 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 Environmental Protection Agency and Relevant Laws

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 Environmental Protection Agency Act 1994 (Act 490) – this is the general framework for environmental protection and provides the legal basis for requiring environmental impact assessments, the issuance of environmental permits and enforcement by the EPA; and
  • the Environmental Assessment Regulations 1999 (L.I. 1652) – this sets out the procedures and requirements for obtaining environmental permits for mining operations, including the content of environmental reports and environmental impact statements.

Supplementary laws that support the main environmental laws are the following.

  • The Forestry Commission Act, 1991 (Act 571) – this law establishes the Forestry Commission for the regulation, conservation, utilisation and management of forest and wildlife resources, and the co-ordination of policies related to them. Authorisation from the Forestry Commission is required for mining operations within forest areas.
  • The Water Resources Commission Act, 1996 (Act 552) – this law sets up the Water Resources Commission (WRC) with the mandate to regulate and manage water resources in Ghana and co-ordinate government policies in relation to them. The WRC grants permits for the use of water for industrial and commercial purposes, including mining.
  • The Water Use Regulation, 2001 (L.I. 1692) – this provides applicable regulations for the abstraction of water for mining operations, including processing of ore and dust suppression. Mining companies are required to obtain a permit from the WRC for the use of water for mining, including surface and underground water.
  • The Drilling Licence and Groundwater Development Regulations, 2006 (L.I. 1827) – this regulation provides the legal basis and conditions for the issuance of water drilling licences by the WRC for mining operations.

Environmental Permits in Ghana

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:

  • application for a mineral right by an applicant;
  • recommendation from the Minerals Commission to the Minister on grant of a right;
  • grant of a mineral right (reconnaissance licence, prospecting licence, mineral lease);
  • application for an environmental permit and payment of approved fees;
  • submission of particulars for initial assessment of the environmental impact;        
  • screening of the application and a screening report by the EPA;
  • where the EPA is of the opinion that an environmental impact statement is required before the issuance of the environmental permit, it must ask for a preliminary environmental report;
  • the Agency may also require an environmental impact statement in addition to the preliminary environmental report if the exploration and mining activity could cause significant damage to the environment; and
  • grant of an environmental permit.

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, including 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 is 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, reservoirs or dams, public roads, railwaysand areas appropriated for railways. 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 and 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 (i) claim compensation for the disturbance of his or her rights over the land from the holder of the mineral right and (ii) graze livestock on or cultivate the land surface, where the grazing or cultivation does not interfere with the operations of the mineral rights-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 is to be transferred to public and research institutions that work on mining and the other half transferred on a quarterly basis to the Office of the Administrator of Stool Lands, which dispenses it according to the following formula:

  • 10% for administrative expenses of the Office of the Administrator of Stool Lands;
  • 25% to the stool/chief;
  • 20% to the traditional authority; and
  • 55% to the district assembly (for development projects as compensation for mine-associated costs).

The Minerals Commission has also developed corporate social responsibility (CSR) and community development agreement (CDA) guidelines for mining companies to support sustainable community development projects undertaken in mining areas. The Ghana Chamber of Mines has also adopted a policy in which 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 well-being of those affected by the mining operations is 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, the 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 the 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 that are affected by mining operations. Contributions into the Minerals Development Fund are mandatory for mineral rights-holders.

Good Examples

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.

Bad Examples

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 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”. Natural 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 solely focused on climate change and sustainable development relating to mining in Ghana currently. However, the existing legislation provides the necessary regulation of operations to achieve the national objectives on climate change and sustainable development. 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 these 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 and Mining (Health, Safety and Technical) Regulations, 2012.

Corporate social responsibility in the mining sector in Ghana has, over the years, evolved to community sustainable development plans (CSDPs), which 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 as follows.

  • Foundation investment and trust funds set up by the major mining companies (AngloGold, Gold Fields, Golden Star, Chirano (Kinross), etc). These are funded through sales (USD1/ounce) and profits (1%) from each mine to support education, infrastructure, human resource development, natural resources, economic empowerment, health, etc in the host communities;
  • The Gold Fields Youth in organic horticulture production programme (Youhop), which focuses on creating employment and improving incomes for about 1,000 youths in the community, along the entire horticulture value chain.
  • The Newmont Agricultural Improvement & Land Access Programme (AILAP), which aims to maintain or exceed pre-project levels of crop productivity and ensure compensated farmers have access to land. The initiative provides free, improved agricultural inputs to persons who were compensated by the company for land in the mining zone.

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:

  • rental charges with respect to the area to which the mining right relates;
  • stamp duty (on instruments and documents);
  • local authority business and property levies; and
  • withholding taxes.

The tax incentives available to the mining investor and projects include:

  • reduced customs import duties in respect of plant, machinery, equipment and accessories imported specifically and exclusively for mineral operations;
  • exemption of staff from the payment of income tax on furnished accommodation at the mine site;
  • immigration quotas in respect of the approved number of expatriate personnel;
  • transferability of capital;
  • transferability of dividends; and
  • deferment of stamp duty;

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 rights-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 the 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). Any gain 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:

  • tax waivers, including import duty exemptions from the payment of customs duties on machinery, plants and equipment imported specifically and exclusively for mining operations;
  • prohibition against discriminatory treatment;
  • guarantee against expropriation and nationalisation (unless in the national interest);
  • guaranteed unconditional transferability of capital, profits and dividends, and personal remittances attributable to the investments (subject to applicable law);
  • remittance of proceeds in the event of sale or liquidation of the enterprise or any interest attributable to the investment, payments in respect of loan servicing where a foreign loan has been obtained, and fees and charges in respect of registered technology transfer agreements;
  • the right of expatriate employees to make remittances abroad that do not exceed the basic net salary of that person subject to the fulfilment of all tax obligations;
  • assistance with the procurement of work and residence permits for foreign employees from the relevant statutory authorities; and
  • a dispute settlement mechanism – the application of internationally accepted rules in any dispute, including the rules of procedure for arbitration of the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.

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:

  • the International Convention on the Elimination of All Forms of Racial Discrimination;
  • the African Charter on Human and Peoples’ Rights;
  • the Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Women in Africa;
  • the International Covenant on Economic, Social and Cultural Rights;
  • the United Nations Framework Convention on Climate Change;
  • the 2001 Stockholm Convention on Persistent Organic Pollutants; and
  • the African Charter on the Rights and Welfare of the Child.

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 neither withhold consent unreasonably nor 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.

African Continental Free Trade Area (AfCFTA)

Ghana is a signatory to the Agreement establishing the African Continental Free Trade Area, which seeks to create a single continental market for goods and services, with free movement of business, persons and investments across Africa. The Agreement became effective in July 2020, with trading planned to commence on 1 July 2020. However, this was postponed to January 2021 as a result of COVID-19. The AfCFTA creates a market of 1.2 billion people with a combined GDP of USD3 trillion and is expected to impact on the mining sector in the following ways:

  • access to a wider market for gold from small-scale miners, which may impact demand and supply of the commodity;
  • increased competition from across the continent; and
  • local content restrictions may change when the Agreement becomes operational as mining companies may be able to procure services and human resources from companies and persons from African countries other than Ghana.

Monetisation of Mineral Royalties

The government of Ghana is currently considering a plan that is aimed at leveraging the country’s future gold royalties receivables to raise funds to ease the country’s debt stock. Under the plan, the government intends to assign a significant portion of future gold mining royalties to a foreign incorporated SPV as created in return for cash up front (estimated at approximately USD500 million). The government plans to raise the money by listing the company on the London and Ghana Stock Exchanges while retaining majority ownership. Due to an unfavourable public response to the arrangement, the proposed plan has been referred for further consideration by Parliament by the President.

COVID -19 Impact

Commencing 27 March 2020, the government of Ghana went through a three-week managed lockdown with restricted human movement to curb the spread of COVID-19. Certain key sectors, including the mining sector, were exempted from the lockdown and were permitted to maintain production and other mining operations.

Although gold production in the country was not restricted during the period, wider global travel restrictions affected trading of the mineral. Also, many mining companies reduced exploration operations as these were impacted by disruptions in the global supply chain. The Ghana Chamber of Mines has indicated that production will improve to over 4 million ounces by the close of 2020 despite the pandemic. This assertion is based on AngloGold Ashanti’s Obuasi Mine coming on stream, a ramp-up by some miners and the strong demand for gold on the international market.

State-Owned Refinery

The government made a commitment in 2018 to establish a USD25 million state-owned gold refinery through the Precious Minerals Marketing Company (PMMC). The Minister of Lands and Natural Resources indicated in September 2020 that Ghana would start refining gold and other minerals before the end of 2020. Construction on the new refinery is projected to have a capacity of 300 kilograms of raw material a day and was 90% complete at the time of writing. Upon completion, the refinery is expected to process at least 30% of Ghana’s ore for both export and supply to the local jewellery manufacturing industry.

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 passage of the Minerals Development Fund Act 2019 (Act 912), which establishes a Mining Community Development Scheme to manage and spend the 20% share of royalty that is allocated to support the industry, and to distribute to mining host communities;
  • the amendment to Act 703 to criminalise the involvement of foreigners in small-scale and artisanal mining (reserved for locals only) and unlicensed mining activities by Ghanaians;
  • the variation of the royalty rate from a range of 3% to 6%, to a fixed rate of 5%;
  • an upward review of corporate income tax from 25% to 35%;
  • recent renegotiation of stability agreements with major mining companies with a view to enhancing the government’s take from mine operations;
  • the allocation of a 10% share of royalties paid to the Minerals Development Fund to support research, development and training; and
  • the development of CSR guidelines by the Minerals Commission to ensure that CSR projects respond to the needs of the intended beneficiaries, and fit within the development plans of host districts.
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AB & David is a pan-African business law firm incorporated in Mauritius to serve clients engaged in business and projects in Africa. The firm operates from nine cities across eight jurisdictions in Africa and through “best friend” firms in 16 jurisdictions. The firm is able to assist clients in 24 African countries. The focus is simple: to ensure businesses and projects succeed in Africa by helping clients minimise the risks associated with doing business on the continent. Lawyers in the firm work exclusively on deals in the mining sector and understand and provide advice relevant to the client's business. With offices in Burundi, Ghana, Liberia, Rwanda, Uganda, Zambia and Zimbabwe, AB & David is able to pull together a cross-border team quickly to advise on a deal. The firm's mining practice covers project development and restructuring transactions, regulation and compliance.

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