The mining industry is encountering a challenge that has the potential to undermine its competitive advantage and hinder future growth, the Ghana Chamber of Mines has cautioned.
The Chamber said the new tax measures introduced by the government could drive exploration firms away, choke investment, and even collapse some existing mining companies.
Speaking on PM Express Business Edition on Joy TV, Acting Chief Executive of the Chamber, Ahmed Nantogmah, lamented the impact of government’s recent fiscal moves, particularly the imposition of a three per cent levy on gross production and the controversial Value Added Tax (VAT) on exploration activities.
“Exploration is the lifeline of mining and now there’s a VAT on exploration. Most of these explorers are risk takers, but they are being punished for taking that risk,” he said.
He explained that the core activities of exploration – drilling and assay were now being taxed, significantly increasing the financial burden on already fragile, and early-stage ventures.
“You can imagine putting $10 million into exploration, making no discovery, and still paying VAT on that failed attempt. That VAT will not be refunded. It’s money thrown down the drain,” he said.
According to the Chamber, the policy shift was proving costly for Ghana’s mining potential.
He said “Smaller firms that drive most greenfield exploration lack the financial muscle to absorb these new taxes, and as a result, many are moving their operations to neighbouring countries like Côte d’Ivoire and Kenya, where exploration is incentivised, not penalised,” he said.
“These companies are small. They don’t have deep pockets. That’s why they go to places like Kenya or Ivory Coast, where they don’t pay this VAT. So, you’ll see a movement of exploration companies going there.”
He said Ghana was already falling behind its peers in attracting fresh exploration, a trend that could lead to long-term consequences for the country’s mining output and revenue streams.
“No exploration today means no new mines tomorrow,” he noted.
