22 June 2018

Ghana: Parliament Grants Fiscal Concessions to Anglogold Ashanti, Ghana

PARLIAMENT has approved and adopted the report of the joint committee on Finance and Mines and Energy, granting fiscal concessions to Anglogold Ashanti Ghana Limited, under a tax concession agreement between Ghana government and the mining giant.

The House also approved and adopted the report of the joint committee on the development agreement granting stability terms to the company.

In the first agreement, the total estimated value of taxes and duties involved US$259 million, for 10 years.

Per the agreement, Anglogold Ashanti Ghana Limited is obliged to contribute US$2 per cent of every ounce of gold to the Obuasi Community Trust Fund, for the development of the town.

According to the report, sighted by the Ghanaian Times, "the tax concession agreement will facilitate the redevelopment of the Obuasi Mine, which is expected to have a positive net contribution to the Ghanaian economy."

As part of the of economic gains to the country, a total direct contribution of US$5.3 billion is expected to be injected into the Ghanaian economy over the 22-year life span of the mine, according to the report.

It said "Out of the total contribution to the economy, US$2.2 billion represents the direct contribution to government revenue over the life of the mine".

The recommencement of the operation of the mine, which was shut in October 2016, after an invasion by illegal miners and reopened in February 2017, the report noted would improve the security situation in Obuasi which has in part deteriorated as a result of the mine being under care and maintenance.

On the likely negative impact of not approving the agreement, the committee report said the impact will continue to be that "government will lose potential revenue inflows that would accrue from the redevelopment of the mine."

The report emphasised that "the local Obuasi economy would continue in its decline and the almost deserted ghost town is likely to continue, if not worsen, in the absence of the key economic driver which is the operation of the mine."

Acknowledging that gold is an exhaustible natural resource, which will be depleted, the committee recommended that stakeholders put sustainable and alternative livelihood programmes and industry in place within the mining area, to ensure the local economy continued to function properly.

On the stability agreement, the joint committee said the country's local content law relating to employment, the supply of goods and services and related opportunities would be complied with in the redevelopment of the mine.

The report indicated that US$2.4 billion would be accrued to local business entities over the life of the mine, with a projected 2,500 people with expected earnings of US$371 million over the period.

The firm, the report stated would be supporting social intervention programmes like the construction of hospitals and schools as well as releasing some of its infrastructure to assist government set up the University of Mines in Obuasi as part of its corporate social responsibility.

With no major opposition to the agreements, the Minority caucus, led by Haruna Iddrisu, underscored the need for mechanisms to monitor the investment of Anglogold Ashanti whiles raising concern over tax waivers at the expense of the citizenry.

The Majority Leader, Osei Kyei-Mensah-Bonsu, said the current deal was an enhancement of previous agreements assuring that government would monitor to ensure that the deal was respected by both parties.

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