Minerals Licensing in Ghana

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The process of mineral licensing seeks to manage national mineral resources through the allocation of rights to companies or persons to carry out mining operations. These operations include reconnaissance, prospecting, extraction and processing. Thus licences are awarded to those best able to augment knowledge of mineral reserves or commercially extract minerals in an efficient manner.[1] In return for the right to carry out such activities, mineral licenses stipulate obligations and restrictions of usage. For example, in Ghana all licence holders pay a royalty of between 3 percent and 6 percent of their gross revenues.[2]

2006 Minerals and Mining Act

The 1992 Constitution and Section one of the 2006 Minerals and Mining Act clearly define the mineral resources of Ghana as the property of the Ghanaian people.[3] The President places the Minister of Lands and Natural Resources in control of mineral licensing, it is thus his/her role to grant, revoke, suspend and renew rights to these minerals, and to do so in the interest of the people of Ghana.[3]

The 2006 Minerals and Mining Act in Ghana provides a range of available fixed and renewable mineral rights – suited to all different phases and type of mining activity. A specific licence is required to buy and sell minerals – this is aimed to prevent the illicit trade of minerals. Certain types of licence impose a maximum surface area limit on mining operations – depending on the type of mining activity taking place.[4]

Licences are awarded for different time periods, and have different renewal clauses. A reconnaissance licence is granted for 12 months and may be renewed once. Initially prospecting licences have an upper limit of three years, but can be extended for an additional three years. A mining lease may be extended once, provided that the initial term has not exceeded 30 years.[5]

All applicants, Ghanaian and foreign alike, can apply for the right to mine. The one exception to this is licensing for artisanal and small-scale mining operations – where the allocation of rights is limited to Ghana nationals only.[4]

Challenges Facing the Mineral Licensing Process

The National Coalition on Mining (NCOM) has criticised the mineral licensing process, because concessions granted in the past cannot be altered at a later date.[6] It states that companies are currently enjoying royalties as low as 3 percent and generous tax concessions since the original agreements signed have frozen in an investor-friendly 'stabilisation clause' for a set period of time. The coalition called for the removal of this clause from any future law, suggesting that it has caused government to lose out on revenue and damages its regulatory control of the mining sector.

A report published by the World Bank’s Public Sector Reform and Capacity Building Unit for the African Region raises concern over the lack of an open tendering or bidding process to acquire mineral rights.[1] The process requires an application to the Minister of Mines who, following advice from the Mining Commission, may or may not grant a licence. This lack of competition results in licences being awarded on a first-come, first-served basis. Details of the negotiations and contracts are kept confidential in order to protect commercial interests. However, the report suggests that this nondisclosure approach is a significant barrier against accountability and transparency.[1]

References

  1. 1.0 1.1 1.2 "Political Economy of the Mining Sector in Ghana" World Bank, retrieved 8 February 2012.
  2. "Ghana: Mineral Industry Overview" Afribiz, 6 October 2011.
  3. 3.0 3.1 "Copy of The Minerals and Mining Act, 2006 (Act 703)" Sustainable Development Strategies Group, retrieved 14 February 2012.
  4. 4.0 4.1 "Draft National Mining Policy" The Ministry of Lands and Natural Resources (Mines Subsector), retrieved 8 February 2012.
  5. "Extractive Industries Sourcebook – Granting Mineral Rights Appendix Two" A World Bank Project – Extractive Industries Sourcebook Program, retrieved 9 February 2012.
  6. "Remove Stability Clauses - NCOM" Modern Ghana.com, 10 September 2010.