The mining sector is facing a challenge that could erode its competitive edge and cripple future growth, the Ghana Chamber of Mines has warned.
The Chamber is raising red flags over new tax measures that could drive exploration firms away, choke investment, and even collapse some existing mining companies.
Speaking on PM Express Business Edition on Thursday, May 22, Acting Chief Executive of the Chamber, Ahmed Nantogmah, lamented the impact of government’s recent fiscal moves, particularly the imposition of a 3% levy on gross production and the controversial Value Added Tax (VAT) on exploration activities.
“Exploration is the lifeline of mining,” he stated, “and now there’s a VAT on exploration. Most of these explorers are risk takers, but they are being punished for taking that risk.”
[embedded content]He explained that the core activities of exploration – drilling and assay – are now being taxed, significantly increasing the financial burden on already fragile, 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.”
According to the Chamber, this policy shift is proving costly for Ghana’s mining potential.
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.
“These companies are small,” Mr Nantogmah explained. “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 warned that Ghana is 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.
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