Chief Executive Officer of the Ghana Chamber of Mines, Ing. Kenneth Ashigbey, has raised significant concerns regarding the rising fiscal burden on the mining industry, warning that the current effective tax rate is reaching a tipping point.
Addressing the critical intersection of national revenue and industrial growth, Ing. Ashigbey highlighted that the cumulative take by the government is now approaching 60% of mine’s profits.
This high fiscal exposure, he argued, threatens to derail the country’s ability to attract the massive, long-term capital required to sustain production and exploration.
“When you look at the numbers, you’re looking at about 60% of your profits coming back to government as opposed to the investor that is coming in there. So it is something that we really need to look at. And again, one of the things that is very critical about it is stability.”
Ing. Kenneth Ashigbey
Ing. Ashigbey noted that the mining sector’s “capital-intensive” nature requires a predictable and competitive fiscal regime to justify decades-long investment cycles.
Because investors must “model” a mine’s entire lifespan before committing billions in capital, frequent tax fluctuations create an unstable environment that forces potential financiers to look elsewhere.
As Ghana currently sits at the higher end of the global Average Effective Tax Rate (AETR) for mining jurisdictions, the Chamber of mines boss maintains that stability is the only way to ensure the sector remains a pillar of national revenue without “shying away” the very investors who fund it.
The Risk of Fiscal Fluctuations in Capital-Intensive Mining
The mining industry is inherently “long-term in nature,” meaning that any shift in the “fiscal regime” during a mine’s operation can fundamentally change its economic viability.
Ing. Ashigbey pointed out that before a company can “go and raise your capital,” they must have a clear understanding of the tax landscape to properly muddle the project’s future.
When fluctuations occur, it undermines the trust between the state and the private sector, leading to a scenario where investors tend to shyaway from new projects in favor of more predictable regions.
Competitive Tax Regimes as a Catalyst for Growth
For Ghana to maximize its mineral wealth, the Chamber argued that the government must strike a balance that remains “competitive” on the global stage. By ensuring a “stable and competitive fiscal regime,” the state can secure “sustaining long-term growth, production, and national revenue” rather than settling for short-term gains that might stifle future exploration.
A stable tax framework allows mining firms to reinvest their remaining profits into extending the life of existing mines, which provides more consistent employment and procurement opportunities for the local economy over the long run.
Securing the Future of Ghana’s Extractive Sector
Ultimately, the CEO’s call for action serves as a reminder that the mining sector is a global competition for limited exploration funds.
Ing. Ashigbey asserts that Ghana’s position at the “higher end” of the global tax average means there is little room for error when adjusting fiscal policies.
By prioritizing “stability” and addressing the high “effective tax rate,” Ghana can protect its reputation as a premier mining destination, ensuring that the “profits from every investment into mining” continue to benefit both the national coffers and the investors who take on the immense risk of resource extraction.
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