Defer new royalty regime or scrap Growth and Sustainability Levy – Chamber of Mines urges government

 

The Ghana Chamber of Mines has called on government to either defer the implementation of the proposed sliding-scale mineral royalty regime or abolish the Growth and Sustainability Levy before introducing any revised variable royalty structure, warning that proceeding with both could result in excessive fiscal pressure on the mining industry.

According to the Chamber, introducing a new royalty framework alongside existing levies risks front-end fiscal stacking, which could undermine investment, slow mine expansion and discourage the development of new projects.

In a position paper submitted to government, the Chamber said its recommendations are aimed at ensuring sustainable revenue mobilisation for the state while safeguarding the long-term viability and competitiveness of Ghana’s mining sector.

While expressing support for the principle of a sliding-scale royalty regime, the Chamber noted that it does not agree with the proposed royalty range of 5 percent to 12 percent. Instead, it is proposing a more balanced and investment-responsive royalty band of between 4.0 percent and 8.0 percent, to be applied without the Growth and Sustainability Levy.

Under the Chamber’s proposal, an additional 1.0 percent of net profit would be paid into a dedicated fund for industry-specific and host community projects when gold prices exceed US$4,500 per ounce. It described the approach as a fair and sustainable alternative that preserves Ghana’s competitiveness while delivering predictable fiscal returns to the state.

The Chamber further cautioned that if government proceeds with the reform as proposed, robust transitional and grandfathering provisions must be included to protect existing operations and investments already approved under the current fiscal regime.

A balanced, predictable and competitive fiscal framework remains essential if Ghana is to maximise the long-term value of its gold resources, sustain employment and investment, and preserve the sector’s contribution to national development,” the Chamber said.

Government’s consideration of a shift from the current fixed mineral royalty rate of 5.0 percent to a variable regime comes at a critical moment for Ghana’s gold mining industry. According to the Chamber, the proposed reform coincides with rising unit production costs, increasingly complex and maturing ore bodies, and a fiscal environment that already imposes significant gross- and profit-based charges on mining operations.

The Chamber argued that royalties, which are levied on gross revenue rather than profits, have a direct and immediate impact on mine cash flows. As such, any material increase could have non-linear effects on cut-off grades, project economics and life-of-mine planning, particularly for mature and lower-grade operations.

It warned that without careful calibration, the proposed changes could weaken Ghana’s attractiveness as a mining investment destination at a time when global capital for mining projects is becoming increasingly competitive.