FINAL REPORT for 2017 & 2018 Mining SECTOR
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REPUBLIC OF GHANA MINISTRY OF FINANCE GHANA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (GHEITI) FINAL REPORT FOR 2017 & 2018 MINING SECTOR DECEMBER, 2019 GHEITI SECRETARIAT TEL: +233(0)302 686101 EXT 6318 Email: [email protected] Website: www.gheiti.gov.gh Table of Contents List of Abbreviations............................................................................................................... 5 Executive Summary................................................................................................................ 6 1.0 Introduction...................................................................................................................21 1.2 Overview of Artisanal and Small-Scale Mining (ASM)............................... 23 1.2.1 ASM in Ghana....................................................................................................23 1.2.2 Licencing Regime for ASM............................................................................24 1.2.3 ASM Product Marketing................................................................................. 25 1.2.4 Recent Developments....................................................................................25 2.0 Legal and Institutional Framework, including allocation of contracts and Licences.....................................................................................................................................27 2.1. Fiscal Regime........................................................................................................... 30 2.1.1 Proposed Fiscal Reforms...............................................................................31 2.1.2 Mining Related Investment Incentives....................................................... 32 2.1.3 Fiscal Decentralization......................................................................................34 2.1.4 Roles and Responsibilities of Government Agencies............................ 34 2.2 Licence Allocations.................................................................................................... 38 2.2.1 Grant of Mining Lease....................................................................................... 40 2.2.2 Reconnaissance Licence Applications.........................................................41 2.4 Contracts....................................................................................................................... 44 2.5 Beneficial Ownership.............................................................................................45 2.6 State Participation......................................................................................................46 3.0 Exploration and Production........................................................................................50 3.1 Exploration....................................................................................................................50 3.2.1 Obuasi Mine Redevelopment Update 2019.............................................. 54 3.2.2 Mine Production Cost Matrix........................................................................54 3.3 Exports.................................................................................................................... 54 4.0 Revenue Collection........................................................................................................56 4.1 Comprehensive Disclosure of Taxes and Revenues..................................... 56 4.1.1 Scope of the 2017/18 GHEITI Mining Report.........................................61 4.2 Materiality..................................................................................................................62 4.4 Data Quality and Assurance...................................................................................78 4.4.1: Data Quality....................................................................................................... 78 2 | P a g e 4.5 Level of Disaggregation...........................................................................................80 5.0 Revenue Allocations................................................................................................... 111 5.2 Subnational Transfer.............................................................................................. 111 6.0 Social and Economic Spending.............................................................................. 141 6.1 Mandatory and Voluntary Social Expenditures............................................ 141 6.2 Quasi Fiscal Expenditures.....................................................................................141 6.3 Contribution of the Extractive Sector to the Economy..............................141 7.0 Outcomes and Impact............................................................................................... 145 8.0 Observations and Recommendations..................................................................152 List of Tables Table 1.1: Mining Income vrs GRA Collections...........................................................23 Table 2.1: Mining Sector Fiscal Regime........................................................................ 31 Table 2.2 Royalty Rate Based on Gold Price.............................................................33 Table 2.5: Contracts...........................................................................................................45 Table 2.6: Government Shareholdings in Mining companies............................... 47 Table 2.7: Dividends from Mining Companies in 2017 and 2018....................... 47 Table 3.1: Mineral Production........................................................................................... 53 Table:3.1: Export of Minerals............................................................................................ 54 Table 4.1: Revenue Flow in Mining Sector...................................................................56 Table 4.2: Revenue Streams/Basis in the Mining Sector........................................57 Table 4.3: Total Preliminary Receipts...........................................................................62 Table 4.4: Revenues Used in Establishing Materiality Thresholds......................65 Table 4.5: Reconciliation of Forestry royalty receipts in 2017/2018................. 69 Table 4.6: Threshold Analysis and Companies Selection for 2017................... 71 Table 4.7: 2018 Threshold Analysis and Companies Selection for 2018......... 71 Table 4.8: Scoping Decisions for GHEITI 2017/18 Report...................................... 72 Table 4.10: Material (in-scope) companies for 2018............................................... 74 Table 4.12 : District Assemblies of Material (in-scope) Mining Companies for 2017/2018 Reconciliation...................................................................................................76 3 | P a g e Table 4.13: Unilateral declarations of payments by companies that did not submit templates...................................................................................................................84 Table 4.14: Reconciliation by Revenue Streams....................................................... 87 Table 4.15: Reconciliation by Companies.................................................................... 89 Table4.16: Resolution of Discrepancies on Extractive Companies Payments- 2017/2018................................................................................................................................ 92 Table 4.17: Resolution of Discrepancies on Government Agencies Receipts 96 Table 4.18: Analysis of unresolved discrepancies by revenue streams...........98 Table 4.19: Analysis of Unresolved Discrepancies by Companies................... 99 Table 4.20: Contribution of Revenue streams to Government Receipts....... 101 Table 4.21: Contribution by Companies to Government Receipts (2017).... 102 Table 6.2: Contribution of Mining Activities to National GDP.............................142 Table 6.3 GDP Growth by Sector (2015-2018)........................................................ 143 Table 6.4: Total Merchandise Exports in 2016-2018.............................................143 4 | P a g e List of Abbreviations DA District Assembly EITI Extractive Industries Transparency Initiative GHEITI Ghana Extractive Industries Transparency Initiative GRA Ghana Revenue Authority MDF Mineral Development Fund MINCOM Minerals Commission MMDA Metropolitan, Municipal District Assembly MoF Ministry of Finance MUN/DIST ASMBL Municipal/District Assembly NTPU Non-Tax Policy Unit OASL Office of the Administration of Stool Lands Executive Summary The Extractive Industries Transparency Initiative (EITI) is an international initiative among governments, companies and civil society groups to promote transparency in the flow of revenues from extractive companies to host country governments based on a set of criteria for transparent reporting on the revenue streams and other benefits. The purpose of the initiative is to encourage greater transparency in the extractive sector. This would enable citizens to make informed demands for the fair and sustainable use of revenues generated through the exploitation of natural resources. The EITI requires implementing countries to prepare and publish an annual report disclosing company payments and government revenues from the extractive sector. The Ghana Extractive Industries Transparency Initiative (GHEITI) engaged Messrs