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KIA's Gold Assay Centre blocks GH¢14m tax evasion

BY: Doreen Andoh
Minister of Lands and Natural Resources, Mr Kwaku Asomah-Cheremeh
Minister of Lands and Natural Resources, Mr Kwaku Asomah-Cheremeh

The Gold Assay Centre at the Kotoka International Airport (KIA) is significantly having a mitigating effect on tax evasion in the gold export sector.

The Minister of Lands and Natural Resources, Mr Kwaku Asomah-Cheremeh, said since its inception in 2016, the centre had prevented tax evasion amounting to GH¢14 .1 million.

Addressing the Meet-the Press forum in Accra on Wednesday, the minister said total gold assayed at the centre from 2016 to July 2020 was 13,492,032.70 ounces, valued at almost  $19 million.

“Total tax revenue accruing to the government from the assay over the period amounted to GH¢14.1 million. Without the assay process, this would have been lost,” he added.

He said gold had also been exported over the years by production companies without independent confirmation of the actual volumes and grades of the mineral prior to export.

“To address the situation, the ministry established an assay centre at the KIA to properly track (weigh, test, value and certify) actual volumes and grades of gold being exported. I am pleased to say that as it stands today, gold exported out of the country passes through the assay process for validation of the actual value. The Gold Assay Centre at the airport generates taxes and fees for gold by undertaking gold validation prior to export,” he said.

The centre was originally supposed to validate gold from small-scale mining industries, but had its capacity upgraded in 2018 to extend its mandate to large-scale industries.

Accountability

Mr Asomah-Cheremeh said to ensure proper accountability for mineral exports, weigh bridges were constructed to track bulk mineral shipment.

“The ministry, in 2017, identified that the export of bulk minerals was undertaken by companies without proper tracking mechanisms to confirm the actual volume of minerals produced and exported.

“To address the problem, the ministry has constructed two weigh bridges at Apemanim in the Ahanta West District in the Western Region and Awaso in the Bibiani-Anhwiaso- Bekwai municipality in the Western North Region. These are to track and confirm actual volumes hauled from the mines to the Takoradi Port. They are also to ensure that Ghana is not short-changed in any way regarding shipments of bulk minerals,” he said.

The minister said the minerals sector remained the highest forex contributor, with gold being the major commodity.

However, he said, investigations into the country's mineral base were currently ongoing to help diversify the sector.

Production

Mr Asomah-Cheremeh said the production performance of Ghana’s major minerals during the period under review witnessed roller-coaster trends in all the major minerals produced.

He said with respect to gold, over 4.2 million ounces was produced in 2016, and almost the same production figure was achieved in 2017.

“For 2018, production increased significantly to almost five million ounces and dipped to almost 4.7 million ounces in 2019. For the first half of 2020, 2.2 million ounces of gold was produced.  

“For bauxite, total production was about 1.3 million metric tonnes in 2016. That increased to about 1.5 million metric tonnes in 2017. In 2018, the production figure dropped to one million metric tonnes, and the situation was not different in 2019, with the production of 1.1 million metric tonnes. As of June 2020, about 500,000 metric tonnes had been produced,” he said.

The minister indicated that in the case of manganese, production increased from two million metric tonnes in 2016 to three million metric tonnes in 2017, while production in 2018 increased to 4.4 million metric tonnes and 5.4 million metric tonnes in 2019.

He said for the first half of 2020, about 470,000 metric tonnes of manganese was produced.

Revenue generation 

Mr Asomah-Cheremeh said Ghana continued to rely on mineral revenue for its development, indicating that tax revenue collected in 2016 was GH¢1.6 billion, which increased to GH¢2.2 billion in 2017 and GH¢2.4 billion in 2018.

However, the revenue dropped to GH¢1.9 billion in 2019, and as of the middle of this year, the revenue was GH¢1.3 billion.

Total mineral royalties had also witnessed a systematic increase, hitting GH¢1 billion in 2019, while the half-year amount stood at GH¢ 659 million, he said.

Again, he said, mining merchandise exports also saw an increment from $5 billion in 2016 to  $6.6 billion in 2019, making mining a major forex earner for Ghana.

He said due to the currentfavourable gold price, total mineral merchandise exports grew steadily to $3.5 billion during the first half of this year, compared to $1.6 billion over the same period in 2019.  

Gross Domestic Product (GDP)

With regard to the contribution of the sector to GDP, Mr Asomah-Cheremeh said the mining and quarrying sub-sector contributed 8.5 per cent of GDP in 2016, 10.9 per cent in 2017 and 14.9 per cent in 2019.

On local participation in the sector, he said it had been on the rise.

He said in 2017, 105 mine support service companies registered and operated in the sector, with the number increasing to 114 in 2018 and 240 as of the end of 2019.

“The country has since the period under review been able to retain over $1.42 billion through local procurement, which otherwise would have been used to import production inputs for the mining industry,” he said.

Challenges inherited

Enumerating some of the challenges the sector faced on assumption of office by the government in 2017, he mentioned, among others, illegal mining, the lack of alternative livelihood programmes for communities in mining areas, collapsing large-scale mining companies and over-dependency on gold mining.

“To address the challenges, the ministry adopted a number of strategies and programmes that produced remarkable results,” he said.

He said to give local people the opportunity to participate in mining in a well-structured way, the government was implementing the Community Mining Programme.

So far, he said, 14 mining schemes had been launched.

Seized excavators

Mr Asomah-Cheremeh said 157 excavators had been seized in the exercise to curb illegal small-scale mining (galamsey).

He debunked allegations that 500 seized excavators were missing.

He said all the excavators were available and the ministry was currently working on reconciling the figures, as well as developing a database to assist in managing the equipment.

“Again, the ministry is working with the Office of the Attorney-General to ensure full compliance with the Minerals and Mining Act, 2006 (Act 703), as amended by the 2019 Minerals and Mining Amendment Act (Act 995), especially sections (9) and (10),” he said.

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