Oh well done Ritchie, well done!

Ritchie notes that mining royalties in Ghana aren\’t very high.

Ritchie fails to note that the Government of Ghana is a major shareholder in the company which mines in Ghana.

Thus they get their money anyway….

3 thoughts on “Oh well done Ritchie, well done!”

  1. That’s not necessarilty true, Mr N.

    There are several instances where governments hold significant shareholdings in local mining companies and the companies are quite successful. Comparatively speaking it looks like the Government of Ghana has quite a small stake in AngloGoldAshanti. The problems start to arise when ministers and bureaucrats start to think they can actually run mines better than mining engineers.

    Actually Ghana was one of the first African countries to realise that state interference in the mining sector was a disaster. From Independence to the early 80’s the country followed the traditional African pattern of nationalisation and state interference. Then beginning in around 1985 things began to change. The mining laws were modernised and foreign investment encouraged by the introduction of favourable tax and royalty laws and. By the nineties the government had sold most of its stake in the minerals sector (for around $250 million) and numerous companies had entered the market. Ghana now has one of the highest per capita GDPs in Africa.

    In 2006 the mining sector contributed $780 million dollars to the government’s coffers. According to Richie, it looks like, by 2009 this had fallen to $146 million. Interestingly it was in 2007 that the Ghana government considered increasing tax and royalty rates again.

    I haven’t the time to investigate whether this is cause and effect but it would be interesting to know if the tax and royalty increases under consideration were implemented in 2007/8.

  2. Indeed. Government 49% shareholding, MNC 51% shareholding, and MNC management control is generally a recipe for success in extraction ventures. Government 100% shareholding, not so much.

Leave a Reply

Your email address will not be published. Required fields are marked *