Amid the government’s attempt to introduce a sliding scale mineral royalty regime in the country’s mining sector, the Ghana Chamber of Mines is pushing against the proposed rate, cautioning that the rate could be counterproductive and undermine the government’s own long-term revenue ambitions.
The Chamber of Mines argues that while the state may record immediate revenue gains under a higher royalty regime, the broader economic consequences could shrink the very base on which those revenues depend.
The government has announced a proposed sliding-scale royalty range of 5% to 12% in the Minerals and Mining Act. However, the industry is attempting to beat down the rate, pushing for a reduced band of 4% to 8%.
Speaking to some fellows of the Africa Extractives Media Fellowship, the President of the Chamber, Michael Edem Akafia, explains that the justification for their stance is the current situation where royalties are charged on gross revenue, not profit.
This means the royalties are treated as costs or expenditure. He explains that since royalties are taken from top-line revenue, companies must pay them regardless of operational pressures, cost spikes, or market downturns. In his view, pushing the rate too high risks weakening mining firms at a time when global cost conditions remain volatile.
The Chamber’s concern is that an aggressive royalty scale could also reduce reinvestment, stall new projects, and, in extreme cases, force marginal mines to shut down. If production declines or expansion plans are shelved, overall output falls, and with it will include corporate taxes, PAYE contributions, supplier contracts, and foreign exchange inflows.
For the chamber, if the government continues to push for higher royalties, it is jeopardizing other tax proceeds from other tax handles.
In practical terms, the Chamber argues that squeezing more from current revenues may deliver a temporary fiscal boost, but at the risk of undermining the sector’s capacity to grow and generate sustainable returns over time.
The President of the Chamber maintains that the government may be raking in higher revenues with this high royalty rate in the short-term; however, in the long-term, it will be sacrificing its own revenues.
“The thing is, what are you sacrificing? You could be sacrificing short-term revenue gain in favour of long-term revenue loss. Because if projects don’t take off, and companies collapse because you are imposing on revenue, for instance, in the long run, you may not achieve your revenue objectives. You may achieve it in the short term because you are taking it from revenue. But if companies collapse, you will not,” he explained.
He continued, “All the other tax handles, potentially, will shrink if the pie shrinks. So to that extent, you will not get what you want. You can have an objective. But somehow, if you don’t implement the policy related to that objective well, it can become counterproductive. And that’s why we are trying to point that out.”
The industry insists it is not opposing royalties altogether, but rather advocating a rate that balances state revenue needs with operational viability. The proposed 4% to 8% band, they say, reflects that compromise.
For now, the dilemma of the government is whether to maximise immediate inflows or nurture a sector capable of delivering durable, long-term returns.
