As part of efforts to revolutionize the country’s mineral royalty regime with what is known as a sliding scale framework, the Ghana Chamber of Mines has mounted a detailed and careful case against the government’s proposed scale of up to 12%.
The Chamber maintains that the whole idea of a sliding scale is justified; however, the proposed upper limits risk harming mine sustainability, investment, and even Ghanaian-owned mining projects.
The case of the Chamber was strongly made to some fellows of the Africa Extractive Media Fellowship (AEMF) by the President of the Chamber, Michael Edem Akafia.
The President of the Chamber, who is also the Vice President and Head of Legal at Gold Fields West Africa Region, made it clear from the outset that the industry is not opposed to a sliding scale royalty regime, especially one linked to gold prices. In fact, he stressed that such a mechanism is neither radical nor new to Ghana.
“We are not against the idea of proposed, that sliding scale tied to gold price. In fact, it’s something that is not new, even in Ghana. Historically, we had a sliding scale, but that was not tied to the gold price, that was tied to some profit measure,” the President of the Chamber emphasized.
Why the Chamber, In Principle, Supports a Sliding Scale
According to the Chamber, linking royalties to gold prices is actually more equitable than alternatives such as windfall taxes, which many mature mining jurisdictions have abandoned after finding them counterproductive.
For instance, he mentioned Australia and Zambia, which both experimented with windfall taxes in past commodity booms, only to see investment retreat and prices eventually crash.
Ghana itself once operated a sliding royalty scale ranging between 3% and 6%, although it was tied to profit measures rather than gold prices. That system failed because profit-based formulas could be legally optimized through accounting structures, reducing expected revenues for the state.
With this, a gold-price-linked sliding scale, the Chamber agrees, is therefore fairer and more transparent.
But Why the 12% is Problematic for the Chamber
The dissent of the Chamber, according to Edem Akafia, lies squarely with the proposed rate, not the framework.
The Chamber argues that the assumption driving the larger scale, which is that rising gold prices automatically translate into excess profits, is fundamentally flawed.
Mining companies, they stress, are price takers, not price setters. Gold prices are volatile and cyclical, sometimes collapsing dramatically, as seen in 2012 when prices fell by 26% in a single day. Long-term sustainability, therefore, matters far more than short-term windfalls.
The Highly Cost-Intensive Nature of Mining
A major pillar of the Chamber’s argument is cost reality. The venture, he stressed, is highly cost-intensive. Mining costs go far beyond daily operational expenses.
Gold mining involves a long development cycle, often stretching 10 to 13 years from exploration to production. Costs incurred during drilling, feasibility studies, infrastructure development, and reserve conversion must all be recovered over time.
It is for this reason that the global industry uses the All-In Sustaining Cost (AISC) metric, developed by the World Gold Council, rather than simple cash costs. AISC captures not just production costs, but also ongoing exploration, capital expenditure, and mine development needed to sustain output.
In short, a high gold price today does not mean a mine is enjoying pure profit.
Rising Gold Prices Also Mean Rising Costs
The Chamber further noted that when gold prices rise, input costs rise alongside them. Labour unions, contractors, equipment suppliers, and service providers all factor gold prices into negotiations and pricing.
As a result, margins often remain tight even during price booms. Every concession also differs geologically, meaning some sections of a mine are far more expensive to extract than others.
“You can’t be looking at the gold price and saying that, at this current gold price, if the gold price is at 2000 or 5000 and your operational cost is, say, 1000, then it’s all margin now. Because you would have incurred, in terms of those 13 years that I talked about, that you’d have been drilling, you would have to factor that in, because you incur capital in addition to the operational cost,” he explained.
Threat to Mine Life and Ghanaian Participation
One of the most serious concerns raised is the impact of the high scale on life-of-mine calculations. Any increase in costs, including royalties, the Chamber says, shortens the economic life of a mine by making certain reserves unviable.
The Chamber disclosed that some projects are already at risk of being suspended due to the large scale of royalties. Sadly, these projects at risk include at least one wholly Ghanaian-owned large-scale mining operation.
This, they argue, directly undermines national goals of increasing Ghanaian participation in the mining sector.
“One of our members talked about the fact that this will kill a project they’re trying to do, which is a Ghanaian wholly owned, large-scale mining operator. So here’s where you are killing even that whole thing that we’ve all been pushing for, where we want more Ghanaians to participate in the industry. So, you know, this is some of the impact,” he stressed.
The Chamber’s Alternative/Counterproposal
Rather than rejecting reform, the Chamber has put forward what it calls a balanced alternative for the mutual benefit of both the industry and the state.
According to Edem Akafia, the Chamber is proposing a sliding royalty scale ranging from 4% to 8%, benchmarked against comparable mining jurisdictions.
This proposal avoids extreme outliers in other jurisdictions, such as Mali’s recent 10.5% upper rate, which the Chamber described as an exception shaped by non-market factors.
That is not all. In addition, the Chamber has proposed dedicating 1% of mining profits, not revenues, towards community development projects during periods of high gold prices, ensuring communities benefit without pushing loss-making operations into distress.
He noted that, “We believe that the 4% to 8% is what is reasonable, and then one of the things we’ve proposed in doing this gold price run is to dedicate 1% of profit for community projects at this time that we’re having this price, because when it’s on profit, it’s fair, so you don’t make loss-making companies suffer unnecessarily, and so for us, that essentially captures the issue on the royalty.”
The Need for a Balance
Ultimately, the Chamber’s position is not one of resistance but of caution. It argues that Ghana must strike an optimal balance, one that secures fair state revenues while preserving mine viability, protecting jobs, and sustaining long-term investment.
For the Chamber, amid the debates over the proposed royalty regime, the real issue is not whether Ghana should benefit from high gold prices, but how to do so without shrinking the very industry that generates that wealth.
