Ghanaian President to Investors: “Make mining deals more beneficial for Africa’
Ghanaian President Nana Akufo-Addo has demanded that mining deals be more beneficial for Africa on Tuesday, calling on governments to end fiscal incentives traditionally used to attract investment to countries long viewed as rife with risk.
Resource nationalism is high on the agenda at the African Mining Indaba in Cape Town as resource-holding governments, aware of the need for international miners to find new exploration territory, increase tax and royalty demands.
Akufo-Addo, leader of Africa’s second-largest gold producer, said that the continent’s reputation of political instability was outdated and improvements in the rule of law should be reflected in countries’ relationships with mining companies.
“I believe we have come of age. We should not have to give unusual tax and royalties incentives. And mining companies should not expect to make extraordinary profits on our continent,” he told the conference.
Over the past decade, a number of African governments have reviewed mining contracts, seeking to recalibrate partnerships and increase their share of mining revenues.
Last year, Democratic Republic of Congo – the world’s biggest producer of cobalt – rewrote its mining code, ignoring the objections of miners. It canceled existing stability claus’s in contracts and raised royalty rates across the board.
Neighboring Tanzania, once one of Africa’s most attractive jurisdictions for international investors, has also cracked down on the industry, hitting gold miner Acacia with a $190 billion tax bill.
The company has disputed the claim and its parent company Barrick Gold Corp is in talks with the government.
But other African nations, including Angola and Ethiopia, are still seeking to use tax breaks to entice investors to their nascent mining sectors.
Akufo-Addo said Africa needed mining investment, but companies needed to understand their role in developing economies.
“We want you to stay here for the long-term. Respect the land that provides the riches and be part of the transformation,” he said. “It’s time to make Africa prosperous and allow her people to attain a dignified standard of living.”
He also called on his fellow African states to establish value-added industries on the back of their mineral wealth.
Long a major gold producer, Ghana is now seeking to develop its iron ore and bauxite deposits.
Under a deal approved by Ghanaian lawmakers last year, China’s Sinohydro Corp Ltd will provide $2 billion for government road projects in exchange for refined bauxite exports.
The government has created a state-owned company to help establish an integrated aluminum industry. Akufo-Addo said the creation of a similar company to promote an iron and steel industry would be considered in the current parliamentary session.
“We cannot, and should not, continue to be merely exporters of raw materials to other countries,” he said.