Africa’s top gold producer, Ghana could have earned more from the rising price of the metal if it had provided more incentives to attract investment into the mining industry, the Ghana Chamber of Mines has said.

The price of the commodity has risen in value by a fifth since the outbreak of the COVID-19 pandemic supported by the soured US-China relations, as investors shy away from high-risk ventures to a haven.

Prices of the precious metal last week crossed the $2,000 mark for the first time, breaking its all-time high of $1,921 an ounce recorded in 2011. The yellow metal appreciated 32 percent year-to-date.

“Imagine if we had incentivized exploration and attracted new investment, we would at least be having some new mines that will boost our mineral production. This will be mutually beneficial for both the state and mining firms, especially now that the appetite for gold has increased and prices are doing quite well,” Chief Executive Officer of the Ghana Chamber of Mines Sulemanu Koney told Business24 in Accra.

Although Ghana surpassed South Africa to become the leading gold producer on the continent in 2018, it is yet to attract new investors to develop new mines to help ramp up production and maintain the lead role.

Gold export receipts stood at US$6.23 billion last year, despite total output contracting four percent to 4.57 million ounces, compared with the 4.79 million ounces realized in 2018. However, the revival of Anglogold Ashanti’s Obuasi mine after six years of the shutdown is expected to boost total gold production for 2020.

Mining Exploration “Unattractive”

Ghana is reportedly losing prospective mining investors to neighbouring Burkina Faso and Ivory Coast due to ‘unfavourable’ tax regime such as the VAT component on exploration.

Mining companies have described the 12.5 percent VAT, 2.5 percent NHIL and the 2.5 GETFund levy 2.5 as a disincentive to venturing into exploration in the country.

The Ghana Chamber of Mines reported in 2019 that investment in exploration in Ghana’s mining industry has reduced significantly in recent times, “urging the government to remove the VAT on exploration inputs to attract investment.”

In 2019, the mining industry accounted for 9 percent of Ghana’s GDP, of which gold contributed over 90 percent of the country’s total mineral exports.