The President of the Ghana Chamber of Mines, Mr. Eric Asubonteng, has urged government to expedite work and make good the promise of developing the Western rail network to ease the burden on mining companies and the economy.
The Western railway line, which was the primary mode of hauling bulk minerals to the Takoradi port, has deteriorated over the years due to obsolescence and limited investments, the 2020 Chamber of Mines annual report revealed.
According to Mr. Asubonteng, mining companies, like other producers of bulk export commodities, have had to make use of the more expensive road haulage option, which is estimated to be 50 percent more expensive than rail.
Successive governments have consistently pointed out their intention to rehabilitate the western rail network.
“As an industry association, we believe that the benefits of a well-functioning railway system will not be [reserved to] our industry but the entire economy. It will also serve as an alternative means of transporting people, foodstuffs, and other commodities across the country,” he stated in the report.
“We urge government to expedite action in that regard since it has the inherent potential to generate revenue to pay back the initial investment cost.”
The report also highlighted minerals exploration investment in Ghana, which has declined significantly in recent years. It said this is alarming for a country to which mining is critical for foreign exchange and fiscal revenue generation.
The report called for an incentive scheme that will reduce the cost associated with exploration and attract the required critical investments into the sector.
“As a first step, we urge government to exempt exploration companies from payment of VAT on big-ticket cost items such as drilling and laboratory services. Effectively, the extent of actual exploration activity is diminished by upfront costs such as VAT on inputs and landholding costs.
Thus, relieving the usually illiquid exploration companies from the payment of VAT as well as reducing the cost of landholding would not only improve their cash flow and reduce their operational costs but also enhance Ghana’s image as a competitive destination for exploration investment,” said the report.
“In the long run, this will guarantee continuous mineral production and flow of fiscal and forex receipts as well as other benefits from the minerals sector,” it added.
In 2021, the chamber anticipates an increase in production from existing mines as the easing of COVID-19 restrictions signals good prospects for the industry.
Similarly, the expected relatively high price of gold is likely to support growth in recycled gold and producer de-hedging.
Overall, the gold output of producing member companies for 2021 is forecasted to be between 3m to 3.3m ounces. The industry also expects production of manganese by Ghana Manganese Company to increase with a sustained full year production in 2021.
The chamber also projects that global supply of gold in 2021 will exceed corresponding output in 2020.