Lawyer Martin Kwaku Ayisi, Outlines Vision For Sustainable Mining In Ghana

Furthermore, sustained advocacy from civil society organizations, including the IEA, various policy groups, and the media, has been instrumental. They have consistently and vehemently highlighted the deplorable state of mining communities and the perceived inadequacy of national benefits derived from our mineral resources, despite their evident abundance.

Mr. Ayisi underscored the Need for Regional Context and Nuanced Comparison: It is crucial to recognize that our mining sector does not operate in isolation. The business of mining is integrated into a globalized industry and must therefore be cognizant of regional dynamics. Insecurity in a neighboring nation, for instance, inevitably has cross-border repercussions. Consequently, our policy framework must be formulated with a conscious understanding of the broader regional context.

“ while operating within a global paradigm, domestic policies must be tailored to our unique national circumstances, capabilities, and perspectives. This is where simplistic international comparisons become misleading. For example, Saudi Arabia possesses the singular capacity to unilaterally influence global oil prices due to its production volume. Nigeria, or indeed Ghana, cannot exercise the same leverage. The production capacity and economic strength of each nation are incomparable.” He sa

We must, therefore, contextualize all comparisons. When critics cite practices in Burkina Faso, I counter by questioning their regulatory standards. For instance, the requirement for certified mine managers is a fundamental standard in Ghana that may not be present elsewhere. We must avoid a race to the bottom; just because another country adopts a certain policy does not mean it is prudent or sustainable for us.

Legislative Amendments:

1. Abolition of Development Agreements (DAs): We have decided to abolish Development Agreements and Investment Agreements entirely.These instruments, which granted certain companies preferential terms, will be excised from our legal framework. The rationale is clear: these agreements create fiscal rigidity. During periods of high commodity prices—such as the current period where gold has averaged record highs of $3,000 per ounce—the state is unable to capture a fair share of the windfall profits due to stabilisation clauses locked in these DAs.

Conversely, in a market downturn, the state is the first to offer tax concessions and royalty reductions to prevent mine closures and economic collapse. This asymmetry is unsustainable. A recent attempt to introduce a 1% stabilisation levy, later increased to 3%, to capture additional revenue during high prices was largely ineffective because companies shielded by DAs invoked their stability clauses to avoid payment. This demonstrates the fundamental flaw in the system, hence our decision to eliminate DAs permanently.

2. Reduction of Mining Lease Duration: We are reducing the maximum duration for mining leases from 30 years to 15 years.Our research indicates that the global average ranges from 21 to 25 years, with most African countries setting a cap between 25 and 30 years. However, an analysis of actual mine lives reveals that approximately 80% of operations have a life of 10 years or less. Only a handful of major mines (e.g., Newmont’s Ahafo and Akyem operations, Chirano) have projected lives exceeding 15 years. Granting 30-year leases is therefore excessive and not aligned with geological and economic reality. The new duration will be determined based on proven ore reserves and a realistic mining plan.

3. Reform of Fiscal Stabilisation Clauses: It is critical to distinguish between a Development Agreement and a stabilisation clause.The latter is a provision within an agreement that immunizes an investor from certain changes in law for a fixed period. Our current stabilisation regime is among the most extensive globally, often interpreted to cover not only fiscal matters but also environmental and social regulations.

We are moving to abolish broad stabilisation provisions. However, we acknowledge that for specific, capital-intensive projects involving value addition (e.g., refining, major infrastructure like ports or power plants), a form of limited stability may be justified to ensure capital recovery. This will be granted sparingly, based on the mineral type, level of investment, and associated infrastructure development, not for standard gold mining operations.

4. Limiting Prospecting Licence Duration: Ghana is a notable outlier in allowing prospecting licences to be renewed in perpetuity,leading to speculative hoarding of mineral-rich land. Comparatively, South Africa allows a maximum of 15 years (5+10), Namibia 7 years, and most West African nations (e.g., Burkina Faso, Côte d’Ivoire, Mali) between 7 and 10 years. We are now imposing a strict cap. The final duration is under deliberation (between 7 and 9 years), but the indefinite renewal cycle is terminated. Advances in technology (e.g., satellite surveying, AI, advanced drilling) have significantly accelerated exploration, making these extended timeframes obsolete.

5. Mandatory Community Development Agreements (CDAs): Ghana is the only significant mining country where CDAs are not a compulsory,legislated requirement. Currently, contributions are voluntary and often based on profit, which can be zero in years of accounting losses, even for large, revenue-generating mines. We are making CDAs mandatory and will base them on a percentage of revenue, not profit. For illustration, had Newmont’s Ahafo mine contributed 1% of its $1.8 billion revenue last year, it would have generated $18 million for local communities, a sum far exceeding current voluntary contributions. This aligns us with global standards in Canada, Australia, and across Africa (Tanzania, Burkina Faso, Côte d’Ivoire), where revenue-based contributions are the norm.

6. Parliamentary Ratification of Mining Leases: Finally,it is worth noting that Ghana, alongside Kenya, is one of the only two countries that require parliamentary ratification for the cancellation of mining leases. This is an additional layer of procedural complexity not found in most other mining jurisdictions, and it is a structural feature we have inherited.

Conclusion: These amendments represent a decisive shift towards a more equitable,efficient, and modern regulatory framework designed to ensure that Ghana’s mineral wealth translates into tangible and sustainable national development.

Mr Benjamin Aryee the former CEO of the Minerals Commission emphasized that The current revenue streams we observe often lead to a critical judgment, as they stem from a pervasive governmental mindset. Yet, our operational paradigm has consistently positioned the transient government as the central agent.

We are attempting to pivot from this entrenched mode of thinking, though it is a formidable challenge for any administration in power. Our discourse frequently centers on the total revenue generated, treating it as a pool available for immediate distribution. He said.

He indicated that a multitude of inputs are required, and these inputs ultimately determine the destination of capital flows. Mining is a function of cost, which is, in essence, a payment to factor suppliers. Historically, these inputs were almost entirely imported; the mining sector was an enclave economy, reliant on external sources for everything, including basic sustenance.

Thus, for decades, we have generated a net outflow of capital. While promoting national ownership is a valid objective, if we fail to capture value across the entire value chain, we incur significant economic leakage. The current initiatives in Mekong represent a positive shift in this direction.

Mr. Benjamin Aryee indicated that the focus must be on comprehensive ownership, participation, and, crucially, local content. By indigenizing the inputs supplying them locally we ensure that the corresponding payments circulate within our domestic economy.

We have made strides in human capital development and infrastructure funding, but other input sectors remain a challenge, not least due to prohibitively high capital costs, an issue endemic to emerging markets but which we must address.

A holistic view of the value chain is imperative. The degree to which we can supply inputs locally dictates the localization of economic benefits. Furthermore, if our goal is authentic sustainable development, we must confront the finite nature of non-renewable resources.

Our fixation on commodities like gold, which attract foreign investment, has led us to neglect industrial and development minerals that could offer more sustainable, diversified economic foundations and greater downstream linkages.

Ultimately, this requires a fundamental reorientation from short-term political expediency to long-term national interest. Such a shift would justify investments like systematic geological surveys to fully catalogue our endowment. We might then make informed decisions to defer exploitation of certain resources, like our lithium reserves, until market conditions are optimal. However, deferral is not without risk; global substitution trends can render a mineral obsolete, as tragically exemplified by the Canadian asbestos industry, where a once-thriving resource and community vanished.

The imperative, then, is proactive and strategic stewardship: to meticulously assess our resources, protect them, and marshal the requisite investments to leverage them for long-term developmental gain, rather than settling for transient fiscal benefits.

Further Discussion raised
Regarding small-scale mining, it’s imperative to acknowledge the myriad challenges confronting this sector. Could you provide an overview of the production levels emanating from small-scale mining vis-à-vis large-scale mining? Understanding the ratio of production between these two sectors would facilitate a more nuanced comprehension of their respective contributionsutions and inform strategies for addressing the issues at hand.

Pertaining to development agreements and stability provisions, I recall Professor Akabzaa’s pioneering work on Community Development Schemes (CDS) for Newmont approximately a decade ago. It’s intriguing that despite this exemplary model, its widespread adoption has been sluggish, ostensibly due to governmental inertia.

In light of this, I propose a paradigm shift towards Production Sharing Agreements (PSAs) for large-scale mining operations. Drawing inspiration from the oil industry, PSAs offer a more streamlined and equitable framework for resource extraction. By adopting this model, the complexities associated with development agreements, stability provisions, and ratification could be mitigated.