Parliament approves fiscal concession grant to AngloGold Ashanti

Parliament has approved the joint committee on Finance, and Mines and Energy on Grant of fiscal concession to AngloGold Ashanti (Ghana) Limited under a Tax Concession Agreement (TCA) between The Government of The Republic of Ghana and Anglogold Ashanti (Ghana) Limited.

The report jointly signed by Dr. Mark Assibey-Yeboah and Emmanuel K. Gyamfi chairmen of Finance and Mines, and Energy respectively charged The Stakeholders in the agreement to develop a sustainable livelihood programs to keep mining communities under their jurisdiction relevant even after the mining activities years to come.

The Committees “recommends to Government, AGAG and other stakeholders to put sustainable and alternative livelihood programmes and industry in place within the mine area”, according to the report “this will ensure that the economy of Obuasi continues to function properly even after the exhaustion of the minerals deposits thereat”.

The Committee noted that gold is an exhaustible natural resources which will be completely depleted at some point in time.

The Committee noted that per the Agreement, the AGA is required to be exempt for the Stability Period from the application of new taxes that may be imposed under an enactment. 

The Committee was however, informed that AngloGold Ashanti (AGA) has in subsequent negotiations agreed with the Government of Ghana to reduce the Stability Period to seven (7) years solely in respect of a minimum corporate tax regime that may be introduced by Government. 

Thus, should the government go ahead to implement its intention to introduce a minimum corporate income tax, the AGA agrees to be amenable to the tax after seven (7) years instead of the total 10 years stability period. 

The Committee finds this to be in the supreme interest of Ghana since the Government will be able to subject AGA to the intended minimum corporate income tax after just seven, (7) years of the Stability Period. 

Obuasi Gold Mine is the oldest existing mine in Ghana, having started production in 1897 and has produced over 32 million ounces of gold during its 120 year life. 

As part of the arrangement for meager of Anglogold Limited and Ashanti Goldfields Limited to form Anglogold Ashanti Limited (AGA) in 2014 to support plans of extending the life of the Obuasi Mine, The Government of Ghana granted AGA a stability agreement (ratifiedby parliament) which conferred various fiscal concessions and stabilization to the company’s subsidiaries in Ghana namely, AngloGold Ashanti (Ghana) Limited which operates the Obuasi Mine and AgloGold Ashanti (Iduapriem) Limited (AAIL) operates Iduapriem mine.

While the Iduapriem mines continues to run profitably, the Obuasi operation, in spite of continued investment by AGA, has for the most part been loss-making due to challenges from operational difficulties, compounded by the sudden fall in gold price in 2013. 

This prompted AGAG to undertake a majour restructuring programme, under an Amended Programme of Mining Operations (APMO) approved by Parliament of Ghana in November, 2014 in accordance with the mining laws of Ghana. 

During the period of limited operations under APMO, The Obuasi Mine was invaded by illegal miners in February, 2016.

The Committee is satisfied that the grant of fiscal concessions under a Tax Concession Agreement (TCA) is necessary for the planned redevelopment of the Obuasi Mine of AngloGold Ashanti (Ghana) Limited for the achievement of the targeted economic and social benefits for Ghana as a whole and Obuasi in particular. 

The Committee hence recommends to the House, in view of the foregoing observations, to adopt this report and approve by resolution, the Grant of Fiscal Concessions to AngloGold 

Story by Edzorna Francis Mensah

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