Ghana’s President Nana Akufo-Addo demanded mining deals be more beneficial for Africa. He called on governments to end fiscal incentives traditionally used to attract investment to countries long viewed as rife with risk.
On the agenda at the African Mining Indaba in Cape Town was resource nationalism. Resource-holding governments are aware of the need for international miners to find new exploration territory, increase tax and royalty demands.
Akufo-Addo said the continent’s reputation of political instability was outdated and improvements in the rule of law should be reflected in countries’ relationships with mining companies.
At the conference, Akufo-Addo said “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”.
Seeking to recalibrate partnerships and increase their share of mining revenues, a number of African governments have reviewed mining contracts over the past decade.
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 clauses in contracts and raised royalty rates across the board.
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.
However, other African nations, including Angola and Ethiopia, are still seeking to use tax breaks to entice investment to their nascent mining sectors.
Akufo-Addo said “we want you to stay here for the long-term. Respect the land that provides the riches and be part of the transformation. 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. His country Ghana, which is Africa’s second-largest gold producer, is now seeking to develop its iron ore and bauxite deposits.
A deal approved by Ghanaian lawmakers last year, will see China’s Sinohydro Corp Ltd provide $2 billion for government road projects in exchange for refined bauxite exports.
The Ghanaian government has created a state-owned company to help establish an integrated aluminum industry. Akufo-Addo said creation of a similar company to promote an iron and steel industry would be considered in the current parliamentary session.
The Ghanaian President said “we cannot, and should not, continue to be merely exporters of raw materials to other countries”.