Tax hikes will discourage investment - Aubynn

Tax hikes on mining companies in Ghana's 2012 budget could discourage investment in Africa's second-largest gold producer, the Ghana Chamber of Mines warned on Thursday.

Corporate tax on mining companies will increase to 35 percent from 25 percent, and a separate 10 percent windfall tax on mining profits is to be introduced, according to the budget released on Wednesday.

Ghana said in October it was in talks with gold miners over additional taxes as part of efforts to benefit from recent gains in the value of gold on world markets.

"This stance will likely discourage investment and the expansion of current projects," Toni Aubynn, head of the Ghana Chamber of Mines, told Reuters.

"We are not against government trying to maximize its benefit from the extraction of natural resources, but it has to be done carefully so that it is sustainable and so that mining companies can make a profit."

Details of how the windfall tax will be imposed were not provided in the budget statement released to parliament.

Finance Minister Kwabena Duffuor, who presented the budget, said the mining industry was not providing enough social and economic benefits to Ghana. He called for more transparency on revenues and a greater effort to address environmental concerns.

Aubynn said the comments were unexpected.

"We were quite surprised because we (the mining industry) have played a leading role in the establishment of the Extractive Industries Transparency Initiative," he said of a move to establish industry standards in the mining sector.

"We do not understand where the accusation of the lack of transparency is coming from. The government has the power to make companies more transparent," he added.

Aubynn added that the industry employed over 15,000 people but that some players were already reassessing some of their projects in light of Wednesday's statement.

"As it stands now, this could potentially have a negative impact on investment in mining. Members (of the chamber) are concerned about expanding their projects. Some have said they are reconsidering expanding their projects and looking at the numbers again."

Firms operating in Ghana include subsidiaries of Newmont Gold, AngloGold Ashanti and South Africa-based Goldfields. A Newmont spokesman said on Wednesday the company was trying to understand the implications of the announcement.

The Ghana Mine Workers Union have been calling for a windfall tax in addition to raising the country's stake in the mines to enable the economy to benefit from the attractive gold prices.

Ghana's gold production rose 3 percent in the first half of 2011 to 1,497,023 ounces from 1,455,234 ounces a year ago, the chamber of mines announced in September. Revenues during the same period jumped 31 percent to $2. 2 billion.