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Business News of Friday, 29 May 2020

Source: Class FM

Mining and quarrying sector domestic receipts rose 70% in 2019

The Chamber of Mines has said in its annual general meeting today, Friday, 29 May 2020 that the mining sector's total fiscal contribution, at 7.7 per cent of domestic revenue in 2019, was the second-highest after the financial and insurance sectors.

This notwithstanding, the share of the mining and quarrying sector in total direct domestic receipts mobilised by the Ghana Revenue Authority (GRA) improved by 70 per cent from GHS2.36 billion in 2018 to GHS4.02 billion in 2019.

“This growth was occasioned by the simultaneous increase in production and price of some minerals, particularly, gold,” said Mr Eric Asubonteng, President of the Chamber.

Likewise, the expiration of the Stability Agreements between the Government of Ghana and some mining companies further resulted in changes that boosted revenue for the State. Specifically, corporate tax receipts from the sector, saw an 89 per cent increase to GHS2.27 billion in 2019 from the previous GHS1.20 billion in 2018.

Moreover, the income tax (Pay As You Earn) receipts of mining sector employees rose from GHS 457.16 million in 2018 to GHS 736.26 in 2019, representing a growth rate of 61.1 per cent. In a similar fashion, mineral royalty payments increased from GHS 705.26 million in 2018 to GHS 1.01 billion in 2019 representing a 42.7 per cent leap while other taxes stood at GHS 0.67 million in the same period.

In terms of total government revenue, the mining and quarrying sector's contributions increased from 4.9 per cent in 2018 to 7.6 per cent in 2019.

Mr Asubonteng noted that “data from the Bank of Ghana shows that the increase in receipts from minerals expanded the sector's share in gross merchandise export receipts from 39 per cent in 2018 to 43 per cent in 2019, consolidating the mining sector's status as the leading source of foreign exchange from export earnings.

“In fact, the mining sector comes into its own, when you add the equivalent contribution of crude oil and cocoa, which stood at 29 per cent and 15 per cent respectively in the same period. It is equally vital to note that out of their realized mineral export revenue of US$ 4.5 billion in 2019, the producing member companies of the Chamber returned US$ 3.3 billion to the country, representing 73 per cent of export proceeds. As has always been the case, the mineral revenue was returned through the various commercial banks; a critical factor in stabilising Ghana's currency and fiscal outlook.”

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