Over $4Billion From Mining Sector Repatriated In 2021
The Chief Executive Officer (CEO) of the Minerals Commission, Martin Ayisi, has urged local companies to invest in mining, by pumping part of their moneys into the sector, to help grow the country’s economy.
He disclosed that in 2021 alone, per Bank of Ghana report, about $4 billion dollars have left the shores of Ghana to service loans; thereby, depriving the economy the needed capital injection.
As a result, Mr. Ayisi said, it is better to have these companies with huge financial muscles, invest especially, in the metal financing area, than these mining companies relying on foreign partners for their operations.
“So SSNIT for instance, should be making deliberate effort or decision and saying that I am going to give 200 million dollars to Azumah or Cardinal, to put in the mine. That is happening all over the world, or Aziz Capitals or any of these pensions; they are sitting on billions they should release to the mine,” he noted.
Speaking on the Local Content Law segment on Metro television’s Good Morning Ghana programme on Thursday, August 25, monitored by The Anchor, MrAyisi said, it is better for Social Security and National Insurance Trust (SSNIT), insurance firms and others, to finance the sector to avoid repatriation of profits and expenses from the sector.
“According to 2021 Bank of Ghana report, about 4billion [dollars] was repatriated last year by the mining companies”.
“That is why we need this programme so that those companies that are sitting on your tier 1, 2, 3 even SSNIT, because a lot of moneys equity firms, head funds, pension schemes etc. in US, they are the ones that are pumping in, all these billions, that are brought here”, he added.
He further explained that, hitherto, these mining companies had always raised such finances abroad and so after operations, profits, moneys for payment of loans and others, are repatriated abroad to pay their financiers.
“Hitherto the bulk of this metal financing, comes from outside; they go and raise the money in London”, the CEO said.
What does that mean for the currency? The same report said about 1.9 billion [dollars] was sent out to pay loans for mine development, to finance their operations here, equipment that are not manufactured here… plant, machinery and equipment and shareholders.
So, if you can develop a strategy or framework where they can raise the money here, do you need to repatriate almost 2billion dollars out? It means that we have to take metal finance seriously; so enter the stock exchange.
There is a deliberate policy by government which Minerals Commission is supposed to implement, the institution I superintend over, to ensure that they raise the money here”.
He explained further, how the likes of SSNIT and other head funds, heeding to the call, will come in handy.
“How do they do that? So, all these billions that the head funds and even SSNIT and all these companies are sitting on, they should start releasing them to the mining companies and the money can stay here”.
The CEO cited the example of Ashanti Gold, which ably raised locally some $140 [millions] to finance its operations.
Again, this year, MrAyisi said local company, Golden Star, operating in the WassaAchimpim as underground mine, is working to spend some $1billion to do “development that will extend the life of the mine by about 17 years.
By the time they will be completing that in the next 25 years or so, it will be twice or so deeper than Obuasi, it will become the deepest mine in Ghana.
Our job is to ensure that this one billion which they need for expansion to extend the life of the mine, is raised here”.
He continued: “They have stated they have drawn their first plan for 350 million [dollars]; that money should be raised here; that is what government is saying that we are to implement as Minerals Commission, not to bring it from outside, that is our job because, they will take that money out with interest”.
But for the Local Content Law, the CEO said, Golden Star would have gone to Vancouver, Toronto, London Stock Exchange, to raise this expected one billion.
MrAyisi said the Law which he describes as a ‘game-changer’ has come to correct a lot of the wrongs that disadvantaged Ghanaian businesses.
He said in the law, passed in 2021, it is directed that, at least, 20 percent of the financial transactions of these mining firms, are required to be put in local banks.
“But with the coming in of the Local Content Law, this practice is changing. So, the Local Content Law, is saying that, at least ensure that 20 percent of your equity is listed here.
So this year, if Newmont says that they got 2billion dollars from the sale of minerals, I am expecting that in their report, at least 20 percent of the 2billion dollars was placed in the local banks here; that is how we keep the moneys here because these things started this year.
A time will come, where the directive and it is coming maybe a year or two, we will say about 50 percent of your receipt of mining after selling your mineral, should be placed with local banks not the foreign entities that will take their moneys away”.
MrAyisi said these measures which in the past did not exist, is the reason why it was said that everything that was gotten from mining was repatriated. He said the current percentage could in the near future be increased.
“This is what we have not done over the years, that is why people say everything goes out and it is in the raw form; so ensuring they do it here and the same thing goes for the insurance a minimum of 20 percent.
The good thing about this local content regulation is that, we don’t have to go to Parliament every time to change the threshold so latter part of this year, we will review it to see if we can increase insurance to, let say, 40 percent or financial transaction to 40 percent”, he added.
The law aims at among others ensuring that there is improvement in the capacity and then competitiveness of Ghanaian businesses by ensuring that mining and exploration, create mining related industries adding that even though Ghana has not done in that regard, the law will ensure that, that happens.
As a result of the law, Ghana is fast becoming main supplier of explosives for its neighbours like Burkina Faso and also Mali.
On the brighter side of MrAyisi’s interaction with Dr Randy Abbey, he revealed that despite facing challenges in the mining sector and seeking to correct them with the Local Content Law, Ghana is doing very well in the area of skill, research and technology developments saying “for me that is where we are a star”.
Under Mr.Ayisi’s tenure, haulage, fuel and lubricant supply to the mines which involves some $500 million, are restricted to only Ghanaian companies.