Ghana plans to scrap long-term mining investment stability agreements and significantly raise royalties as part of wide-ranging reforms designed to capture more value from soaring gold prices, the regulator of Africa’s largest gold producer told Reuters.
The reforms are aimed at balancing investor confidence with the government’s push to earn greater returns from mining, according to Isaac Tandoh, acting chief executive officer of the Minerals Commission, who spoke in an interview in Accra.
Across Africa, governments are tightening mining rules to benefit from high commodity prices, often increasing royalties and local-content requirements. These changes have at times triggered disputes with global miners over costs and contract certainty.
In Ghana, the world’s sixth-largest gold producer, stability and development agreements typically lock in tax and royalty terms for five to 15 years. In return, mining companies commit between $300 million and $500 million to mine construction or expansion projects.
To qualify for renewal of these agreements, companies must extend mine life by at least three years and increase output by more than 10%, among other conditions.
Newmont, AngloGold Ashanti and Gold Fields currently operate under stability agreements and did not immediately respond to requests for comment.
Tandoh said the planned legal changes mean Newmont’s stability agreement, which expired in December, will not be renewed. Similar agreements held by AngloGold Ashanti and Gold Fields will be phased out when they expire in 2027.
A draft bill expected to be presented to Parliament by March proposes a royalty structure starting at 9% and rising to 12% if gold prices reach $4,500 per ounce or higher. This would be roughly double the current 3%–5% range. Spot gold is currently trading at about $4,590 per ounce.
The reforms also include stricter local-content rules, requiring more in-country procurement and greater support for Ghanaian companies.
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“Renewal of (investment stability agreements) is not going to happen,” Tandoh said. “Renewal is conditional, not automatic.” He added that development agreements would be scrapped entirely because they have been abused.
“We’ve seen companies use revenue from Ghana to buy mines elsewhere while refusing to pay even basic obligations like contributions to district assemblies. That cannot continue,” he said.
Ghana introduced stability agreements in the early 2000s, a move that helped attract billions of dollars in foreign investment and enabled the country to overtake South Africa as Africa’s leading gold producer.
Newmont’s Ahafo agreement, for example, fixed a 32.5% corporate tax rate and a sliding royalty of 3%–5%, rising to 3.6%–5.6% in forest reserve areas.
It also included duty and VAT relief on qualifying inputs. An extension was tied to a minimum $300 million investment and targets for output, mine life and Ghanaian employment, according to a revised 2015 agreement seen by Reuters.
Tandoh said Newmont had requested an extension, but the government plans to phase out the stability regime in favor of broader rules that “indigenise” more value domestically and enforce stricter compliance.
He said authorities are “listening” to concerns from smaller and new projects about the proposed royalty increase and will seek a formula that preserves investment while increasing government revenue when prices are high.
Tandoh rejected claims that the tougher terms would deter investment. “They operate under harsher conditions elsewhere and still make profits. Mining is about numbers,” he said.
The Ghana Chamber of Mines did not immediately respond to requests for comment.
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Image Credit: AusIMM
