The Cry Of Mining Communities

Operators in the extractive industry, particularly mining companies, have always been criticised for contributing to the destruction of the environment and neglecting those affected by their operations.

Although products of mining form the foundation of human life as areas such as Agriculture, science and technology, manufacturing, construction, aviation, medicine, arts, communications, transportation and consumer goods depend on minerals and metals, the industry that produces the raw material for these is listed among the most destructive.

For the indigenes and farming communities mining affects, the activities of the extractive industry endanger their well-being.

Lucy Adutwumwaa, a resident of Asutifi district of Brong Ahafo, points to cracks in her building which she attributes to the activities such as blasting undertaken by the mining company in her community.

She claims she cannot drink from the river which is the only source of drinking water any more.

“I now have to buy expensive “pure water” (sachet water) and this, among other things, has made life difficult for me and my family.”

Many communities facing these challenges have organized against the companies by forming local, national, and international activist groups where they share information and work together to stop the harm that extractive industries cause.

In many cases, they have succeeded in stopping the mining or reducing its impact, though it takes time to achieve any results.

“The perception is that these extractive companies which are mostly transnational companies are in business to milk their host countries dry” Dr. Joyce Aryee, Chief Executive of the Ghana Chamber of Mines says, hinting that most people believe such companies are only interested in extracting the non-renewable resources, repatriating the huge profits and leaving the host country poor.

The minerals, metals, fuel, and timber that extractive industries seek are very profitable.

Ghana is endowed with minerals such as gold, diamond, manganese, bauxite as well as other industrial ones like salt, limestone and kaolin that are exploited on small-scale.

Gold accounts for the majority of mineral exports from Ghana yet residents of mining communities on countless occasions have petitioned the Ministry of Environment and Science, and the Ministry of Natural Resources to intervene “but to no avail,” observes Richard Adjei-Poku, Executive Director of Livelihood and Environment Ghana, an advocacy group.
For Nana Philip Prempeh of Kenyasi, “the mining companies are simply cheats.”

But is it true that mining companies only destroy the environment? PriceWaterhouseCoopers says mining companies are contributing “extensively” to national development.

However, the audit firm claims these contributions are not usually recognized.

To ascertain the value of the contributions of mining companies in Ghana, PriceWaterhouseCoopers conducted a survey: “Total Tax Contribution- A study of the economic contribution mining companies make to public finances.”

It recognized mining companies as important elements in the creation of wealth and development of countries in which they operate.

George Kwatia, Tax Partner at the PriceWaterhouseCoopers, affirms that the contribution of the mining sector is usually not recognized.

The companies that were covered under the survey reported a total turnover of $62.9 billion of which $10.1 billion went to various governments while $6 billion went to employees as wages and salaries.

Corporate income tax formed 40 per cent of all taxes and contributions in addition to other non-income taxes comprising royalties, VAT and infrastructure funding.

An amount equivalent to 15.3 per cent out of the total turnover of mining companies went to governments.

“Mining companies have over the years consistently maintained the position as the highest gross foreign exchange earner as well as providing jobs in the country,” says Dr. Aryee.

“It is good to have such surveys which indicate that we are not being ripped off,” she tells the surveyors.

Mineral royalties increased from GH¢1.9 million in 1990 to about GH¢90 million in 2009 and mineral royalties accounted for about 94 per cent of state royalties during the same period.

The mining industry in 2009 also paid an amount of GH¢125 million as corporate tax while GH¢1.7 billion was collected by the Internal Revenue Service (IRS) from mining companies.

To Dr. Aryee, fiscal imposts alone do not reflect the total value to the mining sector of the country as there are other indirect contributions such as foreign direct investment and secondary industries that also offer employment, and pay statutory taxes that positively contribute to national development.

Since the introduction of the Minerals and Mining Law, PNDC Law 153 of 1986, Dr. Aryee hints the country’s mining industry has recorded phenomenal growth as it continues to attract huge investments.

Records at the Minerals Commission indicate that Foreign Direct Investment (FDI) in the mining sector increased from $6 million in 1983 to $427 million in 2007.

The Mining industry in Ghana has seen a phenomenal growth especially after the Government's Economic Recovery Programme in 1983, due to the large investment inflows into the sector.

The friendly climate and the continuing high gold price in recent times, according to experts, guarantees greater profits for operators in the industry.

Yet to the mining companies, their full profitability will be realized if key challenges facing the industry such as encroachment of ‘galamsey’ miners on mining concessions, high import taxes and high interest rates are addressed.

Players in the industry who want to remain unnamed claim they continue to strive to add value to the communities in which they operate.

They claim they are at the forefront of the corporate social responsibility agenda in their host communities: Apart from their statutory contributions, they voluntarily provide schools, libraries, hospitals, electricity, potable water, roads, housing, sanitation facilities and alternative livelihood projects.

For the Chief Executive of the Chamber of Mines, Corporate Social Responsibility “is not an option but a necessity that enables the mining company to plough back some of its earnings to raise the quality of life of the communities.”

Social licence, with which players in the industry operate, rests in the hands of the host communities, and that to ensure a continuous renewal, there is the need to honour Corporate Social Responsibility roles to residents of mining communities as well as Ghanaians in general.

The Chamber therefore sees mining as a catalyst for national development since it engenders positive multipliers whose effects ripple through the whole economy.

Dr. Aryee suggests government and the mining industry should craft deliberate policies, plans and strategies to ensure that the potential for mining to contribute to national development.

“It is our expectation that the Government will also increase the quantum of mineral royalties that goes to the mining communities.”

Through the fiscal receipts the state derives from the sector as well as the developmental imperatives which accrue to the country, anyone can say mining has contributed enormously to the growth of the Ghanaian economy, but residents of mining communities who bear the brunt of the negative implications of the activities of the companies hold a different view.

Dr. Darcy White, Tax Partner at the PriceWaterhouseCoopers has therefore recommended that mining companies should consider if there could be business benefits from being more transparent in communicating their tax affairs to their stakeholders.