Ghana, one of the world’s leading gold-producing countries, is introducing a new system to collect royalty payments from gold mining companies. The country is Africa’s largest gold producer and ranks sixth in the world. In 2023 alone, it produced about 4 million ounces of gold. Gold mining plays a major role in Ghana’s economy, contributing around 7 percent of the country’s gross domestic product.
Mining activities are spread across many regions, and gold has been mined in the country for hundreds of years. Recently, however, small-scale and often illegal mining has become very common. Although small-scale mining is legally allowed as a source of livelihood, studies show that more than 85 per cent of these operations still happen informally and outside government regulation, which raises significant concerns about environmental degradation and the safety of workers involved in these unregulated activities.
Despite concerns from some governments and mining executives, Ghana has decided to continue with its new royalty policy. The policy links the amount of royalty paid by mining companies to the global price of gold. At the moment, gold mining companies in Ghana pay a flat royalty rate of 5 per cent. As gold prices rise under the new sliding-scale system, so will the royalty rate. For example, when gold reaches about $4,500 per ounce, companies will pay a royalty of 12 per cent.
Gold prices are currently trading above $5,000 per ounce, which could increase government revenue. The policy is part of a wider effort by African countries to gain more value from their natural resources while global commodity prices remain high. Some foreign governments, including the United States and China, reportedly encouraged Ghana to delay the plan, but Ghanaian officials have chosen to move forward.
According to Isaac Tandoh, head of the Minerals Commission, diplomats mainly questioned the highest royalty level of 12 per cent. They suggested applying that rate only when gold prices reach $5,000 per ounce, but Ghana rejected the idea. The new system will also apply to lithium, where royalties will range between 5 and 12 per cent depending on prices. Other minerals will continue to be taxed at a flat 5 per cent rate.
Mining companies warn that higher royalties could discourage investment and slow future projects. The Ghana Chamber of Mines says the policy could reduce production over time, potentially leading to job losses and decreased economic growth in the mining sector. However, Ghana’s regulators maintain that the system strikes an appropriate balance. They say it will increase government income while still allowing mining companies to remain profitable. Officials also argue that investors usually value stable regulations more than small changes in costs.
