1. Presentation on Mineral Royalties Disbursement By: Dr. Gad Akwensivie Office of the Administrator of Stool Lands, HQ Email: gadosman@yahoo.com 1

2. T-H-I-N-K-I-N-G C-O-R-N-E-R “CHANGE IS THE ONLY THING WHICH IS CONSTANT ON EARTH BUT CHANGE DOES NOT HAPPEN UNTIL THE NEW STATE BECOMES EFFECTIVE AND MANAGED ” - ANANYMOUS 2

3. Overview of Revenue streams from Mining activity  Capital gains Tax  Dividends  Corporate income tax  Ground Rent  Property Rates  Mineral Royalties 3

4. Ownership of Minerals in their natural state  Article 257 sections (6) of the 1992 constitution of the republic of Ghana as well as Section 1 of the Mining and Minerals Act 703 (2006) describes minerals in their natural state as belonging to the state. Reads “ Every mineral in its natural state in, under or upon land in Ghana, rivers, streams, water-courses throughout the country, the exclusive economic zone and an area covered by the territorial sea or continental shelf is the property of the Republic and is vested in the President in trust for the people of Ghana” 4

5.  Mineral companies are by law required to pay mineral royalties (a range of between 3 and 6% of the value of gold they mine) to the state. This is paid to the Large Tax Unit of the Internal Revenue service who then pays into the consolidated fund.  80% of the mineral royalties paid by mining companies to internal revenue service is retained by government in the consolidated fund.  10% is paid from the consolidated fund to the Minerals development fund  10% is paid to the Office of the Administrator of Stool Lands (OASL) 5.

6. Disbursement of Mineral Royalties  The Office of the Administrator of stool Lands disburses mineral royalty to beneficiaries according to the constitutional formula as spelt out in Section 267 (6) reads:  10% of revenue accruing from stool lands shall be paid to the OASL to cover administrative expenses. The remaining revenue shall be disbursed in the following proportions –  Twenty-five per cent to the stool through the traditional authority for the maintenance of the stool in keeping with its status;  Twenty per cent to the traditional authority; and  Fifty-five percent to the District Assembly within the area of authority of the stool lands. 6

7.  The constitutional formula does not apply to Mineral Royalties paid by Mining firms because minerals are the property of the Republic of Ghana, vested in the state for and on behalf of the people of Ghana. This implies that mineral royalties are not considered as land revenue. 7

8. Current Disbursement of Mineral Royalties  Government/Consolidated Fund = 80%  Minerals Development Fund = 10%  Office of the Admin. of Stool Lands =10%  Total = 100% 8

9. Disbursement to the Communities Administrator of Stool Lands retains 10% of the amount received to cover administrative expenses. The remaining 90% is apportioned as follows:  55% to District Assemblies  25% to Stools  20% to Traditional Councils 9

10. Extracts from the Draft Regulation on the Minerals and Mining Act, 2006 (Act 703)  Liability for royalty Every holder of a mining lease, restricted mining lease, or small scale mining license is to pay royalty to the Republic in respect of the mining operations at the rate specified in the Schedule to these Regulations 10

11. Extracts from the Draft Regulation on the Minerals and Mining Act, 2006 (Act 703) Cont’d  Liability for royalty A person who obtains ore or tailing or any material from a holder of a mining lease, restricted mining lease or small scale mining license for the purpose of wining minerals may be required by the minister to pay royalty on behalf of the holder of the lease or license in respect of any minerals won from the operations 11

12.  Liability for Royalty Notwithstanding to the contrary in these Regulations, a holder of a small scale mining lease shall pay royalty at the rate of three per centum of the total value of minerals obtained from the operations.

13.  Variation of rate of royalty The rate of royalty payable under these Regulations may be varied on the basis of profitability of the mining operations The profitability of a mining operation shall be determined by the application of the operating ratio, expressed in terms of percentage, which the operating margin bears to the value of the minerals won from the mining operations during the yearly period.

14.  Variation of Rate of Royalty For the purpose of determining the operating margin, the operation cost shall be deducted from the mining operations. A person liable to pay royalty under these Regulation shall within thirty days after the expiration of every yearly period, submitted to the Commissioner returns stating in detail the total value of minerals obtained by the holder.

15.  Royalty payments to be made monthly A person liable to pay royalty under these Regulations shall within fifteen days after the expiration of every month pay to the Republic on account, royalties at the minimum rate of three per centum of the total value of minerals obtained by the holder

16.  Offences Any person who: - fails or refuses to pay royalty payable by the person; or - makes or submits a false declaration in respect of the person’s operation costs or the value of minerals won; or - contravenes any of the provisions of these Regulations

17.  commits an offence and is liable to the same punishment for which a person would be liable for failure or refusal to pay income tax or for the contravention of similar provision under the INTERNAL REVENUE Act 2000 (Act 592)  Notwithstanding sub-regulation (1) where a person is found guilty of an offence under these regulations the Minister may, in addition to any punishment which a court may impose, cancel or suspend the lease or license held by the person.

18.  Formulation of guidelines for the use of mineral royalties by District and Municipal Assemblies by the Ministry of Local Government and rural development, the Ministry of Lands and Natural Resource and Ministry of Finance and Economic Planning.

19.  Proposal by Chiefs and Traditional rulers ( National House of Chiefs) for an increment of the share of Mineral Royalty paid to beneficiaries  Minerals Development Fund Bill to be laid before parliament to give legal backing to the disbursement of mineral royalties to communities where mining activities take place. It is hoped that the passing of this bill will be expedited.

20.  OIL and GAS. With the discovery of Oil and Gas in commercial quantities, there is an on going debate in the country how royalties from oil and gas should be treated. Lessons will be learnt from neighboring countries such as the Nigeria (Niger Delta, etc) to ensure that the oil find remains a blessing and not a curse. THE END!