The Ghana Chamber of Mines is pushing against the government’s proposed sliding scale mineral royalty regime ranging from five to 12 percent, cautioning that the rate could be counterproductive and undermine long term revenue generation despite delivering immediate fiscal gains.
Chamber President Michael Edem Akafia presented the industry’s position to fellows of the Africa Extractive Media Fellowship (AEMF), clarifying that the industry supports the principle of a sliding scale tied to gold prices but rejects the proposed rate structure under the Minerals and Mining Act amendment.
The Chamber argues that while the state may record immediate revenue gains under a higher royalty regime, the broader economic consequences could shrink the very base on which those revenues depend. The industry is pushing for a reduced band of four to eight percent instead of the government’s five to 12 percent proposal.
Akafia, who also serves as Vice President and Head of Legal at Gold Fields West Africa Region, explained that the justification for their stance is the current situation where royalties are charged on gross revenue, not profit. This means royalties are treated as costs or expenditure that must be paid regardless of operational pressures, cost spikes or market downturns.
The Chamber President emphasized that since royalties are taken from top line revenue, companies must pay them irrespective of whether they are making profits. In his view, pushing the rate too high risks weakening mining firms at a time when global cost conditions remain volatile.
The Chamber’s concern is that an aggressive royalty scale could also reduce reinvestment, stall new projects and in extreme cases force marginal mines to shut down. If production declines or expansion plans are shelved, overall output falls along with corporate taxes, Pay As You Earn (PAYE) contributions, supplier contracts and foreign exchange inflows.
Akafia stated that if the government continues to push for higher royalties, it jeopardizes other tax proceeds from other tax handles. He explained that squeezing more from current revenues may deliver a temporary fiscal boost but at the risk of undermining the sector’s capacity to grow and generate sustainable returns over time.
The Chamber President maintained that the government may be raking in higher revenues with this high royalty rate in the short term, however in the long term it will be sacrificing its own revenues. He stated that the question is what are you sacrificing, adding that you could be sacrificing short term revenue gain in favor of long term revenue loss.
Akafia explained that if projects do not take off and companies collapse because government is imposing on revenue, in the long run authorities may not achieve revenue objectives. He stated that while government may achieve objectives in the short term because it is taking from revenue, if companies collapse all other tax handles potentially will shrink if the pie shrinks.
He added that to that extent government will not get what it wants, noting that you can have an objective but somehow if you do not implement the policy related to that objective well, it can become counterproductive. He emphasized that is why the Chamber is trying to point that out.
The industry insists it is not opposing royalties altogether but rather advocating a rate that balances state revenue needs with operational viability. The proposed four to eight percent band reflects that compromise according to Chamber officials.
Finance Minister Dr Cassiel Ato Forson offered to cut the Growth and Sustainability Levy (GSL) from three to one percent to ease industry concerns about the new royalty regime, which takes effect 21 days from Tuesday, February 3, 2026, unless Parliament amends it. However, the minister proposed maintaining the five to 12 percent sliding royalty scale.
The Chamber explained that gold prices are volatile and cyclical, sometimes collapsing dramatically, as seen in 2012 when prices fell by 26 percent in a single day. Mining companies are price takers, not price setters, facing significant risks from sudden market shifts that can devastate cash flows if royalties remain fixed to revenue rather than profit.
A major pillar of the Chamber’s argument centers on the highly cost intensive nature of mining operations. Gold mining involves a long development cycle often stretching 10 to 13 years from exploration to production. Costs incurred during drilling, feasibility studies, infrastructure development and reserve conversion must all be recovered over time.
Akafia explained that one cannot look at the gold price and say that at the current gold price, if the gold price is at 2,000 or 5,000 dollars and your operational cost is 1,000 dollars, then it is all margin now. The global industry uses the All-In Sustaining Cost (AISC) metric developed by the World Gold Council to account for these comprehensive expenses.
The Chamber warned that one of its members talked about the fact that the proposed royalty regime will kill a project they are trying to do, which is a Ghanaian wholly owned large scale mining operator. Akafia stressed that here is where government is killing even that whole thing that stakeholders have all been pushing for, where they want more Ghanaians to participate in the industry.
In addition to proposing a four to eight percent sliding scale, the Chamber suggested dedicating one percent of mining profits, not revenues, toward community development projects during periods of high gold prices. This ensures communities benefit without pushing loss making operations into distress.
The new gold royalty regime adds approximately one percentage point for every 500 dollar rise in the gold price, mirroring systems in Burkina Faso. The proposed scale is based on the assumption that rising gold prices automatically translate into excess profits, which the Chamber describes as fundamentally flawed.
A Chamber position paper shows that lifting royalties from five to seven percent at a realized price of 2,044 dollars per ounce would cut net present value of AngloGold Ashanti’s Obuasi mine by eight percent under the new scale, enough to drop it below typical hurdle rates. Perseus Mining’s planned 170 million dollar expansion of the Edikan mine’s pit would become uneconomic under the proposed regime.
Together the two projects account for 1,344 jobs and more than 800 million dollars in future royalties and taxes according to industry calculations. The Chamber argues that shelving such projects would result in forgone government revenues far exceeding any short term gains from higher royalty rates.
Ghana posted record breaking six million ounces of gold production in 2025, driven largely by a surge in artisanal and small scale mining according to the Chamber. While large scale output remained flat, higher gold prices and reforms helped pull informal supply into official channels.
However, industry leaders warned at South Africa’s Mining Indaba that the country’s proposed sliding scale royalties of five to 12 percent could derail 2026 growth. Chamber Chief Executive Officer Dr Kenneth Ashigbey stated that the royalty increase will hit new projects immediately, the ones meant to lift next year’s production.
Ghana’s mining sector contributed 17.7 billion cedis in fiscal payments to government in 2024, a 51.2 percent increase from 11.7 billion cedis in the previous year. This accounted for 24.3 percent of direct domestic taxes and 9.5 percent of total government revenue.
Mineral royalties paid by the mining sector increased from 2.8 billion cedis in 2023 to 4.9 billion cedis in 2024. The 76.7 percent growth in royalty payments closely reflected the expansion in mineral revenue, as royalties are assessed on gross mineral sales.
The Chamber has proposed a sliding royalty scale ranging from four to eight percent benchmarked against comparable mining jurisdictions. This proposal avoids extreme outliers such as Mali’s recent 10.5 percent upper rate, which the Chamber described as an exception shaped by non market factors.
For the government, the dilemma is whether to maximize immediate inflows or nurture a sector capable of delivering durable long term returns. The Chamber’s position is not one of resistance but of caution, arguing that Ghana must strike an optimal balance securing fair state revenues while preserving mine viability, protecting jobs and sustaining long term investment.
