By Eugene Davis
The Ghana Chamber of Mines has cautioned that government’s proposed increase in mining royalties from 5 per cent to as high as 11 per cent could undermine the long-term sustainability of the industry and weaken Ghana’s ambition to position itself as the mining hub of West Africa.
The proposed changes, contained in a Legislative Instrument (LI) under the Minerals and Mining (Royalties) Regulations, 2025, introduce a sliding-scale royalty regime for gold and lithium, linking royalty rates to international commodity prices.
However, the Chamber argues that the structure and rate thresholds of the proposed regime place excessive fiscal pressure on mining companies, particularly in an industry characterised by high capital costs, fixed production capacity and long investment horizons.
“Mining Is not as flexible as price movements”
Speaking on the matter at the media soiree in Accra, Chief Executive Officer of the Ghana Chamber of Mines, Dr Ken Ashigbey, said while the Chamber remains open to engagement, the proposed royalty framework raises serious concerns.
“We will continue to engage government and we hope we can sit around the table to properly discuss this. The lithium conversation came in and everything has been lumped together, without adequate consideration of what happens when gold prices rise,” Dr Ashigbey said.
He explained that unlike other sectors, mining companies cannot quickly scale production in response to higher prices.
“When gold prices go up, your production capacity is largely fixed. Expanding capacity requires significant investment in processing plants and infrastructure, and by the time those expansions come on stream, prices may already be declining,” he noted.
According to him, government policy should focus on supporting mines to expand, create more jobs and generate sustainable revenue, rather than imposing what he described as an aggressive fiscal grab during price upswings.
Already one of the highest fiscal burdens globally
The Chamber noted that Ghana’s mining fiscal regime already draws revenue from both gross revenue and profits, placing the country among jurisdictions with one of the highest governments takes globally.
When mineral royalties are combined with corporate income tax and the Growth and Sustainability Levy (GSL), Ghana’s Average Effective Tax Rate (AETR) already exceeds 60 per cent.
Dr Ashigbey pointed out that even under the current system, the combined effect of the 5 per cent royalty rate and the GSL has pushed the effective royalty burden close to 10 per cent of gross revenue.
“Raising royalties to levels as high as 11 per cent imposes a heavy charge on gross revenue, irrespective of profitability. This is distortionary and discourages investment,” he said.
Sliding-Scale regime raises structural concerns
Under the proposed regulations, royalties on gold would be determined using a sliding-scale mechanism based on the weekly average London PM Fix price, with rates starting at 5 per cent when gold prices are up to US$1,900 per ounce, rising progressively to 11 per cent and above as prices move higher.
While the Chamber says it is not opposed in principle to a sliding-scale royalty system—given its ability to reflect commodity price volatility—it argues that the proposed structure is fundamentally flawed.
The key concern is that the minimum royalty remains fixed at 5 per cent, identical to the current rate, meaning government shares no downside risk when prices fall. At the same time, royalty rates rise sharply during price upswings.
“This is not a counter-cyclical framework. It is an upside-only fiscal mechanism that creates fiscal asymmetry and heightens investor uncertainty,” the Chamber warned.
Threat to mine viability
According to the Chamber, if gold prices retreat to their long-term averages, many mines—particularly mature and marginal operations—could record sustained losses without sufficient fiscal relief.
This, they warn, could result in:
Reduced life-of-mine (LOM)
Higher cut-off grades, making some deposits uneconomic
Delayed expansion projects and reduced exploration
Potential job losses and lower export earnings
Over time, the Chamber argues, this could erode rather than enhance government revenue.
Lithium and Other Minerals
The proposed LI also introduces a sliding-scale royalty regime for lithium (spodumene), with rates rising from 5 per cent at lower price levels to double-digit rates as prices increase.
Royalties for other minerals—such as diamonds, bauxite, manganese, salt, limestone, iron ore and other industrial minerals—remain fixed at 5 per cent.
The Chamber warned that this selective application of variable and higher royalties could distort investment decisions and complicate Ghana’s fiscal framework.
Competitiveness at risk
Dr Ashigbey cautioned that the proposed royalty increases could weaken Ghana’s competitiveness relative to peer mining jurisdictions in Africa and globally, many of which increasingly rely on progressive, profit-based fiscal instruments rather than heavy charges on gross revenue.
“Globally, mining fiscal regimes are designed to be predictable, stable and counter-cyclical. The proposed approach moves Ghana in the opposite direction,” he said.
Chamber’s Counter-Proposals
The Ghana Chamber of Mines has therefore called on government to reconsider the proposed royalty increases and engage in broader consultations. Its counter-proposals include:
Maintaining the existing fiscal framework for gold and other non-lithium minerals
Exploring additional revenue mobilisation through profit margins, rather than higher royalties
Strengthening revenue collection in the artisanal and small-scale mining (ASM) sector, whose contribution to output continues to rise
For lithium, adopting a more moderate sliding-scale structure to support project viability:
Up to US$1,500: 5%
US$1,501 – US$2,500: 7%
US$2,501 – US$3,500: 9%
Above US$3,500: 11%
Call for Balance
The Chamber stressed that while government’s revenue mobilisation objectives are understandable, fiscal stability, predictability and sustainability are critical to maintaining investment in a sector that remains a cornerstone of Ghana’s economy.
Without a balanced approach, it warned, the proposed royalty regime could ultimately shrink the industry it seeks to tax.
Dr Ken Ashigbey
