Ghana: Memorandum on the Minerals and Mining Bill 2005 Submitted by the National Coalition on Mining
Published by MAC on 2005-06-13
Memorandum on the Minerals and Mining Bill 2005 Submitted by the National Coalition on Mining to the Select Parliamentary Committee on Mines and Minerals
13 June 2005
GENERAL INTRODUCTION
This memorandum is submitted by the National Coalition on Mining (NCOM) on the Minerals and Mining Bill 2005
The purpose of the memorandum is in two fold. On the one hand, the memorandum calls for a national mining policy to set the basis for the development and revision of Minerals and Mining Bill. On the other hand, the memorandum raises fundamental issues and concerns on the Minerals and Mining Bill and makes proposals for addressing those concerns.
The National Coalition on Mining (NCOM) is a voluntary groupings of organisations, individuals and communities affected by mining dedicated to the promotion and protection of the environment, community rights and economic justice vis-à-vis mining and other extractive sector activity.
A cross-section of members of the Coalition has been engaged in some of the processes leading to the preparation of the Minerals and Mining Bill. This memorandum is the second of memoranda submitted by the Coalition.
The memorandum is set out in two main sections. Section One is the background that gives a brief introduction of the history of mining in Ghana, the perceived benefits and the realities on the ground. It highlights the key issues of concern, which include the absence of a national policy for mining, the framework of the current mining code and its relationship with value-addition and corporate welfare verses citizens' interest. The section also discusses the mining bill in brief by isolating in summary, fundamental questions of community rights, environmental standards, maximising the net returns from mining to the national economy, rights of mineral right holders, and mineral sector governance consideration. Section Two presents comments and proposals specific to the Minerals and Mining Bill Part by Part and section by section.
SECTION ONE
BACKGROUND AND ISSUES OF CONCERN
1.0 Introduction
Mineral exports have a long history of importance in the economy and export trade of Ghana. Over the last two decades the mining sector has been one of the key targets of policy reforms in the country. As a result of the reforms, the twenty years since 1986 have seen tremendous growth in corporate mining activity across Ghana especially in the gold sub-sector. The gold sub-sector has correlatively attracted the bulk of the total foreign direct investment (FDI) inflows into the country since the reforms were instituted in 1983. This growth has been attributed largely to Ghana's adoption of one of the most liberal mining regulatory regimes in mineral endowed developing countries.
The increased participation of foreign mining companies coupled with new technology of mining, which enabled recovery of shallow low-grade surface deposits previously considered uneconomical has resulted in an overall mining boom. The renewed mining boom in Ghana has equally boosted the small scale mining sector which is essentially in direct competition with large scale multinational companies for prospective grounds. Therefore, the small-scale mining law was enacted to legalise the activities. The sector is now a growing sector and contributes significantly to job creation and the supply of specific minerals in particular diamonds and gold.
1.1 Perceived benefits
Despite the mining boom over the last two decades, there has been growing contention about the contribution of the sector to national economic development. On the one hand, the mining sector has often been hailed as the key pillar to Ghana's economic recovery and growth. The most publicised benefits of the renewed mining boom include the following:
- Mining is the leading earner of foreign exchange in the country
- Provides substantial government revenue
- Generates direct and indirect employment
- Provides social infrastructure for community development in mining areas
1.2 Realities on the ground
Measured against the level of incentives provided for transnational mining corporations, environmental destruction, and social problems generated by the activities of mining the net contribution of the sector to national economic development has been either minimal or negative.
The sector's net foreign exchange contribution to the national economy has been undermined by high levels of off-shore retention. Mining companies retain on the average 75% of their earnings in off-shore accounts which denies the domestic economy the opportunity of benefit from the mineral wealth so generated.
Similarly, the sector's contribution to government revenue has been relatively minimal in light of huge capital allowances and tax holidays, and the practice of deferred royalty payment.
The sector has relatively limited capacity to generate the perceived employment because surface mining, which has been predominant following the radical policy reforms, is capital-intensive with relatively low labour requirements.
Local communities at the fringes of mines have suffered and continue to suffer various degrees of adverse impact of mining operations. The problems associated with the Bonte Gold Mines liquidation is a recent case that best illustrates such adverse impact of mining. Some communities have suffered militaristic attacks, others have had their water sources polluted, their land destroyed, and many of them continue to suffer low and inadequate compensation packages. Concerns have also been expressed about inadequate housing, youth unemployment, family disorganisation, school dropouts, prostitution and drug abuse associated with the mining boom.
2.0 Issues of concern
We members of the NCOM are deeply concerned about the nature and implications of the new mining boom. In many ways the boom is a re-run of the colonial experience with the country's non-renewal resources (in particular gold) being exploited primarily for the benefit of foreign interests with little developmental value to national economy while also causing destructive impact on the environment and the livelihood of communities near the mining sites.
2.1 Absence of a National Mining Policy
The Coalition is concerned that with all the reforms and revisions and with all the virtues extolled on the minerals and mining sector there is no national policy that gives definition and direction to the on-going reforms and the excessive exploitation of the country's non-renewable natural resources. From 1983 to date, various pieces of legislation have either been promulgated or revised in order to facilitate mining sector development. The most fundamental changes included:
- Promulgation of the Minerals and Mining Law, 1986, PNDCL 153
- Establishment of the Minerals Commission, 1986, PNDCL 154
- The Minerals (Royalties) Regulations, L.I. 1349, 1987
- Additional Profit Tax Law PNDCL 122, 1987
- Promulgation of Small-Scale Mining Law in 1989, PDCL 218
- The Precious Marketing Corporation Law, 1989 (PNDCL 219)
- Establishment of Precious Minerals Marketing Corporation, 1989
- Establishment of Environmental Protection Agency in 1994
- Drawing up of mining environmental guidelines in 1994
- The Minerals and Mining (Amendment) Act 1994
- Review of mining environmental guidelines in 1999.
- Divestiture of state-owned mines from 1992 to 1999
Despite the many pieces of legislation, the absence of a national policy does not provide a framework for a collective vision interlinked with other sectors in the overall national development effort. The policy absence does not also offer the opportunity for setting out hierarchy of objectives for the mining sector neither does it provide for collective national strategies, roles and responsibilities as well as standards for achieving set objectives.
We call for the development of a national mining policy, the definition and direction for the continued exploitation, management and utilisation of the country's mineral resources. There can be no justification for continued operation of such an important and multifaceted sector without a public policy. Indeed, Ghana should have a consolidated natural resources policy that coordinates our use of land, forests, water, minerals, hydrocarbons and even the frequency spectrum. An acceptable policy must reflect the letter and spirit of the Constitution. It must involve a historical review of sector performance and problems and an evaluation of technological and other solutions available globally for addressing such problems. It must involve the broad participation of all interest groups at different levels of society feeding ultimately into informed Parliamentary debate. It is only through such a policy process that we can identify the competing interests around resources and harmonise or at least prioritise these within a long-term public interest outlook.
2.2 Framework of National Mining Code
The framework for the current mining code has prioritised the interest of transnational mining corporations by providing for expansive liberalisation and incentives such as tax exemptions. In addition to extensive tax exemptions the mining code has very low levels for whatever payments are due to government institutions. They are granted wide freedom in respect of the external retention of earnings and do not facilitate transparency in respect of the transactions of mining companies as well as their fiscal relationship with governments. There is a lot of discussion about capital flight from the country. In as much as this may be true, the spotlight should also turn on the capital flight legalised by the taxation regimes in the mining code. The current mining code offers a vivid testament of the interplay of the negative effects of external donor pressure and corporate globalisation on the continent's development logic.
2.3 Value-Addition
Again the framework of the country's Mining code does not encourage value addition and inter-sectoral linkages. The massive exploitation and appropriation of Ghana's mineral resources in their raw form deprives the Ghanaian economy from value-addition, forward and backward linkages, and access to various opportunities. In view of this, the result of the mining boom has been contradictory to the national development. For instance, despite the mining boom the Ghanaian economy has moved from growth to highly indebted poor country (HIPC) status.
2.4 Corporate Welfare and citizens' plus environmental interest
Within the liberal national frameworks in which they operate across the country mining companies are extending the frontiers of their advantage, usually with the support of their home governments. While many of them are very quick in exercising the extensive rights and privileges provided for by national law the same cannot be said when it comes to compliance with their obligations on environmental standards, the principles of human rights, timely payment of royalties, and compensation to displaced communities. A case in point is the failure of Bonte Gold Mines to reclaim the environment, and also the delay in posting reclamation bonds to EPA by a number of gold mining companies including Anglogold-Ashanti. Increasingly mining contracts/concessions are constraining the legislative authority of African governments through the increasing use of stability clauses.
In the relationship between mining companies and citizens, there is a paradox of repressive use of state power by state security against local communities and citizens generally in order to provide space for transnational mining corporations. The use of state security in Bibiani and Prestea communities exemplifies the use of state security to protect mining companies. Paradox because of the proclamations of commitment to democratic while exercising hostile attitude and practices towards citizens who are determined to defend national interests, environmental protection and their human rights against violations by mining companies.
2.5 The Mining Bill
The purpose of the Minerals and Mining Bill is to revise the existing Minerals and Mining Law, 1986 (PNDCL 153) Any revisions in our current Minerals and Mining legislation should be judged, in particular in regard to how the revision offers to:
· Maximize the net returns of mineral wealth to the national economy and other lawful beneficiaries of mining
· Protect the environment and community livelihood
· Deal with community and human rights fairly, as directed by the Constitution and also in line with our current democratic dispensation;
Our understanding of this Bill leaves us with significant concerns in regard to all of these three issues. In both its content and in the level of consultation that has taken place the Bill is severely flawed. As regards general policy, the drafters offer only the following brief paragraphs in the memorandum:
"The purpose of the Bill is to revise the existing Minerals and Mining Law, 1986 (PNDCL 153) to reflect in our laws, new thinking and developments in the mining industry and to consolidate it with the enactment on small scale gold Mining.
The exiting Law, when it was enacted in 1986, was hailed as one of the best enactments on the subject in Africa and made Ghana an attractive destination for mining investment.
However, after nearly two decades of operation of the Law, it has been realised that development in the mining industry requires a revision of the Law to reflect international best practices in the industry, as well as to re-position Ghana as a major mining investment destination in Africa. The provision by law of an internationally competitive framework that ensures a stable and equitable tax regime and also takes cognisance of environmental protection as well as community interests is necessary in order to provide the basis for the development and sustainability of mining in the country".
The consolidation of Law 153 and the Small-scale gold mining Law is almost mechanical - small-scale mining licenses are not even re-classified as mineral rights! Clearly, consolidation was not a real priority. The draft does not specify what "new thinking and developments" the drafters have in mind. There is no discussion in the memorandum of the burning issues discussed above. Despite this, the policy priorities of the memorandum are clear. It "ensures" investor interests but merely "takes cognisance of" environmental and community interests. The Bill itself clearly systematically relaxes environmental, social, fiscal obligations of the industry and weakens the authority of the minister in relation to the industry (but not in relation to the communities with which the industry is increasingly in conflict).
The process through which the Bill has come to Parliament reinforces our concerns. There has been no public discussion of the Bill. The Bill appears to have been prepared in cloister by the Minerals Commission in consultation with the Chamber of Mines. Industry's involvement is apparently such that late last year the Bill was withdrawn in order to address concerns raised by Industry. Other stakeholders have been completely excluded from the process. The Minerals Commission would not even supply the National Coalition on Mining with a copy of the Bill for study compelling us to use unofficial channels to secure a copy for discussion. Essentially, the process has been one of extending the capture of sector agencies to Parliament. The sector agencies that Parliament is supposed to oversee have presented it with a fait accomplish regarding fundamental issues concerning the sector. Simply by accepting the Bill as a template for debate Parliament closes off certain channels of enquiry. Even in rejecting specific proposals such as the 50%, reduction in royalties Parliament will largely have accepted the industry worldview and policy hegemony.
In our opinion, the proposed legislation should be withdrawn in order for MLFM to launch a participatory process to develop a mining and minerals policy that would then guide the drafting of legislation amongst other things.
2.5.1 Community rights
Article 12 of the Constitution provides:
(1) The fundamental human rights and freedoms enshrined in this chapter shall be respected and upheld by the Executive, Legislature and Judiciary and all other organs of government and its agencies and, where applicable to them, by all natural and legal persons in Ghana, and shall be enforceable by the Courts as provided for in this Constitution.
(2) Every person in Ghana, whatever his race, place of origin, political opinion, colour, religion, creed or gender shall be entitled to the fundamental human rights and freedoms of the individual contained in this Chapter but subject to respect for the rights and freedoms of others and for the public interest.
The protection of these rights in the context of mining is perhaps the most contentious sector policy issue today. Some specific issues are addressed below by way of illustration.
2.5.1.1 Land Expropriation
Land rights are a key issue in sector policy.
Article 20 of the constitution provides:
(1) No property of any description or interest in or right over any property shall be compulsorily taken possession of or acquired by the State unless the following conditions are satisfied.
(a) the taking of possession or acquisition if necessary in the interest of defence, public safety, public order, public morality, public health, town and country planning or the development or utilization of property in such a manner as to promote the public benefit; and
(b) the necessity for the acquisition is clearly stated and is such as to provide reasonable justification for causing any hardship that may result to any person who has an interest in or right over the property.
(2) Compulsory acquisition of property by the State shall only be made under a law, which makes provision for.
(a) the prompt payment of fair and adequate compensation; and
(b) a right of access to the High Court by any person who has an interest in or right over the property whether direct or on appeal from other authority, for the determination of his interest or right and the amount of compensation to which he is entitled.
(3) Where a compulsory acquisition or possession of land effected by the State in accordance with clause (1) of this article involves displacement of any inhabitants, the State shall resettle the displaced inhabitants on suitable alternative land with due regard for their economic well-being and social and cultural values.
A number of conclusions derive from this.
a. Clause 2 empowers the acquisition of land by the president under applicable laws where required for "the development, or utilisation of a mineral resource". We believe that in accordance with the constitution there must be a prior finding that the "development or utilisation" project is in the public interest. In other words, there must be a determination by the President that the results of mining any particular parcel of land (not of mining generally) are better than whatever current use (e.g. farming) applies. It is not enough that the area is or might be mineralised and that a company has applied for the requisite license.
b. Clause 3 (all lands in Ghana are available for the grant of mineral rights unless already subject to a mineral right or expressly excluded by law or executive instrument) ignores the serious concerns that many communities and organizations have expressed over the use of particular lands for mining for example in the Tarkwa area.
c. Clause 12(7) of the Bill (following Section 18(5) of Law 153 says that the grant of a mineral right is sufficient authority for the holder over the land incorporated in the mineral right and him to enter the land in respect of which the right is granted. We believe that this is ultra vires the constitution - unless the President has prior to the issue of the mineral right acquired the land in accordance with the due process described above. Given the tight time-frame within which licenses are to be approved under the Bill (150 days from submission of applications) it is unlikely that the Minister will ever meet the constitutional standard.
.
2.5.1.2 Compensation Entitlements
Clause 68 of the Bill omits the operating standard imposed on mineral rights holders by Section 70(2) of Law 156. This reads that a mineral rights holder shall exercise his rights "in a manner consistent with the reasonable and proper conduct of the operations concerned so as to affect as little as possible the interest of any lawful occupier of the land in respect of which such rights are exercised". The omission of this general provision is worrisome as it signals a reduced commitment on the part of the state to the protection of communal land rights.
Clause 68(5) and Clause 69 provides that compensation negotiations are carried out after acquisition between the mineral rights holder and the "owner or legal occupier" with the minister playing the role of arbiter of disputes. Clause 70 gives a restrictive list of elements to be considered in awarding compensation which could exclude loss of communal rights to harvest NTFPs, social and cultural rights for example. Post expropriation negotiations with mineral rights holders unduly disadvantage affected land users. Further, the state is likely to have a better understanding of the full range of customary interests in any piece of land than a foreign mining concern.
We believe that a proper reading of the constitution requires a process as follows:
a. Clear valuation criteria that fully accounts for economic, social and cultural costs of dislocation and which encompass all traditional land users (and not just "owners and lawful occupants" is established through a participatory process and given legislative backing;
b. Compensation should be negotiated between the state (which expropriates the land in the first place) and the affected persons with reference to an independent third party expert (or panel of exports) in the case of disputes between Government and applicants;
c. Compensation values are presented to the prospective Mineral Rights holder on a take-it -or-leave-it basis.
2.5.2 Environmental standards
Environmental degradation - poisoning of soils and water bodies, destruction of top-soils, flora and fauna - is the second most contentious issue in mining.
The industry's record is deplorable. Especially following the Bonte episode last year we believe that the Bill should take a stronger position.
2.5.2.1 Operating Standards
Section 72 of Law 153 obligates mineral rights holders to "have due regard to the effect of the mineral operations on the environment and ... take such steps as may be necessary to prevent pollution of the environment as a result of such mineral operations." The Bill replaces this with Clause 18 which merely requires acquisition of EPA approvals and compliance with regulations to be made under the Act. There is also a suggestion in Clause 46(2) (d) that even more liberal terms will be available to mining lease holders with investments exceeding 500 million dollars. This again is perverse since environmental damage is generally proportionate to the size of the operations.
2.5.2.2 Regulatory Powers
Section 83(2)(m) of Law 153 empowers the Minister to make regulations "preventing the pollution of waters, springs, streams, rivers or lakes." By contrast Clause 106 in empowers the minister only to enact regulations restricting mining operations "in or near any rivers, dam, lake or stream". Again the Memorandum does not highlight this.
2.5.2.3 Standards of Liability
Section 80(1)(f) made environmental pollution an offence. Clause 102 of the Bill excludes environmental pollution in the list of offences. In other words under the Bill the damage done by Bonte would not be an offence! The memorandum to the Bill does not even allude to this major shift, let alone justify it.
2.5.3 Contribution to national the economy
2.5.3.1 Job Creation
Clause 101 of the Bill reproduces Section 79 of Law 153 in requiring preference for Ghanaian personnel, goods and services. In practice the industry has ignored this over the last twenty years. It is necessary therefore to address enforcement mechanisms.
2.5.3.2 Revenue
The fiscal regime for mining needs review and public justification. Only as much of the economic rent deriving from mineral exploitation should remain in the hands of investors as is required to encourage continued operation. Even though this principle need not be stated in the Bill the mechanism through which the appropriate mix of revenue instruments to achieve it should be spelled out. A number of observations arise:
a. The calculation of the annual mineral right fee established in Clause 24 is not specified. We assume that its Mineral Right Fee (MRF) is intended to be the equivalent of the Timber Rights Fee that logging companies pay for access to forest resources. If implemented this could constitute a reliable and cost effective means of assessing and retrieving economic rent from mining companies. The logical approach is an auction system with a reserve price set by an independent third party. This in turn argues for a change in the system allocation of mineral rights towards a competitive system. The Bill must spell this out.
b. Clause 25 halves royalty rates applicable under Section 22(2) of Law 153 from 12% to 6%. This drastic reduction is not flagged let alone justified in the memorandum to the Bill. The analysis behind this and made public as part of the rent sharing strategy.
c. It cannot be in the national interest or in the "interest of the production of the mineral concerned" for the state to defer royalties. Financial capability relative to the risk of mining is a qualification for the grant of mineral rights. If right holders require finance the appropriate avenue should be the commercial banks and or credit and insurance houses. Clause 26 should be excised.
d. The Minister should not have the power to defer payment of revenue to the Republic. If debts must be deferred then it should be a matter for the Ministry for Finance acting in accordance with Parliamentary authorisation.
2.5.4 Rights of Mineral Rights Holders
2.5.4.1 Nature of Mineral Rights
A proper interpretation of Clause 1 of the Bill (which reproduces Section 1 of Law 153 and Article 257(6) of the Constitution) is that minerals in their natural state are public assets. The right to explore for and produce these must be understood to be contractual in nature. Mineral Rights are not legal assets. They are personal contracts. This has certain consequences for the Bill.
1. Transfers and assignments of mineral rights may be acceptable especially in the case of corporate mergers etc. In any such transaction, the State must satisfy itself as to the identity, integrity and operational capacity of the prospective transferee. Acceptable grounds for transfer should be spelled out clearly in the Act or in subsidiary legislation.
2. Charging of mineral rights should be strictly prohibited or at least the Bill should make it clear that the Government will not recognize charges on mineral rights. If mineral rights are used as security then banks and companies with no operational capacity will soon be trading Ghanaian mineral rights and the state might actually have to incur significant cost in escaping from unsuitable relations. For example, the directors of Bonte could by purchasing the debt of another company secured by a Mining Lease find itself once involved in Ghana.
2.5.5 Governance
The bill raises several issues of sector governance that require public debate and consensus.
2.5.5.1 Resource Management Standards
We have made various comments about the licensing scheme put forward by the Bill (and Act 153). Pulling them together we would like to propos the following broad process of creation and award of mineral rights starting from reconnaissance licenses:
a. Government through Geological Survey Department and contractors conducts a systematic geological survey of Ghana to be paid for by levies on the mining industry and sale of data packages to prospective investors etc. This ensures that a proper scientific data base is developed and that Ghana can exercise some control over the management of its resources.
b. Government in association with District Assemblies and Civil Society conducts participatory socio-economic surveys of mineralised areas that have potential commercial interest to assess fully the likely economic, social, cultural etc. impact of any mining on these areas and their populations. This will allow a determination as to whether mining is the optimum land use for these areas and if so the opportunity costs that must be borne by stakeholders.
c. Government based on the foregoing publishes executive instruments declaring particular areas available for applications for mineral rights and develops mining prospectuses for potential investors. These prospectuses will contain the minimum environmental and social obligations attaching to any particular mining area, leaving potential investors to compete on a relatively narrow range of technical and financial (presumably the proposed mineral rights fee) issues.
2.5.5.2 Constitutional Limits on Ministerial Discretions
Article 296 of the Constitution provides:
Where in this Constitution or in any other law discretionary power is vested in any person or authority -
(a) that discretionary power shall be deemed to imply a duty to be fair and candid;
(b) the exercise of the discretionary power shall not be arbitrary, capricious or biased wither by resentment, prejudice or personal dislike and shall be in accordance with due process of law; and
(c) where the person or authority is not a judge or other judicial officer, there shall be published by constitutional instrument or statutory instrument, regulations that are not inconsistent with the provisions of this Constitution or that other law to govern the exercise of the discretionary power.
There are several clauses in the Bill that confer discretions on the Minister that require regulation in accordance with Article 296. One example is Clause 3 and 4 that confer on the Minister the power to determine which lands in Ghana are available for application for mineral rights. Another example is the discretion Clause 5 gives the Minister to grant, revoke, suspend or renew mineral rights. Without specifying the criteria (beyond first-come-first-serve) on which applications will be evaluated the requirement for a written justification for a refusal is not adequate protection against abuse of ministerial discretion. All such powers should be exercised by reference to Parliament through the submission of a constitutional instrument.
2.5.5.3 Illegitimate compromises of Ministerial Discretion
1. Clauses 31(4) and 33(3) of the Bill obligate the Minister to notify mineral rights holders regarding violations of their licenses failing which such non-compliance shall not constitute grounds for rejection of applications for extensions of licenses. There is no comparable provision in Law 153.
2. Clause 46 (2) (b) and (d) seek to restrict respectively the manner in which the Minister might exercise "any discretion conferred by or under the Act" and "environmental issues and obligations of the holder to guard the environment in accordance with this Act or any other enactment" in relation to mining leases involving investments above 500 million Dollars. Again, these amount to unequal treatment under the law and an abdication on the Part of the minister of his discretionary responsibility. There can be no justification for surrendering this outside of the context of a constitutional instrument enacted by Parliament.
2.5.5.4 Parliamentary ratification of Mineral Rights
Article 268 of the Constitution provides:
(1) Any transaction, contract or undertaking involving the grant of a right or concession by or on behalf of any person including the Government of Ghana, to any other person or body of persons howsoever described, for the exploitation of any mineral, water or other natural resource of Ghana made or entered into after the coming into force of this Constitution shall be subject to ratification by Parliament.
(2) Parliament may, by resolution supported by the votes of not less than two-thirds of all the members of Parliament, exempt from the provisions of clause (1) of this article any particular class of transactions, contracts or undertakings.
The requirement for Parliamentary ratification should be re-stated clearly in the Bill. Its omission and the subsequent passage of the Bill into Law based on the current language could lead to confusion as to whether or not Parliament has waived the ratification requirement.
2.5.5.5 Transparency and information sharing
Clause 1 of the Bill, following from the Constitution makes it clear that mineral resources are public assets held in trust for the Republic by the State. Accordingly, private companies that opt to manage these assets under license or lease must meet public standards of transparency and publicity. As a basic principle all information on the management of the resource should be available to the public. Non-disclosure should be the exception rather than the rule. The Bill should spell out what kinds of information are exempt from the disclosure requirement (e.g. patented proprietary processes and commercially sensitive information) or provide for the specification of this information by Legislative or Executive Instrument. The onus should lie on the manager of the resource to apply for the exclusion of specific pieces of information in accordance with stipulated criteria.
The standards and processes proposed in the Bill (Clauses 19 and 20) are unduly restrictive of the public's right to information and should not be accepted. Indeed we believe that in furtherance of the public right to information mining companies should be required to file copies of all reports with district offices of regulatory agencies or where there are no such district offices with the District Assemblies that their mineral rights fall within.
2.5.5.6 Law Enforcement
1. The bill omits the provision in Law 153 that makes obstruction of government pre-emption rights an offence. There is no reference to or explanation of this in the memorandum. It is seems difficult to justify.
A major change in policy takes place in Clauses 102 - 105 which the Memorandum to the Bill is silent over. Whereas offences are created and penalties prescribed upon conviction the penalty imposed by any court pursuant to the Bill are deemed to be civil debts to the State recoverable in court. This undermines the principle of equality of rights, obligations and opportunities before the law established in Article 35 of the constitution and constitutes a dangerous precedent.
SECTION TWO
COMMENTARY ON THE MINERALS AND MINING BILL
PART I: Ownership of minerals and cadastral systems
Section 2:
There is no specification on who can require land. There is no restriction on land use in particular forest reserves and other national heritage sites and monuments such as the Castles and Akosombo Dam.
Section 2 is further reinforced by section 3
Section 3: This is a new provision. By implication, this provision suggest that all land may be subject to an application for mineral rights except those expressly reserved under sub b. but on the contrary, no land has been expressly reserved.( Are forest reserves not expressedly reserved?) It is vital for the Mineral and Mining Bill to take into consideration the pertinent issues of sustainable development and the livelihood of the masses in the area if operation of the mines.
Proposals
Stringent rules should be put in place to control lands available for application for mineral rights. To achieve sustainable development, forest reserves, wide settlement areas, water bodies and lands with unique features should not be given for mining.
The Bill should expressly exempt such lands as forest reserves, wild life sanctuaries, sacred groves, etc from the criteria of land for the application for mineral rights. It is an international recommendation that each country should have at least 20% of its land for forest reserves. Ghana is a signatory to the International Convention on Biological Diversity, which recommends that at least 20% of a nation's land should forest reserves.
Section 5: Experience has shown that the mining companies can easily influence government officials hence the powers vested in the minister through the bill are too wide. This provision gives the Minister an unfettered right to grant, revoke, suspend or renew mineral rights. To invest the Minister with such unfettered discretion is to place those who apply for mineral rights at the mercy of the Minister and gives him the awesome power to decide who should be entitled to mineral right or not. There is no guide nor yardstick or strict standard that the Minister is bound to apply in determining the reasons for a decision. This provision would enable the minister, out of prejudice; bias, or even political preferences to refuse or grant mining rights on flippant and untenable grounds.
Proposals
The government on areas suitable for mining purposes should do a geological survey and socio economic survey. The communities should be involved in the socio economic cost of their land. After the survey is done and all the opportunity cost is calculated then the land can be declared open for mining. Hence anyone interested in mining can know the full cost of mining in terms of compensation. The cost must be paid up front. There is therefore the need to enumerate justifiable and practical reasons to measure the legality of the minister's decision on an application for a mining right. Hence Parliament has to ratify the minister's decision.
Section 7
The bill seeks to diminish a lot of information, which is contained in PNDC Law 153. There is a provision for the right of pre-emption to be exercised but there are no adequate provisions for the extent of which the application of this right is permitted.
Proposals
We therefore propose that Sections 4 -7 on pre-emption rights of government under PNDC Law 153 should be retained in the present bill.
PART II: Mineral rights
Section 12
This provision places a limited time frame for the commission to broaden consultation and research on the application. Secondly where there are many applications the cost of processing applications per year will increase
Proposal
The law should spell out the processes to be undertaken by the mineral commission before it makes its recommendation. The process should be widened beyond the commission and the time frame should be extended or fixed to a review on an annual basis.
Section 13(7):
This does not take into consideration the comparative advantage between the mineral right holder and the actual owner of the land because too much power and advantage is vested on the mineral right holder to do as he may please once he has license to mine.
Proposal
This power or authority over the land once a license is granted should be subject to other terms and conditions aimed adequately compensating the landowners.
Section 17:
We recognize the need for mining companies to request for permit under the Water Resource Commission Act of 1996. However, we are concerned that there was not adequate publicity on the act for e.g. communities were required to register their interest in water bodies before the law came into being in six months unless all water bodies will become subject to the law.
Section 19 and 20:
These sections are vague and broad because it does not specify which information should necessarily be in the public domain and does not clearly stipulate a reasonable fee. The extent of the transparency should be reconsidered since many stories on human rights abuses within miming concessions would be subject to this clause.
Proposals
There should be a listing of documents, which should be confidential and we believe that the environmental annual audit reports are not to be confidential and should be made available.
Section 21:
There is wrong reference to section 19 (2) instead of section 20 (2).
PART III: Royalties, rentals and fees
Section 25: What are the justifications for the royalties to be reduced to between not more that 6% and not less than 3%? The maximum rate of royalties to be paid is too low as compared to 12 % of PNDC Law 153. As the law stands no company has ever paid more than 3% for royalties.
Proposal
The royalties should be left to be not more than 12% and not less than 3%.
Section 26:
This section gives room for arbitrary decision and actions and places the applicants for the mining rights under the whims and caprices of the minister. We know from experience that deferment in royalty payment has caused irrecoverable losses to the state and communities and should not be encouraged in our law books.
Proposal:
There should be no deferment of royalties. In order to achieve durable investment goals, companies with limited resources should not be allowed to invest in Ghana.
Section 27(2):
This section acts as a springboard for unscrupulous financial arrangements because it gives the minister a wide power to decide on financial issues pertaining to mineral rights.
Proposals
27 (1) adequately provided for debt recovery hence sub 2 is unnecessary.
PART V & VI: Recognisance and prospecting licences
Section 31 (4) and 33 (3):
These are very firm provision, which will make it impossible for the minister to reject any application once the first application is granted. It is necessary to reiterate that the minister has no power to compromise a breach of law. A breach of law should be treated as a breach of law if due to certain reasons the minister omitted to perform an act that should not be the basis for treating an application with out consideration of performance under the previous contract.
Proposals
Section 31 (4) and 33 (3) should be cancelled because it is improper to say that the mining companies can breach the terms of a contract without impunity. The applicants have obligations to imply with the terms of the contract and once there has been an infringement, it must be a factor to be considered before granting an extension on the mineral license.
PART VII: Mining lease
Section 39 (3) (b):
This reflects the provision in section 31 (4) and 33 (3) in which the onus is put on the minister to perform and act. Section 39 (3) (b) is an outrageous provision because it is to the effect that an applicant must suffer for his or her default and not the people or the minister as the case may be. Section 31, 33, 39 portrays that the minister has little room for rejecting an applicant and must proof under prescribed circumstances reasons for its decision.
Proposal
The minister should have powers of outright rejection and there should be no need for arbitration as provided in subsection 39 (3). Section 39 (3 ) & (4) should be deleted.
Section 43
This section confers rights on mining companies to stock or dump mineral or waste product. It does not provide for any precaution these waste products may have on the environment and consequently on the society.
Proposal
Provisions regulating the exercise of the rights conferred by section 43 should be spelled out either in the act itself or in the subsidiary legislation compelled by the act.
The subsidiary legislation should be considered alongside the minerals and mining bill.
Section 45:
The stability agreement gives unequal treatment to mining companies who are also companies' registered under the laws of Ghana like any other company. This amounts to unfair discrimination of the non-mining companies. This is in contravention of non-discriminatory provision (ARTIC LE 17 equality clause in the bill of rights in the Ghanaian constitution) of the constitution.
Stability agreements do not take account of the dynamics of industry. Economic situations can change for better or worse.
Proposal
There should be no stability agreements.
Section 46: The Company has to simply propose a development plan that involves half a billion dollars or more to the government to enter into a development agreement. For instance while the law provides for dispute settlement procedures, an investment agreement of half a billion dollars, can assert a different dispute settlement procedure, different from the procedure provided by the law. The section also discriminates in favour of large companies.
Proposal
The mere mention of a half a billion dollars should not be a factor for disregard of the mining law by the minister. Section 46 should not form part of the Bill.
Section 47: This provision is too weak. There is no commitment mechanism for hiring and training Ghanaian by the MCs. There is no standard of measurement for employment.
Proposal
There should be a provision for a penalty should a MC fail to submit to the Commission a detailed program for the recruitment and training of Ghanaians. The companies should furnish evidence that there are no qualified Ghanaians and West Africans to take up a job before it is available to expatriates (expatriates meaning people from the west Africa region).
Section 51: The fine for change of ownership is too small. There is need to work extensively on section 51 -56 because companies change names and incorporate them selves as new companies to benefit from the tax free incentives.
Proposal
Hence there should be a rigid mechanism to regulate change of control of mining leases.
PART X: Surface and rights of compensation
Section 68: This provision is vague because it does not give a concise meaning of a "lawful occupier". The compensation system needs to be reviewed radically. The key issue here is the need for a new social accounting that takes into account the cultural values of displaced communities. A proper survey can facilitate the social accounting process and compensation issues can be resolved as part of the licensing approval process. Compensation issues cannot be an afterthought to be resolved later between the government and the communities.
Proposal
The cultural and social value of different locations can be established in a socio economic survey that should accompany the geological survey for the bill. Many district assemblies are already gathering such data and this can be a contribution. The government of Ghana can inform MCs upfront with what magnitude of compensation cost to expect.
The scale of the Land Valuation Board has to be upgraded upgraded.
Mining operations should not be allowed to proceed until after compensation issues have been settled.
Section 69 (6): This is an abuse of the principle of separation of powers between the executive and the judiciary. This is an issue to be addressed by the court.
Proposal
The minister should not play a quasi-judicial role in settling compensation disputes.
Section 70 (f) does not recognise cultural values.
Proposal
Cultural values of lands have to be recognised and compensated
Section 71: (1) This is very tricky and sounds confusing. All citizens of the land must have equal access to the courts. There must be judicial redress in all-environmental matters according to Rio Principe declaration article 10. Under subsection (3) the high court is exercising its supervisory jurisdiction. By implication a person dissatisfied by the minister's decision cannot go to court. In other words, one cannot appeal against a minister's decision. By the mere fact that the matter has been dealt with by the minister will practicably preclude a person from going to court under section 71. Section 71 limits the right to access to justice.
Proposal
Community members should not be precluded to going to court after the minister's decision, for they may be dissatisfied with the decision and may want to take the matter further.
Furthermore the use of the word "shall is not appropriate. We request that "shall" be substituted with "may".
Section 71 (3) A supervisory decision is not sufficient to address this problem.
PART XIII: Administration and miscellaneous provisions
Section 97: There is not strict division of functions between the Minerals Commission and the Inspectorate of Mines.
Proposal
To ensure accountability and transparency, the Inspectorate of Mines must be distinct from the Mineral Commission
Section 98: This section seeks to oust the jurisdiction of the EPA. The Mines Inspectorate does not have the capacity to do environmental monitoring.
Proposal
Only the EPA should monitor issues of environmental concern.
Section 101: This section does not does not put a strong obligation for such companies as describe to use Ghanaian products and materials.
Proposal
Companies in this category should be made to report on its implementation of this section. It would be an alternative to look at the concept of reporting and notification as a means of accessing relevant information.
APPENDIX
LIST OF ORGANISATIONS OF THE NATIONAL COALITION ON MINING
(NCOM)
1. Third World Network-Africa (TWN-Afr)
2. Centre for Public Interest Law (CEPIL)
3. Centre for Environmental Law and Development (CELD)
4. Civic Response (CR)
5. Wassa Association of Communities Affected by Mining (WACAM)
6. Friends of the Nation
7. Grass Roots-Africa
8. Friends of the Earth Ghana, (FOE-Ghana)
9. Forest Watch-Ghana
10. Crisis Action Solutions (CASOLS)
11. ABANTU for Development
12. Integrated Social Development Centre (ISODEC)
The following article was taken from the May 20, 2005 edition of the Accra Daily Mail.
The praises for Anglogold Ashanti by the Zambian President is not unexpected of government officials. They always do even when there is evidence of human suffering resulting from the activities of mining companies.
Recent study of the impacts of the activities of Anglogold Ashanti on surrounding communities by a team of researchers from the University of Ghana sponsored by TWN-Africa revealed:
1. Very appalling health conditions
2. High levels of water pollution above the EPA and WHO permissible levels
3. High proportion of casual labour (a strategy to deny workers their right to determination)
4. AGC (Anglogold Ashanti) has been operating in Obuasi over a century but it was much recent (2000) that the town had a few of its roads asphalted. A significant proportion of the road network in Obuasi is still not paved.
It is also doubtful that the revision of the mining law is intended to regulate mining companies. Indeed the bill is intended to give mining companies more power and much room to operate by providing for:
1. 3% royalty instead of 3-12%
2. Stability clause
3. Clause 68 of the Bill omits the operating standard imposed on mineral rights holders
Clause 46(2) (d) of the bill provides for more liberal terms for mining lease holders with investments exceeding 500 million dollars. This again is perverse since environmental damage is generally proportionate to the size of the operations.
Clause 102 of the Bill excludes environmental pollution in the list of offences.
6. Illegitimate compromises of Ministerial Discretion
TWN-Africa is working with its Ghanaian partners to influence the bill through changes in some of the provisions.
We would be circulating a memorandum for your information and also for you help in putting pressure on the Ghanaian government to change some of the provisions or totally withdraw the whole bill.
Abdulai Darimani, TWN Africa
Mwanawasa Salutes Anglogold Ashanti
Accra Mail (Accra)
May 20, 2005
Zambian President Mr Levy Patrick Mwanawasa has commended the progressive improvements of the health and safety record of Anglogold Ashanti - Obuasi Mine.
The president was also impressed with the social investment record of the company and efforts it was making not only to battle poverty but also to improve living standards at both community and national levels in the country.
President Mwanawasa made these observations when he visited the Obuasi Mine as part of his five-day official visit to Ghana.
Accompanied by a 14-man delegation, including Lt General R. Shikapwasha, Minister of Foreign Affairs and Mr Kaunda Lembalenbu, Minister of Mines - Mr Mwanawasa noted that "as an underground operation, your progressive improvement of your health and safety record year after year is worthy of emulation by other companies, operating in Africa".
He urged the management and employees "to keep it up". Touching on the Corporate Social Responsibility, President Mwanawasa was very much impressed with the array of projects put up by AngloGold Ashanti for the communities and the country as a whole.
"You have done well in the provision of roads, schools, clinics and other social amenities for the people. For the people to appreciate your presence in the community". Overwhelmed with the scale of the Obuasi operation, President Mwanawasa also commended the professionalism of the workforce he met at the environmentally-friendly Sulphide Treatment Plant, the plant which has made Obuasi the technological hub for the use of bacteria in the treatment of ore.
On his part, Ghanaian Vice President Alhaji Aliu Mahama, who headed the government delegation, which accompanied the Zambian president, also commended AngloGold Ashanti for its contribution to the economy of Ghana in terms of employement and foreign exchange.
He urged mining companies in the country to work hand in hand with the local assemblies in the initiation and implementation of development projects to ensure maximum impact on the people.
Contributing, Minister of Mines Professor Dominic Fobih spoke about efforts by the government to legislate a new mining code to regulate the country's mining industry, and called for meaningful collaboration between the government, mining companies and the civil society.
In an earlier presentation, Mr Daniel Spies, managing director of the Obuasi Mine, noted that plans were underway to intensify exploration in the underground to assess the exact wealth of reserves in Obuasi.
Mr Spies noted that Ghana has lots of talents in mining and to sharpen these talents, the company is intensifying education and development in all sectors of the mine to enable it become more competitive.
Mr Spies said as part of the company's social investment, the mine would soon embark on anti-material programme in Obuasi to reduce the incidence of malaria in the municipality.
The programme, he said, would be extended to other parts of the country after the Obuasi phase.