AFRICAN GOVERNMENTS SEEK BIGGER SHARE FROM MINING ACTIVITIES

Ghana moves to increase gold mining royalties - Ghana, along with a number of other African countries, is considering increasing the royalties paid by companies exploiting its gold resource. Mining companies operating in the gold producing country will soon be mandated to pay more than the current 3% minimum royalty to the government. Ghana's Minerals Commission has come up with the necessary regulatory framework -- a Bill that will ensure that companies contribute more to government coffers. The Bill seeks to ensure there is an exact percentage, which all mining companies will be mandated to pay to government as royalties. If approved, the new legislation will ensure that the companies do not have the option to pay what is convenient for them so far as the amount does not fall outside the minimum royalty rate.

The United Nations Conference on Trade and Development has claimed that Ghana earns just some 5% of the value of its gold exports, a lower figure than in many non-African gold producing countries.

The Bill also looks into how communities hosting mining companies can benefit from the royalties paid to the central government. In June last year, Ghana's Chamber of Mines proposed a 10% royalty for miners, whom it accused of not doing enough for the communities they operated in, voicing concern that the current royalties paid were paltry and would not translate to meaningful development in the communities.

Figures were not available Monday as to how much mining companies paid as royalties to the government in 2007. But in 2006, mining companies contributed US$780 million to government coffers.

Steps are also being taken in other African countries - Many African countries are looking at how they can derive a greater proportion of income from their natural resources.

Only recently, on April 1, Zambia began enforcing a new tax code from which it expects to earn US$650 million in additional revenue this year. The new tax code lifts royalties on sales fivefold from 0.6% to 3% and increases corporate income tax to 30% from 25%. The Zambian government has also introduced a 15% variable profit tax on taxable income above 8% and a minimum 25% windfall profit tax. It has raised the effective tax rate on miners to 47% from 31%.

Tanzania, in east Africa, has proposed new legislation that would see mining firms paying the existing corporate tax of 30% and a royalty of 3% for gold and 5% for diamonds much earlier - with times depending on the life of the mines. Under the old mining policy, companies could defer tax for up to 20 years.

Guinea is to review mining agreements - The West African state of Guinea, possessor of the world's largest reserves of bauxite believed to be about 30% of the global total, will review mining agreements without cancelling any to ensure that more profit can be derived from the metal refined for beverage cans and car parts. The price of bauxite has increased 8.9% in the past year, while the price of aluminium, which is refined from bauxite, has more than doubled in the past five years. Guinea's move could affect Russia's Rusal, which operates the Friguia alumina and bauxite complex at Fria that refines 1% of the world's alumina, and the Rio Tinto Group, which is developing the 170 million-ton-a-year Simandou iron-ore project in Guinea.

DRC recently completed a review of over 61 mining agreements signed between 1998 and 2003, during the country's civil war, ensuring more earnings to state coffers.

Botswana is the world’s largest producer of diamonds with production of 34.3m carats (ct) to a value of $3.4bn in 2006. Diamonds are the main contributor - about one third - of government revenue in Botswana and over 80% of the country’s foreign exchange is earned by diamond exports.

Botswana has also moved up to 11th place in the annual Fraser Institute Survey of Mining Companies when comparing countries’ policy environments for mining exploration and investment. Its ranking was the highest ever for an African nation. The Botswana Ministry of Minerals, Energy & Water says that the country continues to evolve an enabling investment climate for the expansion of diamond exploration and mining; there is no restriction on the repatriation of profits, exchange controls have been abolished, taxation regimes are low, and mining legislation is transparent and predictable.