Minerals and Mining Law

Last updated April 25, 2019

The Minerals and Mining Law of 1986 (PNDCL 153), as amended by the Minerals and Mining (Amendment) Act of 1994 (Act 475) and the minerals and mining bill of 2005 (law No. 703), regulates mining in Ghana. Under the Minerals and Mining Law, mining companies must pay royalties; companies may also pay corporate taxes at standard rates. Companies are exempt from custom duties on accessories, equipment, machinery, and plants used for mining operations, but must pay local property taxes on their immovable properties. The 1986 mining law had been instrumental in attracting more than $5 billion in foreign investment to the Ghanaian mining industry between 1986 and 2002. The 1994 amendments reduced the 45% general mining corporate tax rate to 35%, which is the same as that imposed on other industries.

Mining is the extraction of valuable minerals or other geological materials from the earth, usually from an ore body, lode, vein, seam, reef or placer deposit. These deposits form a mineralized package that is of economic interest to the miner.

Ghana, officially the Republic of Ghana, is a country located along the Gulf of Guinea and Atlantic Ocean, in the subregion of West Africa. Spanning a land mass of 238,535 km² (92,099 sq mi), Ghana is bordered by the Ivory Coast in the west, Burkina Faso in the north, Togo in the east and the Gulf of Guinea and Atlantic Ocean in the south. Ghana means "Warrior King" in the Soninke language.

A royalty is a payment made by one party, the licensee or franchisee to another that owns a particular asset, the licensor or franchisor for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation. A royalty interest is the right to collect a stream of future royalty payments.

On December 15, 2005, the Ghanaian Parliament passed into law a new minerals and mining bill. Some of the provisions under the new Minerals and Mining Law, law No. 703, included access to mineral rights on a first-come, first-considered basis; a specific timeframe within which all applications are expected to be granted; the right for applicants to demand written reasons from the Minister if an application is rejected; the Government’s right to acquire land or authorize its occupation and use if the land is required for mining purposes; the establishment of a cadastral system for the administration of mineral rights; a provision establishing the range of royalty rates, which is not to be less than 3% or exceed 6% of total mining revenues; the Government’s right to obtain a 10% free-carried interest in mining leases; and the establishment of the period of duration of a mining lease, which is not to exceed 30 years and which may be renewed once for a period not to exceed an additional 30 years.

The Parliament of Ghana is the legislative body of the Government of Ghana.

The Government of Ghana was created as a parliamentary democracy, followed by alternating military and civilian governments. In January 1993, military government gave way to the Fourth Republic after presidential and parliamentary elections in late 1992. The 1992 constitution divides powers among a president, parliament, cabinet, council of state, and an independent judiciary. The government is elected by universal suffrage.

A cadastre is a comprehensive land recording of the real estate or real property's metes-and-bounds of a country.

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The General Mining Act of 1872 is a United States federal law that authorizes and governs prospecting and mining for economic minerals, such as gold, platinum, and silver, on federal public lands. This law, approved on May 10, 1872, codified the informal system of acquiring and protecting mining claims on public land, formed by prospectors in California and Nevada from the late 1840s through the 1860s, such as during the California Gold Rush. All citizens of the United States of America 18 years or older have the right under the 1872 mining law to locate a lode or placer (gravel) mining claim on federal lands open to mineral entry. These claims may be located once a discovery of a locatable mineral is made. Locatable minerals include but are not limited to platinum, gold, silver, copper, lead, zinc, uranium and tungsten.

A royalty trust is a type of corporation, mostly in the United States or Canada, usually involved in oil and gas production or mining. However, unlike most corporations, its profits are not taxed at the corporate level provided a certain high percentage of profits are distributed to shareholders as dividends. The dividends are then taxed as personal income. This system, similar to real estate investment trusts, effectively avoids the double taxation of corporate income.

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Mining law is the branch of law relating to the legal requirements affecting minerals and mining. Mining law covers several basic topics, including the ownership of the mineral resource and who can work them. Mining is also affected by various regulations regarding the health and safety of miners, as well as the environmental impact of mining.

Income taxes in the United States are imposed by the federal, most state, and many local governments. The income taxes are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels.

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References

This article incorporates text from the public domain Minerals Yearbooks.

The Minerals Yearbook is an annual publication from the US Geological Survey. It reviews the mineral and material industries of the United States and other countries. The Minerals Yearbook contains statistical production data as well as information on economic and technical trends. First published in 1933, it was preceded by The Mineral Resources of the United States.

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