Questions of equity are beginning to emerge over tax-hikes in the mining industry as companies wielding so-called stability agreements appear to be protected and less aggrieved. At least two miners, Anglogold Ashanti and Newmont, have signed such agreements with the government that freeze taxes, royalties and other conditions over 10-15 years, and have said they do not expect to be immediately affected by the new rules. Anglogold Ashanti Limited, which signed a stability agreement with the state in 2004, has said it will not scale-back planned investments at the Obuasi mine, its biggest operation in Ghana, despite the tax-changes -- which include an increase in the corporate tax from 25 to 35 percent, a windfall-profit tax of 10 percent and changes to capital allowance rates. The company says it expects to invest at least US$150million for a second year in the mine. Obuasi has had a difficult last few years with output shrinking and costs rising, but Anglogold believes it will remain fecund for at least the next 30 years. “We’re committed to Ghana in the long-term so we’ll continue to invest, but we’ll continue to engage government,” said Kwame Addo-Kufuor, Anglogold’s Vice President (Ghana) in charge of corporate affairs. When early indication of the government wanting to review the mining regime and contracts was given two years ago, Newmont’s CEO Richard O’Brien said the company had reminded the government of its stability pact, but was nonetheless “willing to “talk”. Meanwhile, there are more than 20 large-scale companies that cannot seek solace in any stability agreement, and are subject to any changes or new rules that come into effect in the industry. Gold Fields, which operates the Tarkwa and Damang gold mines, said in the wake of the tax-hikes that planned investments worth about US$1billion at the mines could be dealt a deathblow by the new development. But shedding light on these initial comments, made by chief executive Nick Holland in Johannesburg, the company’s head of corporate affairs in Ghana, Mrs. Pamela Djamson-Tettey, said the miner is having to reassess its plans because, unlike others, it is “directly exposed” to the hikes. “We need to look at [Gold Fields’ position] in the context of the mining regime in Ghana. Some of the mining companies have stability agreements that protect them, but Gold Fields does not have such an agreement with the government. Therefore, Gold Fields is exposed whenever there is new legislation or new taxes are introduced,” she said. More biting, in respect to Gold Field’s capital-injection plans, according to Mrs. Djamson-Tettey, would be the lower capital allowance rate of 20 percent for five years, from 80 and 50 percent at different periods in the past. “That specifically impacts on project work, and it’s going to impact our plans so severely in terms of the feasibility and viability of future projects,” she stated. While its initial action is going to be unevenly felt within the industry, the government has already put together a seven-member team to renegotiate stability agreements in the industry. “[Your] first task is to review and re-negotiate any part of a stability agreement between the Republic of Ghana and any mining company that is not in the best interest of the country,” Finance Minister Kwabena Duffuor told the team at its inauguration in Accra last month. The team, led by academic and jurist Prof. Akilagpa Sawyerr, will be assisted by a local resource team and advised by international mining experts in discharging its duties. Anglogold has said it is yet to be contacted over the review of its stability agreement, and will not react now in order not to pre-empt any future event. “These [stability] agreements are binding in international courts, and it’s not likely that the government will succeed in changing them,” said one industry source not willing to be mentioned. According to Addo-Kufuor, Anglogold’s stability agreement was legally procured, and he said he believed there is mutual value in it for the state and his company. But the government has often said it is not getting a fair share of miners’ profits and revenues, which have soared during the last decade as gold and other metal prices spiked to record levels. “What we are looking for is a win-win situation in which mining companies and the people benefit equally,” Duffuor said. Yet, Dr. Toni Aubynn, chief executive of the Ghana Chamber of Mines, has blamed the country’s inability to devise a “comprehensive vision” and framework for local participation in the industry’s value-chain for its failure to derive maximum benefits from mining. “The best way to keep the mining industry as an integral part of the country’s economy is to put in place deliberate and sustained local-content and capability-development policies, backed by legislation and enforcement mechanisms -- and not just resorting to appeals or pleas to mining exploration and production companies,” he said. In a new study published this month on the industry in West Africa, the World Bank said both governments and companies need to do more to expand the benefits of mining to communities. It reckoned the industry would have a bigger impact on economic growth if companies purchased more equipment, supplies and services from locals. Countries have to enact policies that encourage local procurement, while helping locals to be able to utilise the opportunities, the bank said. For their part, companies will have to give fair access to locals to opportunities and provide information to communities on their procurement needs. The bank said, also, that regional economic blocs could promote cross-border procurement by harmonising incentives and taxes linked to activities in the industry’s supply-chain. Ghana is taking such steps, Lands, Forestry and Natural Resources Minister Mike Hammah has said, with new regulations already finalised to boost participation of locals in the industry.