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The Minerals Commission has said that it did not play any role in the award of a revenue assurance contract between Strategic Mobilisation Limited (SML) Ghana and the Ghana Revenue Authority (GRA). The contract is meant to monitor the extraction and export of mineral resources in Ghana.
The Minerals Commission, the sole regulator of the mining industry in Ghana, in response to a Right to Information (RTI) request by The Fourth Estate on January 15, 2024, also said it had never reported any act of “deliberate or accidental calculation as far as gold revenue is concerned” but it undertakes “regular or special audits from time to time as per its mandate to deal with such issues and we do collaborate with other government or public institutions to do that.”
However, a Ministry of Finance letter sighted by The Fourth Estate stated, “Honourable Minister [Ken Ofori-Atta] has determined that there is the need to monitor the production and shipment of oil and gold out of the country.”
“To this end, he will like to expand the Revenue Assurance work being performed by SML to include upstream oil drilling by the production companies and the gold mining companies,” the letter, dated June 22, 2023, stated.
In the expanded contract signed in October 2023 between GRA and SML, the company will be paid 0.75% of the total value of gold that is produced and monitored in the country. Ghana is currently the largest producer of gold in Africa.
Using the 2022 production figures to estimate SML’s earnings, the company’s 0.75% share of 3.7 million ounces at a global price of US$1,800 per ounce (as contained in the Finance Minister’s 2024 budget statement) will amount to an estimated US$50 million per year from the gold sector alone.
A mining expert, who spoke to The Fourth Estate on condition of anonymity, described the engagement of SML to monitor gold production as a “typical create, loot, and share” scheme to plunder the resources of the state.
The source said SML has no role in the mining sector and won’t perform any function that is not already in place to monitor and assure revenue for the government.
“To put it simply, what we do here is that we crash rocks in search of gold. After crashing, we take the rocks that have gold particles to what we call the Gold Room to extract the gold,” the source explained.
“In the gold room of every mining company, we have officials of the GRA to protect the government’s interest and calculate taxes on whatever we produce,” the source continued.
The source further explained that aside from the GRA officials, the Gold Room also has officials from the Precious Minerals Marketing Company (PMMC), the state institution certified to grade, assay, value, and process precious minerals.
“The PMMC is the government’s assayer, so they take samples of the gold we produce to their labs in Accra to test and report on the percentage of actual gold in the bars,” the source said.
The source further pointed out that the mining companies in Ghana refine their gold outside the country and reports from the gold refineries abroad are returned to Ghana for reconciliation with the PMMC report.
The source explained that the gold that leaves the mines is airlifted by helicopters with security protection to the Kotoka International Airport in Accra for onward export: “Between the mines and the airport, anything could happen, so we have Customs officials in every helicopter that lifts the gold from the mines to Kotoka, where they hand it over to their superiors for the paperwork and export.
“So, what is SML coming to do? Are they coming to do the work of PMMC or GRA?”
The Minerals Commission is the second state regulatory institution to deny any role in the SML/GRA contract. On December 4, 2023, the Petroleum Commission in a response to The Fourth Estate also denied any knowledge of a contract with SML to monitor petroleum revenue in the upstream sector.
Ghana currently produces between 160,000 and 170,000 barrels of oil per day. The Pecan Field project is expected to add 80,000 barrels per day in a year, a Deputy Minister of Energy, Andrew Mercer, told the Reuters news agency. SML’s share of US$ 0.75 per barrel a day means that the company will make at least US$120,000 barrels per day from the 160,000 barrels per day.
This is part of the findings of an investigation by The Fourth Estate into the circumstances surrounding the signing of an expanded consolidated contract worth nearly US$100 million a year for revenue assurance in the upstream petroleum and gold mining sectors.
The investigation also revealed that although SML Ghana failed to explain how it saved the state GHS 3 billion through its revenue assurance contract in the petroleum downstream sector, the company is paid GHS 24 million every month (2 million US dollars).
The Managing Director of SML, Christian Tetteh Sottie, claimed he did not know about the GHS3 billion figure when The Fourth Estate confronted him with counter-evidence. He said the media, including the state-owned Daily Graphic, had taken a presentation SML made to the GRA board out of context and reported the wrong information. He said SML had called the journalists to draw their attention to the supposed error.
The company had also claimed that its services had stopped “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”
When The Fourth Estate confronted the company with evidence that it did not perform any of those services, SML admitted its claims were false and deleted them from its website.
Meanwhile, tax audit firm, KPMG, which President Nana Akufo-Addo appointed to investigate the SML contract, is expected to submit its report this week.
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