South Africa’s Gold Fields Ltd has finalized a tax and royalties agreement with the government of Ghana which could safeguard its Damang mine, where around 2,000 jobs would be at risk if it is placed under care and maintenance.
The bullion producer said the agreement included a cut in corporate tax to 32.5 percent from 35 percent, and a change in the royalty rate to one based on the gold price rather than a flat 5 percent of revenue, effective from January 2017.
However the company said it had not yet decided whether to inject more cash into Damang, one of two mines operated by Gold Fields in Ghana, or suspend operations there, company spokesman Sven Lunsche said.
“This is obviously a positive input into our decision-making process, though we are considering many other economic, financial and mining variables in the process,” Lunsche added, referring to the agreement with the government.
Damang did not benefit from weaker currencies as did its mines in other regions, leaving it exposed to sinking gold prices. The agreement is effective from March 17 and runs for nine years for Damang, and for 11 years for Gold Fields’ other mine Tarkwa, each renewable for an additional five years, the company said.
“Ghana continues to be a key region for Gold Fields and we commend the Government of Ghana for creating a fair and competitive environment in the country,” Gold Fields said.