The Ghana Chamber of Mines is arguing that a royalty increases from 5% to about 11% or 12% would render mining investment uneconomic, potentially resulting in the loss of 1,344 jobs (88% from host communities), foregone government revenues estimated at US$228 million in royalties and US$604 million in corporate income tax, and a sharp contraction in local procurement exceeding US$1.7 billion over time.

According to the Chamber, investment modelling confirms broader competitiveness concerns, stressing that simulations show that the proposed sliding-scale royalty would reduce Non-Present Value (NPV) and Internal Rate of Return (IRR) materially across multiple operations, including an 8.0% decline in NPV at AngloGold Ashanti’s Obuasi Mine. This is a magnitude sufficient to push projects below typical internal hurdle rates and trigger capital deferral or cancellation.

Similar adverse outcomes, it said in its paper on ‘Proposed Sliding Royalty Regime for the Gold Mining Sector’, are observed for brownfield expansions and advanced exploration projects, weakening reserve replacement and the long-term production pipeline.

The Chamber further stated that mine-level financial analysis demonstrates that even modest increases in royalty rates have non-linear impacts on profitability. “At an average gold price of US$2,044 per ounce, a shift from a 5% to a 7% royalty rate, under the proposed scale, represents a 40% increase in the royalty burden, resulting in a reduction in comprehensive income of nearly US$0.8 million for a representative Chamber member, assuming no change in production volumes or costs”.

These effects, it said, are magnified for mature and low-grade operations, adding, operational case studies further illustrate the risks.

The Chamber pointed out that at the Edikan Gold Mine, Perseus Mining Ghana Limited (PMGL) has committed US$170 million in sustaining capital to extend mine life from 2027 to 2032. “This investment is only viable under the current fiscal regime and prevailing gold prices”, it explained.