Ghana Manganese Company shut down over $300m loss of revenue

He ordered that the shutdown should take effect from Monday, August 5, 2019.

The Minister, Kweku Asoma Cheremeh said the closure is due to the company's inability to fulfill its financial obligations which have resulted in over $300 million loss of revenue to the state.

“We are going to engage them to find an amicable solution to the infraction that they have committed. If indeed they do not have any good explanation for the happenings, then we will arraign them before court.”

He indicated that the government will consider a private take over of the company or sell the company’s assets to defray the debt if it becomes necessary to do so.

In January 2019, the company was directed to stop its mining operations to help the state to undertake a thorough financial audit of its operations.

But the Ministry said the audit could be done whiles mining operations are ongoing.

Subsequently, the preliminary audit showed that the state is incurring huge losses through the operation of the company.

The report showed that the company failed to pay additional royalty ($12.8 million), additional corporate taxes ($79 million) and a loss of dividends declared ($6.1 million).

There was also a loss of $259 million additional revenue residing offshore from 2010 to 2017 as there was no transfer pricing audit performed before 2017.

It added that “primarily, road and rail infrastructure are stretched beyond capacity and are close to complete failure. Aside from the findings of the audit report, there is also ample evidence of lack of compliance and circumvention of the local content policy following a complaint to the Ministry by local contractors.”

“Ghana contractors providing services to GMCL are owed hundreds of millions of cedis though the company continues to expand its export of manganese,” the minister added.

He further indicated that current figures available to the ministry shows that production and export are in the excess of three million metric tonnes.

“There are also defaults by the company in the payments of Annual Mineral Right Fees in excess of $4 million. These and several other infractions leave me no options as the sector Minister than to close down the operations of GMCL until further notice,” he said.

Adding that the Ministry together with the Minerals Commission and other relevant stakeholders will begin discussions with the company “to resolve these and all other outstanding issues in the course of the shutdown.”