The Minerals Income Investment Fund (MIIF) may well become the most important lever in Ghana’s development.
This is the view of Edward Nana Yaw Koranteng, the Chief Executive of the Fund. Addressing participants at the 14th West Africa Power Exhibition and Conference on the topic “MIIF as a tool for National Development” Mr. Koranteng said the time has come for Ghana and Ghanaians to think differently about wealth creation especially for future generations.
Mr. Koranteng also highlighted some aspects of the proposed Agyapa listing on a high-powered panel which featured internationally acclaimed Natural Resources Governance Expert, Dr. Steve Manteaw, the Chief Executive Officer of the Ghana Chamber Of Mines, Suleman Koney, Daniel McConvey, founder and Managing Member of Rossport Investments LLC., and the acting Head of Goldfields West Africa, Joshua Mortorti who chaired the panel.
What is MIIF
MIIF was established by an act of Parliament, Act 978 in 2018. According to Mr. Koranteng, the President’s vision leading to the creation of MIIF was for MIIF to utilize two main streams of income from the mining sector – dividends and royalties – and use these to support the development of the mining sector and the mining communities.
“Dividend and royalties hitherto were paid into the consolidated account without recourse to any accountability metrics or how these were positively impacting the mining sector,” Mr. Koranteng noted.
The MIIF Act mandates MIIF to manage the equity interest of the Government in all mining companies. This is the usual 10% carried interest which is the prescription of law except for a few and to hold and manage all royalties paid by all mining companies for all mineral types except for bauxite.
Mr. Koranteng stated that “the objective of MIIF is to invest the income (royalties and dividend) in various asset classes which would derive sustainable long-term value to the people of Ghana with emphasis on the mining sector. In explaining the breakdown and uses of royalties collected, Mr. Koranteng said that, “20% of royalties collected across all mineral types goes to the Minerals Development Fund (MDF) which is responsible for deploying directly to traditional authorities and local government for the provision of developmental amenities, 2% goes into the operations of MIIF, 2.4% to GRA as a collecting agent and 75.6% goes into investment activities.”
“Ghana will not gain from her natural resources, until Ghanaians participate fully in the value chain of the various minerals mined. The creation of MIIF is to provide such a conduit,” said Mr. Koranteng who bemoaned the lack of development in the mining areas, the lack of Ghanaian ownership in the mining majors, and the informal nature of the indigenous small scale mining sector. He said, “Ghana has been mining for a long time. We have discovered at least seventeen minerals, the latest one being lithium. The question is, where is the Ghanaian participation in all these mining activities?”
How MIIF is Changing the Narrative
Mr Koranteng elaborated that since the creation of MIIF, the Fund has pursued a policy of value creation with emphasis on Ghanaian interests. This is being done through a multi-layered approach. In this vein, the Fund is investing equity in prospective mines in Ghana and has recently invested $20 million for a 4.65% equity stake in the Toronto and Frankfurt listed Asante Gold which owns the well-resourced Bibiani gold mine and on the verge of acquiring Kinross assets in Ghana. This would eventually make Asante one of Africa’s largest gold mines. Mr. Koranteng revealed that the Fund is currently reviewing two major gold prospects in Ghana and is designing a product program with banks to support the quarry sector and currently in talks to invest in the recently discovered lithium in Ghana.
“Lithium is of genuine interest to us at MIIF. The global market for Lithium for instance is around $6.8 billion, however the Electric Vehicle (EV) market which uses Lithium as its main resource is worth about $100 billion. Value addition is where the gains are. We are seriously considering a stake in Atlantic Lithium, which has discovered large deposits of the mineral in the Central Region. The by-product of lithium which is felspar is used for ceramics, fiber-glass and other high value products which could create another line of economic interest for Ghana,” Mr. Koranteng emphasized.
Aside large-scale gold mining firms, MIIF will soon launch its Small Scale Incubation Project (SSMIP), a targeted intervention in the small scale mining sector with a proposed $14 million equity incubation to be piloted with the provision of mini gold processing equipment to licensed small scale miners and a $500 million collaborative trade investment plan which would cover the next ten to fourteen years. The objective of the incubation program is to help formalize the small scale mining sector which is responsible for 30% of Ghana’s gold output and to eradicate the use of mercury from the small scale sector while improving environmentally sustainability mining, traceability and transparency for Ghana’s gold on the international market.
Similarly, “MIIF is considering investments in Salt which we consider as the infinite white gold,” said Mr. Koranteng. “We have expressed interest in helping to develop the Ada Songhor Salt pans which have the capacity to produce Industrial Salt for the regional market with a demand in excess of 900,000 mt of salt per annum and other products such as caustic soda for our own industrial needs. A full capacity Ada Songhor Salt will make it the largest in Africa,” Mr. Koranteng said.
“Currently Gold and Manganese contribute the most to our minerals royalties but MIIF, as part of its strategy to expand the royalties net, is seeking to grow royalties from Granite, Limestone and for the first time in Ghana’s history, the country has started receiving royalties from sand winning,” Mr. Koranteng added.
The Question of Agyapa Royalties
“The listing of Agyapa Royalties Company is an opportunity for Ghana to garner more value from the global capital markets to support the gold mining sector in Ghana, develop the mining communities and have more Ghanaians participate in the gold sector,” said Mr. Koranteng.
Mr. Koranteng, responding to questions on Agyapa, clarified that, “Agyapa is an existing gold royalties company belonging 100% to the Government of Ghana through MIIF. The strategic objective is to use the company as a tool to invest in gold companies in Ghana and gold royalties globally including other gold royalties companies worldwide.” Mr. Koranteng added that, “listing the company on the stock exchange is not a collateralization of Ghana’s gold assets and neither is it a sale of Ghana’s mineral assets”. He explained further that, “Agyapa’s main source of income is 75.6% of royalties from 12 specific mining leases which hitherto was coming straight to MIIF. Listing the company means any one can buy shares in the company with MIIF maintaining at least 51% majority. The initial raise with a target of $450 million to $700 million would have a significant portion going into the development of infrastructure mainly in mining communities in Ghana.”
Mr. Koranteng conceded that the initial communication on the listing of Agyapa to the public may not have been the best when it was introduced in 2020 but any research on royalty companies vis a vis listed mining companies shows that the royalty companies which are insulated from the operational pressures and costs seen with mining companies have performed much better.
Reacting to the presentation, Dr. Steve Manteau, the Head of the Civil Society Organisations in the Extractive Sector, applauded the vision of MIIF. “Investing the country’s royalties is the way to go. Over the years, it was just being piped into the consolidated fund and being used as we pleased. We are all for investing royalties and I have been really educated on what the intentions of MIIF are. On Agyapa as a Special Purpose Vehicle, we just want more transparency about the structure and valuation of the country’s royalty streams. We all want royalties invested and not consumed so you have our support. We just need more rigor so we don’t sell ourselves for cheap and we need more belief in the business model,” said Dr. Steve Manteau.
Mr Koranteng responded in agreement and assured participants that MIIF will engage all stakeholders including the CSOs on the Agypapa listing when the review of the transaction as tasked by the president is completed.
The 14th West Africa Mining and Power Conference focused on new technologies in the mining and power space in the region as well as thought leadership among industry chieftains and investors.
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