Ghana Manganese Company Limited Shutdown Temporarily

Mr Kweku Asamoah-Cheremeh, the Minister of Lands and Natural Resources on Monday announced the temporary shutdown of the operations of the Ghana Manganese Company Limited (GMCL) effective August 6.

The action, he explained was as a result of a preliminary technical and financial assessment conducted by the government, which showed that the state had lost over 300million dollars.

Speaking at a media briefing in Accra, Mr Asamoah-Cheremeh said the Ministry together with the Minerals Commission and other relevant stakeholders would immediately commence discussions with the management of GMCL to resolve the issues and retrieve the monies.

He stated that aside from holding discussions with the company to pay the monies, the government had other options including taking legal action against the company or selling the assets to defray the debt.

The Minister noted that the audit revealed that, “Estimated losses to the government for the period 2010 to 2017 based on Fair Pricing Model utilizing best business practices, open-source data as well as information obtained from verifiable business intelligence centres include, royalty and corporate taxes amounting to 91.8 million dollars due.

“Loss of dividends declared, 6.1 million dollars and additional revenue residing offshore for period 2010 to 2017 no transfer pricing audit performed prior to 2017 amounts to 259 million dollars.”

Mr Asamoah-Cheremeh said an exclusivity agreement allegedly appointed Manganese Trading Limited (MTL) as the sole off-taker of the total volume of the manganese produced by GMCL.

He noted that the agreement fixed the selling price (transfer price) of manganese ore to 2.4 dollars for every Dry metric ton unit (DMTU ) for a period of three years.

The Minister said in late 2014 and early 2015, just before the expiry of the sales agreement reached in April 2012, there was a manipulation of the sales in order to stockpile ore prior to adjusting the price downwards by 0.65 dollars for every DMTU, contrary to section 13 of the mining lease agreement governing their operation.

He noted that the calculated loss due to this price/production manipulation was conservatively estimated to be 3.64 million dollars.

Mr Asamoah-Cheremeh said the company defaulted in the payments of Annual Mineral Right Fees in excess of four million dollars.

The preliminary financial analysis, he said indicated that since the change in ownership the production and sales increased from 2017 to 2018 resulting in 65 percent rise of production tons mined and 80 percent growth in sales.

The Minister said there were infrastructural deficiencies as a result of GMCL operations and that the primary, road, and rail networks had been stretched beyond capacity and were close to complete failure.

He said there was ample evidence of lack of compliance and circumvention of the local content policy following complaints to the Ministry by local contractors.

“Ghanaian contractors providing services to GMCL are owned hundreds of millions of Ghana Cedis even though the company continues to expand its export of manganese. Current figures available to the Ministry suggest production and export in excess of three million metric tonnes,” he said.

Mr Asamoah-Cheremeh said the operation was contrary to one of the major policies of the Akufo-Addo Government, which was to add value to the minerals that were produced in the country.

“This is demonstrated by the establishment of the Ghana Integrated Aluminum Development Corporation Act, 2018 for the Bauxite Industry as well as the Ghana Iron and Steel Development Corporation Bill for the Iron industry. In the case of Manganese, however, GMCL has not shown a strong commitment to value addition, in particular, the establishment of a smelter,” he added.

It would be recalled that early this year the government ordered the shut down of the operations of GMCL to enable it among other things analyze and review data and other related documents covering all transactions in relation to the operations of GMCL from 2010.

The mission also sought to ascertain the pricing for manganese as declared by GMCL and examine the grade of ore mined including review of data and limited drilling within the pits of GMCL where necessary to ascertain effective head grade.