Ghana Manganese Company shut down following iWatch Africa’s investigation

An investigation by iWatch Africa in May 2019, has led to the shut down of Ghana Manganese Company Limited (GMCL) effective August 6th 2019. iWatch Africa’s investigation in May revealed that failure of some six mining companies to pay dividends due Ghana deprived the nation of potential revenue amounting to over $14m as at October 2018.

Our investigation which covered the financial period between 2013-2016 uncovered that these mining companies: Chirano, Adamus, Gold Fields Abosso, Persus Mining, Ghana Manganese and Ghana Bauxite although in certain instances declared profits, they failed to transfer dividend attributable to the government.

Read Also: Failure of six mining companies to pay government dividends cost Ghana close to $15 million in 2018

The government of Ghana ordered the shutdown of operations of the Ghana Manganese Company Limited on Monday, August 5th, 2019.

The decision, according to the sector Minister, Kwaku Asomah-Cheremeh, follows the apparent lack of transparency in the operations of some mining companies in Ghana which has been a source of “serious concern” to the Ministry.

Making this known at a press conference on Monday, the Minister of Lands and Natural Resources, Kwaku Asomah Cheremeh revealed that plans have been put in place to retrieve the monies.

“GMCL has not shown strong commitment to value addition in particular. There are also defaults by the company in the payment of annual minerals rights fees in excess of 4 million dollars. These and several infractions give me no option as the sector Minister than to close down the operations of GMCL.”

“The company is therefore instructed to stop all mining exploration and export of minerals effective 6th August 2019. The Ministry together with the Minerals Commission and other relevant stakeholders will immediately commence discussions with Ghana Manganese to resolve this and other outstanding issues in the course of the shutdown.”

Read Also: Mining firms shortchanging state will face gov’t wrath – Minister promises after iWatch report

Results from the government audit also indicated that revenue residing offshore from 2010 to 2017 with no transfer pricing audit performed prior to 2017 recorded loses of a whopping $259m.

Further, loss of dividends within the period amounted to $6.1m while additional corporate tax due was $79m.

Aside the findings of the audit report, Cheremeh added that in late 2014 and 2015, just before the sales agreement reached between Manganese Trading Limited (MTL) as the sole off-taker of the total volume of the manganese produced by GMCL, there was a manipulation of the sales in order to stockpile ore prior to adjusting the price downwards by $0.65 for every DMTU.

Calculated loss due to this price per production manipulation was conservatively estimated to be $3.6m.

The Lands and Natural Resources Minister, following our report in May, 2019 stated that, “if firms are found to be shortchanging the state, “then the wrath of the government would be visited on them.”

“They [non-compliant firms] are seeking to thwart the efforts of government and they are seeking to derail all the effort the government has brought into being.”

The minister insisted that he will champion the interests of the state “and that can even cause the revocation of the licenses.”

iWatch Africa expects that all companies cited in our investigation will face the full rigors of the law if government investigation confirms that they are indeed shortchanging the state.

Report by Gideon Sarpong | iWatch Africa | Follow @gideonsarpong