USD 300 Mn Down The Drain – Ghana’s Manganese Company Has Closed Shop & Someone Is Going Down For It
The Ghana Manganese Company Limited (GMCL) may have closed up for the last time, at least, until further notice, as Ghana’s Minister of Lands and Natural Resources, Kweku Asoma Cheremeh, has ordered a complete shutdown of the company effective immediately. And this may not be unconnected to mishandling of funds amounting to hundreds of millions of dollars.
The Minister said the closure is due to the company’s inability to fulfill its financial obligations which have resulted in over USD 300 Mn 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,” said Cheremeh, who also hinted that the Ghanaian government is currently tinkering with the idea of having a private company take over the company, though the option of selling the company’s assets to offset debt is very much on the table.
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 of Lands and Natural Resources suggested that the audit could actually be done while mining operations are ongoing. And subsequent findings from the preliminary audit revealed that the state was, in fact, incurring huge losses as a result of the company’s mismanaged operations.
The audit report found the company wanting in the payment of additional royalty to the tune of USD 12.8 Mn, payment of additional corporate taxes amounting to USD 79 Mn and a loss of dividends of up to USD 6.1 Mn.
There was also a loss of USD 259 Mn additional revenue residing offshore from 2010 to 2017 as there was no transfer pricing audit performed before 2017. And it appears the Minister is incensed, as he should be, over the gross mismanagement of funds.
Cheremeh said; “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.
According to the Minister, the current figures available to the ministry indicate that production and export are in excess of three million metric tonnes and the GMCL also defaulted in the payment of Annual Mineral Rights Fees of which the backlog is now well over USD 4 Mn.
These and several other infractions by the GMCL are believed to have forced the closure of the company by the sector Minister and things will stay that way until further notice.
Following the closure of the GMCL, the Ministry of Lands and Natural Resources, together with the Minerals Commission and other relevant stakeholders, will now spend the next few weeks deciding the fate of the company. But it’s certain that wholesale changes are going to be made and someone will have to answer for the failures of the company.
Featured Image Courtesy: modernghana.com
