General Overview of the Acquisition of Mineral Rights in Ghana
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ToggleIntroduction
Ghana’s mineral sector is a cornerstone of the national economy and a critical driver of foreign direct investment, contributing significantly to the country’s export earnings, employment, and public revenue. Recognised as a leading mining jurisdiction in Sub-Saharan Africa, Ghana is the largest gold producer on the continent and ranks among the top ten globally.
The legal foundation for mineral resource governance in Ghana is rooted in a constitutional principle that vests all minerals in their natural state in the President, held in trust for the people of Ghana. This principle applies regardless of private ownership of land. Therefore, a person with legal title to land that contains mineral deposits cannot conduct reconnaissance, prospecting, or mining activities unless granted a mineral right by the State.
Types of Mineral Rights
A mineral right is a legal interest granted by the State which confers upon its holder the authority to undertake specific activities related to mineral resources.
There are six types of mineral rights under Ghanaian law. These are the reconnaissance license, the prospecting license, the mining lease, and their corresponding restricted versions; restricted reconnaissance license, restricted prospecting license, and restricted mining lease. Restricted rights are typically reserved for Ghanaian companies or apply to specific minerals such as industrial materials.
Reconnaissance License
A reconnaissance license grants the holder the right to search for minerals using non-intrusive techniques such as geophysical, geochemical, and remote sensing surveys. This form of license does not allow the holder to engage in drilling or excavation. It is typically issued for a period not exceeding twelve months and may, under exceptional conditions, be extended once for an additional twelve months.
Prospecting License
The next stage in the mineral development process is governed by the prospecting license. This license allows the holder to conduct operations aimed at determining the extent and economic value of a mineral deposit. A prospecting license is issued for an initial period not exceeding three years and may be renewed once for a further three years. Any application for renewal must be submitted at least three months before the license expires.
Mining Lease
Where commercial viability is established, the holder may apply for a mining lease. This lease may also be applied for by any qualified person in respect of land not already subject to a mineral right for the same mineral. The mining lease grants the right to mine and extract minerals for commercial purposes. It is typically issued for a term of up to thirty years, with a possibility of renewal for a further thirty years. Applications for renewal must be submitted at least three months before the lease expires, unless the Minister responsible for Lands and Natural Resources allows a shorter notice period.
It is important to note that activities carried out under a mineral right must strictly adhere to the scope of the right granted. For instance, holders of reconnaissance licenses cannot engage in prospecting or mining activities. Similarly, each stage of mineral development – reconnaissance, prospecting, and mining requires a separate application and grant.
Qualification and Procedure for the Grant of Mineral Rights in Ghana
Qualification
To qualify for a mineral right in Ghana, the applicant must be a company or partnership registered under Ghanaian law. Individual persons are generally not eligible, except in cases where the law provides otherwise.
Procedure
The authority to grant, revoke, suspend, or renew mineral rights rests with the Minister for Lands and Natural Resources, acting on behalf of the President and based on recommendations from the Minerals Commission.
The Commission is the first point of contact for any application. Applicants must submit the completed forms with the prescribed fees and supporting documentation. Upon satisfying itself that the application meets all legal and technical requirements, the Commission submits a formal recommendation to the Minister.
Once the Minister receives this recommendation, a decision is made on whether to approve or reject the application. If approved, the Minister issues a written notice to the applicant stating the terms of the mineral right. The applicant must respond immediately in writing to indicate acceptance of the offer. The failure to do so causes the approval to lapse.
Once the acceptance is received, the Minister proceeds to formally grant the mineral right. Thus, the issuance of a mineral right is contingent not just on the Minister’s approval but also on the applicant’s timely acceptance.
Transferability and Financial Obligations of Mineral Rights Holders
Transferability
Mineral rights, once granted, may be transferred, assigned, or mortgaged in whole or in part. However, such transactions require the prior written consent of the Minister. Without this approval, the transaction is deemed null and void.
Financial Obligations
Holders of mineral rights are also subject to several financial obligations. They must pay annual ground rent as prescribed by law. This rent is payable to the landowner or their successors.
Where the land is part of stool lands (lands under traditional authority), the rent must be paid to the Office of the Administrator of Stool Lands. In addition, holders of mining leases, restricted mining leases, or small-scale mining licenses are required to pay royalties to the Government of Ghana. The royalty rate is calculated on the total revenue from minerals obtained.
There is also a requirement to pay annual mineral right fees, which are made to the Minerals Commission. Failure to comply with these financial obligations could result in the suspension or revocation of the mineral right.
Investment Incentives for Mineral Rights Holders
To promote investment in the mining sector, Ghana offers several incentives to mineral right holders. These include exemptions from import duties on mining equipment and accessories, tax reliefs on furnished accommodation provided to mining staff, and approved immigration quotas for expatriate personnel. Expatriates are also entitled to a tax-free remittance quota for transferring personal earnings out of the country.
Moreover, the law guarantees mining leaseholders the free transferability of foreign exchange earnings. This can be done either through the Bank of Ghana or, in the case of entities recognised as net foreign exchange earners, through accounts established for that purpose.
Summary
In summary, the acquisition of mineral rights in Ghana is a structured and transparent process anchored in legislation. While the system offers significant investment opportunities, it also demands strict compliance with procedural requirements and regulatory obligations. Prospective applicants – whether local or international must approach the process with due diligence, a clear understanding of the legal framework, and readiness to fulfil their responsibilities to both the State and affected communities. With these foundations, Ghana continues to maintain its status as one of Africa’s leading destinations for sustainable mineral investment.
This guide provides general information on the acquisition of mineral rights in Ghana and is not intended as legal advice for specific situations. For guidance tailored to your circumstances, we recommend seeking professional legal advice. You may contact us at contact@olaryealaw.com for further assistance.