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Over 1000 workers sent home, as gov’t shutdown Ghana Manganese Company

The percentage of joblessness in Ghana keeps increasing by the day as private and state companies for managerial reasons keep folding up and laying off employees.

The latest crop of unemployed Ghanaians is from the Ghana Manganese Company as government early this week order the company to shutdown.

According to official data from the Ghana Manganese Company, 1500 workers by the announcement of the government has been rendered unemployed.

Minister of Lands and Natural Resources, Mr Kwaku Asomah-Cheremeh, on August 6, 2019 ordered the Ghana Manganese Company Limited (GMCL) located in Tarkwa in the Western Region to stop all mining, exploration and export of minerals with immediate effect.

The order came after a financial analysis of the company’s operations between 2010 and 2017 revealed that it had caused revenue loss of about $360 million (GH¢1.94 billion) to the state.

Speaking at a presser in Accra, where he announced the shutdown, Sector Minister Asomah-Cheremeh said the country lost $12.8 million in royalties due, $79 million in corporate taxes due and $6.1 million in dividends.

“Additionally, revenue residing offshore for the period 2010 to 2017 also amounted to $259 million. The estimated losses were based on a fair pricing model, utilising best business practices, open source data, as well as information obtained from verifiable business intelligence centres,” he said.

The minister explained that no transfer pricing audit was performed prior to 2017 in that regard, He had no option but to order the closure of the company until the outstanding issues had been addressed.

Ownership of Ghana Manganese Company

The Ghana Manganese Company Limited (GMCL) was originally owned by a Ukrainian but was sold to a Chinese company called Tianyuan Manganese Industry Group Co. Ltd (TMI), which took over full operations of the company in 2018. The government of Ghana has a 10 per cent carried interest in the GMCL.

Portions of the Minister’s statement on Ghana Manganese Company

Financial analysis had discovered an exclusivity agreement that allegedly appointed Manganese Trading Limited (MTL), a Chinese company registered in Ghana, as the sole off-taker of the total volume of manganese produced by the GMCL.

Uder the agreement, the transfer price of manganese ore had been fixed at $2.4 for every dry metric tonne unit (DMTU) for a period of three years, in violation of the mining lease.

“In the late part of 2014 and the beginning of 2015, there was a manipulation of the sales in order to stockpile ore prior to adjusting the price downwards by $0.65 for every DMTU, contrary to Section 13 of the mining lease agreement governing their operation.

“The calculated loss due to this price and production manipulation is conservatively estimated to be $3.64 million,”

Although evidence showed that there had been a more than 100 per cent increment in production by the current owners of the company, compared with the previous ownership, the company failed to stick to its commitments.

The drastic increase in production was not due to capital investment in mining assets, even though a formal letter of intent indicates that the TMI, the mother company, will invest up to $100 million

The audit exercise had also revealed major infrastructural deficiencies resulting from the GMCL’s operation. It was found that the operations of the company had stretched roads and rail infrastructure beyond the required capacity.

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 complaints to the ministry by local contractors.

Ghanaian contractors providing services for the GMCL are owed millions of Ghana cedis, even though the company continues to expand its export of manganese, with current figures available to the ministry suggesting that production and export are in excess of three million tonnes a year.

Sector Minister ordering Ghana Manganese Company to stop work

The government would explore various options, including engagement with the management of the company, seeking legal redress and taking over the company, to get what rightfully belonged to the state. The Minister said.

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