Gold Fields Calls for Less Tax in Ghana as Bullion Price Drops

May 28, 2014 8:00 pm ET

May 29 (Bloomberg) -- Gold Fields Ltd., which operates the Tarkwa and Damang mines in Ghana, appealed to the country’s government to decrease taxes to help foreign mining companies struggling with a lower gold price.

“We are appealing to government to come to our aid and loosen the fiscal regime because the current gold price doesn’t help us at all,” Alfred Baku, head of Gold Fields’ west Africa operations, said yesterday after a presentation at a conference in the capital, Accra. “We are really in a difficult situation.”

Bullion has dropped 25 percent since the beginning of 2013, including a 2.7 percent drop this week to $1,257 an ounce, as the U.S. tightened monetary policy, reducing investors’ need for the haven asset. Gold Fields’s all-in cost of production in Ghana is $1,200 an ounce, Baku said.

Baku proposed a reduction of corporate tax to 30 percent from 35 percent and royalties of 4 percent compared with 5 percent now. Ghanaian Mining Minister Inusah Fuseini didn’t respond to calls and a text message sent to his mobile phone.

Ghana’s fiscal gap reached 10.8 percent of gross domestic product in 2013, wider than a budget forecast of 9 percent, the central bank said in April. The cedi, the country’s currency, retreated to a record low against the dollar on May 27 on concern the nation is struggling to contain the budget deficit and because foreign-exchange reserves are dwindling.

Reserves declined 9.8 percent to $4.7 billion in March, according to Bloomberg calculations made using central bank data.