Geologist backs new sliding royalty regime amid industry pushback

A senior academic has thrown his weight behind Ghana’s move to introduce a sliding-scale royalty regime for minerals, arguing that the country must take advantage of elevated commodity prices while they last.

Prof. Prince Ofori Amponsah, head of the Earth Science Department at the University of Ghana, said the policy reflects a pragmatic approach to a volatile global commodities market. “We have to be inward-looking and take what we can,” he said. “Commodity prices are not static — they move with time. If the bubble bursts and we fail to benefit, then we were not smart enough to cash in.”

Capturing windfall gains

Under the new framework, Ghana replaces a flat royalty system with a price-linked structure that increases the state’s share when commodity prices rise. Prof Amponsah argued that much of the recent surge in mining profits has been driven by external market forces rather than operational improvements by companies.

“When prices rise sharply, the windfall has little to do with the company itself,” he said. “It is driven by external factors. The country must therefore position itself to benefit from that upside.”

He noted that while companies often cite rising operational costs, higher prices also expand the economic viability of mining operations, allowing firms to exploit deposits that would otherwise have remained unprofitable. “Pits that would not have been mined are now being opened because the price window has widened,” he said.

Balancing risk and reward

The geologist dismissed concerns that the policy could significantly undermine profitability, arguing that mining firms would continue to earn strong returns despite higher royalties. “Investors will always complain,” he said. “But they are not losing their margins have increased. What they earn today still exceeds what they initially projected.”

He added that the sliding-scale mechanism provides flexibility, allowing the fiscal burden on companies to ease when prices fall. “When prices drop, royalties also adjust downwards. That is the essence of a sliding scale as you make more, the state takes more; when you earn less, the burden reduces.”

Industry concerns

The policy has faced opposition from sections of the mining industry. The Ghana Chamber of Mines and executives of major gold producers have warned that higher royalties could discourage new investment and constrain future output. Critics argue that increased fiscal pressure may affect project viability, particularly in a capital-intensive sector where long-term investment decisions depend on stable and predictable tax regimes.

Economic implications

Analysts say the new regime could significantly boost government revenue during periods of high commodity prices, strengthening public finances and supporting fiscal consolidation efforts. For Ghana, which remains heavily reliant on extractive revenues, the ability to capture a larger share of windfall gains could provide additional resources for infrastructure, social spending and economic stabilisation.

At the same time, the policy introduces a delicate balancing act. While higher royalties may improve state earnings in the short term, there is a risk that overly aggressive fiscal terms could dampen investor appetite, particularly for new exploration projects.

In the longer term, the success of the regime will depend on how effectively Ghana manages this trade-off  ensuring that it maximises value from its mineral resources without undermining the competitiveness of its mining sector.

For Prof Amponsah, however, the principle is clear: “Windfalls are not permanent. When the opportunity comes, the country must be ready to benefit.”

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