Assessing Expropriation, Valuation and Compensation Practices for Mining in Ghana

<p dir="ltr">Expropriation and compensation remain a contentious issue globally. In Ghana, despite the extensive research in the mining sector, seldom has research empirically assessed the procedures and practices of compulsory acquisition, valuation and compensation for mining within the context of current best practice criteria and the prevailing legal framework. Yet the recurring incidences of conflict and unrest in mining host communities have been attributed to disagreements and community discontent over expropriation practices and the compensation packages mining companies offer as a prelude to expropriation. Given the benefits of mining to Ghana’s economy, some researchers have emphasised the need for centralised standard to guide expropriation and compensation practices in the mining sector.</p><p dir="ltr">This research aims to examine the procedures and practices of expropriation, valuation and compensation for mining in Ghana within the context of current best practices using two case studies: Asanko Gold Ghana Limited (AGGL) and Newmont Goldcorp’s Ahafo Mine (NGAM).  To achieve this primary research aim, four objectives were included in this thesis: </p><p dir="ltr">i. To ascertain whether the procedures for expropriation, valuation and compensation for mining in Ghana meet best practice criteria</p><p dir="ltr">ii. To examine the composition of compensation awards when private or communally held land and attached property are acquired for mining in Ghana </p><p dir="ltr">iii. To review the valuation methods applied in assessing compensation for mining-impacted property and assess the consistency of the compensation offered upon the acquisition of land for mining and </p><p dir="ltr">iv. To develop a new framework for expropriation and compensation for mining in Ghana based on current best practices. </p><p dir="ltr">Using a qualitative case study approach, semi-structured interviews were used to collect data from study participants comprising farmers, farmers’ representatives, traditional leaders, valuers, officials of the studied mining companies and government officials. Data collected through semi-structured interviews was augmented with data gathered from observation, photography, archival records and other secondary sources such as fliers, websites, literature research on the laws, policy documents and international guidelines, frameworks, standards and approaches to expropriation. Data collected from these sources facilitated triangulation of the research results. This yielded several findings that confirm some previous research findings and challenge some expropriation and compensation practices of the studied companies within the framework of the existing legal provisions and best practice criteria.</p><p dir="ltr">First, the results indicate that some procedures and the practices of expropriation and compensation for mining in Ghana fall short of best practices. This is a novel finding in literature since no recognisable research has assessed expropriation, valuation and compensation procedures and practices in Ghana’s mining sector. For instance, whereas the studied cases have introduced alternative dispute resolution mechanisms to address community grievances, the findings indicate that the grievance mechanisms do not serve the needs of some aggrieved parties. This has driven some parties to resort to the courts and/or other means to register their discontent over expropriation and compensation matters. Besides this, some key issues identified include minimal community participation in environmental impact assessments due to lapses in the legal framework. Considering the environmental impacts of mining on host communities, reduced community participation in impact assessments has a consequential effect on their ability to monitor mining companies’ compliance with set standards and contribute to the development of sustainable solutions to reduce the impacts of mining based on local knowledge. The findings also indicate that although the studied mining companies operate within the same legal and institutional frameworks, considerable differences exist in their expropriation procedures and practices. Even though the law explicitly provides for prompt compensation upon expropriation, the results revealed that the studied companies delay compensating affected parties. In addition, delayed compensation sums do not attract the mandatory interest rates legally prescribed. Indeed, the findings as presented lend credence to studies that reinforce the need for a uniform framework to guide expropriation and compensation in Ghana’s mining sector (Ghana Chamber of Mines 2008). </p><p dir="ltr">In addition to the differences in expropriation procedures, the results revealed considerable variations in the compensation standards, valuation methods and compensation values. Although local dynamics have an impact on compensation values, the vast differences in compensation values for crops, especially, cocoa raises adequacy and fairness concerns around the compensation values. Contrary to assertions that the government valuation agency, the Land Valuation Division of the Lands Commission (LVD) offers lower compensation values (Ghana Chamber of Mines 2008; Anim-Odame 2011), the results indicate that this does not hold in its entirety as one of the studied case’s compensation values for certain crops were below the statutory minimum. Yet the regulatory agencies have not moved to enforce compliance with the law. Thus, this finding supports the assertion that the challenges in Ghana’s mining sector are attributable to weak regulatory mechanisms (Agyei 2016; Bugri and Kumi 2018). A significant finding of the research was that, whereas the legal provisions call for compensation for communal and common property resources, the studied mining companies disregard these claims in accounting for compensation for land use deprivation. </p><p dir="ltr">Based on these findings, it can be argued that the challenges in expropriating and adequately compensating for mining-induced expropriations are assignable to three key factors;</p><p dir="ltr">1. The lack of uniformity in expropriation and compensation procedures and practices.</p><p dir="ltr">2. Mining companies’ disregard for the legal provisions and the lack of clear regulatory direction on the approach to assessing compensation for some heads of claims.</p><p dir="ltr">3. Communities’ lack of knowledge on expropriation, valuation and compensation matters and the lack of technical assistance to enable host communities to negotiate with mining companies on a level playing field.</p><p dir="ltr">On the back of these findings, the research proposed a new framework to provide objective guidance to mining companies, host communities, policy makers, civil society and other interest groups and the mining sector regulatory agencies. However, due to COVID-19 and travel restrictions, the research drew on international guidelines and frameworks, practices from other countries and the existing legal provisions to validate the measures proposed within the framework. The framework addresses the key issues identified in the thesis. Hence, it can contribute to improved expropriation, valuation and compensation practices in Ghana. This will substantially reduce the recurrent tension and conflicts plaguing the mining sector.</p>