17
Wed, Jul
4 New Articles

JOSPONG’S GCDGL TO LOSE MINING CONTRACT AS GOVERNMENT TERMINATES DEAL

General News

The government, through the Ministry of Lands and Natural Resources, has abrogated the contract with Great Consolidated Diamond Ghana Ltd, a subsidiary of the Jospong Group of Companies.

The government, through the Ministry of Lands and Natural Resources, has abrogated the contract with Great Consolidated Diamond Ghana Ltd, a subsidiary of the Jospong Group of Companies.

 

A letter seen by the Daily Statesman dated June 10 2019 and signed by the Minister of Lands and Natural Resources, Kwaku Asomah-Cheremeh, states that the mining lease of the company has been cancelled pursuant to Section 68 of the Minerals and Mining Act 2006 (Act 703).

“Please take note that the cancellation is without prejudice to any obligation or liabilities incurred by GCDGL in relation to the leases prior to the cancellation,” the letter says.

Earlier notice

The June 10 letter follows a notice to the company, sent on December 12 2018, to remedy a breach of mining licence within 120 days of receipt of the letter.

The Notice to Remedy Breach of Mining Licence letter, also seen by the Daily Statesman and signed by the sector Minister, shows that GCDGL had breached the terms of its six mining leases, which were granted on December 31 2012.

The letter says that GCDGL owes the Minerals Commission US$7,705,600 in accrued mineral right fees ‒ a clear breach of Section 68 (1) (a) of the Minerals and Mining Act 2006 (Act 703).

“The Company has been dormant for five (5) years and therefore has not been able to carry out its obligations including the production of diamonds required under Section 69 (1) (a) of the Minerals and Mining Act 2006 (Act 703),” the letter says.

“GCDGL is hereby required to remedy the above-mentioned breaches within one hundred and twenty (120) days from the date of this notice.
“Please take note that failure to satisfactorily remedy the breaches within the time specified in this notice will result in the termination of the mining leases,” the letter concludes.

DIC letter

Following the ministry's notice last year, the Divestiture Implementation Committee (DIC), through their lawyers, Cardinal Law Group, also wrote to the management of the company in April this year to serve them notice to address the breaches.

“This is to serve you notice that upon your persistent failure to remedy your default in settling your indebtedness arising from the non-payment of the balance of the total consideration due from you for the divestiture of the assets of the above company (GCD) to you, our client has instructed us to invoke Paragraph 13 of the offer letter dated May 6 2011 with Reference Number DIC/119/01 to abrogate all agreements our client has with you on the subject,” lawyers acting for the DIC stated.

“As you are aware, your indebtedness in terms of the balance aforesaid as of 31st March 2019 stood at eighteen million, eight hundred and forty-four thousand, fourteen dollars and forty-five cents (US$18,844,014.45),” the letter says.

Background

In 2011 the Government of Ghana, through the Divestiture Implementation Committee, sold the assets of the then Ghana Consolidated Diamonds Ltd (GCD), which was then owned solely by the government, to the Great Consolidated Diamonds Ghana Ltd (GCDGL), which is associated with Joseph Siaw Agyepong of the Jospong Group of Companies.

The government of the time entered into an asset sale and purchase agreement with GCDGL and as part of the terms of the said contract, the assets of GCD were sold to GCDGL for $17 million upon certain terms and conditions.

However, as at December 5 2011, GCDGL had made only part payment of $2.7m, according to the sale contract executed by the parties.

As of November 2018, GCDGL owed GRIDCo, the bulk power distributor, more than GHC5m ($1m) in unpaid electricity bills. Its failure to settle the debt led to the disconnection of power to the entire company and surrounding communities.

 

*A copy of the letter signed by the Minister of Lands and Natural Resources, Kwaku Asomah-Cheremeh, abrogating the contract between the government and GCDCL