The handling of theAdamus Resources mining lease could discourage investment in Ghana’s mining sector if investors perceive that regulatory authorities can disregard established procedures, lawyerKobby Amoah has warned.

Amoah said the concern was particularly significant because Adamus is among a relatively small number of locally owned companies operating in Ghana’s large-scale mining sector.

“We need to protect our indigenous entities, our indigenous companies in a sector like mining and oil and gas, where most of our resources are taken up by foreign entities,” he said on the Asaase Breakfast Show on Wednesday (12 August).

He argued that locally owned mining companies have an important role in retaining profits and investment within Ghana and should therefore not be subjected to arbitrary regulatory action.

Amoah said the government had the right to regulate mining operations and sanction breaches, but argued that the law required the authorities to follow due process before imposing the most serious sanctions.

He warned that the perceived failure to follow those procedures could have consequences beyond the Adamus case.

“Once the authorization is seen at the jurisdiction that does not follow its own laws, that does not follow its own procedure, it becomes difficult for any investor to come into the country,” he said.

According to Amoah, investors conduct risk assessments before committing capital to jurisdictions, including assessments of regulatory and legal certainty.

He said uncertainty over whether established procedures would be followed could therefore affect Ghana’s ability to attract investment into capital-intensive industries such as mining.

“Mining is a serious business. There’s a lot of investment that has to be made,” he said.

Amoah acknowledged that Adamus’s local ownership does not, by itself, give the company a legal exemption from regulatory requirements.

“Legally, no,” he said when asked whether the company’s status as a Ghanaian-owned entity had a direct bearing on the minister’s decision.

However, he argued that mining policy should take account of Ghana’s broader economic interests and the government’s stated objective of increasing local participation in the exploitation of the country’s mineral resources.

He said the ability of indigenous companies to raise the capital required for large-scale mining made it particularly important to avoid regulatory decisions that could discourage local participation.

“Raising the needed capital to involve in such ventures is extremely difficult,” Amoah said.

He argued that if an indigenous company had successfully secured the financial and technical capacity to operate a large-scale mining concession, regulatory authorities should ensure that any sanctions imposed on it strictly comply with the law.

Amoah also rejected the suggestion that the alleged breaches cited by the government automatically justified revocation.

He said the government had other legal mechanisms available to pursue issues such as unpaid taxes, royalties or other financial obligations.

“Many allegations are not enough,” he said, insisting that allegations must be tested through the procedures established by law.

The government has cited alleged unauthorised assignment of mineral rights, mining outside approved areas, environmental and forestry violations and outstanding financial obligations in its action against Adamus.

Amoah said the allegations, if established, could warrant regulatory action, but argued that the company must first be given a fair opportunity to respond and remedy breaches where the law allows.

He said the handling of the case had therefore become a broader test of Ghana’s regulatory credibility and its commitment to encouraging indigenous participation in the mining industry.