Accra, Ghana, October 22, 2019//-Stakeholders in Ghana’s mining industry have discussed issues impeding the smooth implementation of the country’s local content programme in the mining industry.
The stakeholders including manufacturers, suppliers, Minerals Commissions, and senior government officials at a day’s workshop organized by the Ghana Chamber of Mines noted that exchange fluctuation, high interest rates charge by banks, delay payments and penchant for foreign goods are affecting the implementation.
In his welcome address, the Chief Executive Officer of the Ghana Chamber of Mines, Sulemanu Koney said that; “the mining industry is continually confronted with unique challenges, such as high cost of production, fluctuations in the gold price, environmental and security challenges, amongst others”.
Nonetheless, regardless of the aforementioned challenges, the sector continues to be a key enabler of industrialization and broad-based economic development in Ghana”.
For instance, in 2018, the sector contributed 9.8% to GDP compared to 7.3% in 2017, making it the fourth largest economic sector by value.
Mr Koney added that proceeds from the export of minerals also accounted for 39% of gross merchandize exports, making it the foremost source of export earnings for the economy.
Producing member companies’ share of mineral revenue returned to the country increased from 70% in 2017 to 75% in 2018.
“Producing member companies also continue to employ more and more Ghanaians to ease the unemployment situation in the country”.
Various initiatives
Over and above the contributions made by the mining industry, the Chamber and its member companies have taken various initiatives to source inputs and services from the local economy.
Recently one of Chamber’s member companies–Gold Fields Ghana commissioned a 33km road in Damang as part of its corporate social responsibility activities.
One of the key highlights of this voluntary social intervention was that, the US$27M contract was awarded to four local Ghanaian companies, he noted.
Some local suppliers have also benefited from the local content policy in terms of fuel supply to member companies such as Newmont, Anglo, Gold Fields, Asanko, Chirano, and Ghana Manganese.
These include Zen Petroleum, GOIL, Champion Oil, and Gaso Petroleum. The industry’s confidence in local content has been demonstrated even beyond its core business of mining.
Mr Koney emphasized that; “the overriding rationale for these initiatives, however, is principally business-driven. That is, to develop a locally integrated business network that will lower the cost of production and create opportunities to spawn other businesses to support national development”.
To do this, member companies of the Chamber proactively engage stakeholders to help build the management and technical capacity of local suppliers in the mining supply chain.
In a speech read for the Minster of Lands and Natural Resources, Kwaku Asomah-Cheremeh, said local content and value addition had become integral part of the strategies that resource-rich countries had adopted to increase the benefits from resource extraction and stimulate broad base growth beyond securing optimal rents, royalties, taxes, shares and other revenues.
“Indeed, the goal of the local content strategy is to promote linkages with other sectors of the economy through local employment opportunities, local manufacturing of inputs, in-country spending on local procurement of goods and services, technology and skills transfer on local participation through equity and management”.
He said that the government recognizes that for the mining sector to improve its contribution to broad base development it must be better integrated into the national and event regional economic fabric through linkages as stipulated in the African Mining Vision.
A Deputy Minister of Energy, Dr Mohammed Amin Adam who was the special guest appealed to the mining companies to use their innovative technologies to turn agric and health around in the local communities in which they operate.
According to him, investing agric, health and education would go along way to improve the lives of the people in the mining communities of the country.
BACKGROUND
Among the several initiatives and activities undertaken was a Memorandum of Understanding signed among the Ghana Chamber of Mines, Minerals Commission and the International Finance Corporation in August 2011 to carry out a validation and gap analysis of opportunities for increasing local procurement from existing suppliers in the country.
Following the findings of the gap analysis, the National Supplier Development Program was designed in 2014. The objective of the project was to support efforts in strengthening the mining industry’s implementation of socially and environmentally responsible business operations, and to improve the economic situation of local businesses in Ghana.
It also sought to establish a collaborative sector-wide approach to sustainable mining in Ghana.
However, economic circumstances, namely a declining gold price and sharp increase in operating cost, as well as operational challenges of key member companies of the Chamber, necessitated a natural review of the initiative.
A decision was reached by both the Chamber and the Minerals Commission to foster local production, while ensuring that standards are not compromised- “to procure goods and services of Ghanaian origin to the maximum extent possible”.
This formed the basis of the promulgation of the Minerals and Mining General Regulations (LI 2173), the overarching legislation on local content and localization requirements.
In order to satisfy the law, the Chamber in concert with the Minerals Commission agreed that mining companies would work under the Chamber to collectively develop and support existing Ghanaian manufacturers.
The team also identified mining products which were imported, but had opportunities for realistic, achievable and competitive local manufacturing. It was agreed for this to be done in instances where robust business cases could be developed, based on consolidated demand within Ghana and the sub-region.
In February 2013 a Local Content Committee was established to deliver the joint Local Procurement Plan and Roadmap for the Chamber of Mines to submit to Minerals Commission.
The IFC-Time bridge report also focused on investigating commodities that could potentially raise manufacturing capacity and quality standards in Ghana, while at the same time enhancing import substitution.
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