Economy | Mining

Mining: Ghana to increase local content items to 18

After a century of mining operations in Ghana, only eight items are binding on companies to use as local content.

The trend is however set to change as the Minerals Commission and other stakeholders review these items, Chief Executive of the Commission has revealed.

Dr. Tony Aubynn, speaking on the topic “Governance as it relates to Local Content in the Mining Sector”, hinted that these items are likely to increase to 18 after the review by December.

The eight items are: lime, grinding media, HDPE and PVC pipes, cement and cement products, tyre-retreading, general and special lubricants, explosives and caustic soda.

“We are still thinking, it is not a decision yet, that we might go to the original 18 which the Commission envisaged at time implementing the LI 2173; gradually we will be going them by [December]”, he said.

He was presenting a study paper at the third Public-Private Sector Dialogue on Mining Governance in Ghana series organized by the African Center for Economic Transformation (ACET), a non for profit policy research and advisory institution based in Ghana, and sponsored by the Australian Government.

Dr. Aubynn underscored that even before the passage of LI 2173 in 2012, stakeholders in mining had anticipated the need for local content.

Although about 27 items were settled on, after intensive analyses by a world acclaimed institution, the number was whittled down to 18 under the Suppliers Development Programme, he recalled. It was further reduced to the current eight (8) after assessing the capacities of local firms and the availability of materials to meet the demand of the mining companies.

These eight items however constitute 54-60% of all items purchased by mining companies, Dr. Aubynn remarked.

“We are still thinking, it is not a decision yet, that we might go to the original 18 which the Commission envisaged at time implementing the LI 2173; gradually we will be going there”, he reiterated.

The Mineral Commission’s Chief Executive, even though pushed for more local content in the mining sector, he pointed out that some of these policies on local content run counter to World Trade Ogranisation’s policies. WTO had not unruffled it feathers possibly because of the importance of these local content and would not like to pressure them, he surmised.

He commended Newmont Ghana for its commitment to local content. The company, he noted has an internal local content policy which ensures that firms in communities it operates are the first point of call when they need any supplies.

He however emphasized the need for any concrete document on local content to ensure clarity in terms of what local company means and what constitutes local procurement; likewise, the policy must not only signal aspirations, but must clearly states its objective which should go beyond providing opportunities for Ghanaians, and among others the capacity of local companies to meet demands.

He stated, “An adoption of proper local content policy obviously holds the prospect of improving the image of mining companies. Needless to say that it also create the opportunity for job creation, and attract investment with the understanding that we have well prepared workforce.”

Dr. Tony Aubynn further appealed to governments in the sub-region to transform ECOWAS into what he termed a “big country” to make it a strong bloc and give it that bargaining power for development.

Ghana being a leader in terms of mining in ECOWAS, he suggested, could concentrate on using its expertise to mine within the region whilst Nigeria being an oil powerhouse should also concentrate on oil and gas, “and other countries might see some spots to take of; but then the whole ECOWAS sub region becomes a market for the locals, that we think might give an added advantage for our market”.

The Australian High Commission’s First Secretary Development Cooperation, Ms Zabeta Moutafis, who opened the dialogue remarked: “The purpose of this dialogue is to bring together key stakeholders and policymakers to discuss and build consensus around the complex issues concerning local content in Ghana. The extractives sector has a key role to play in transforming and developing Ghana into the future.”

The presentation of the paper was followed by lively discussions moderated by Mr. Benjamin Aryee, Mining Advisor at the Ministry of Land and Natural Resources. Discussions highlighted both the challenges and opportunities presented by Ghana’s current framework on local content, with case studies presenting examples of best practices in the region and globally. The discussion looked at what tangible opportunities could be provided for local communities and businesses to buy into the mining value chain.