‘Gov’t urged to resolve conflicting interests in extractive sector

Government must take prudent steps to resolve conflicting interests within the extractive sector as they may pose a major challenge to the promotion of local content in employment and procurement in the country, Benjamin Aryee, Chief Executive Officer of the Minerals Commission has said.

“A major challenge to the promotion of local content in employment and procurement is the need to resolve conflicts of interest that may occur within and/or between government and operators.

“Governments play many roles, as policymakers and regulators in both short- and long-term periods and this has the tendency of resulting in conflicting interest with the operators,” said Mr. Aryee at a seminar organised by the Ghana Chamber of Mines that brought together experts from academia, policymakers, stakeholders and industry players from the oil, gas and mining sectors.

Speaking on the topic ‘Increasing Local Content In Resource Development: A Key To Sustainable Development’, he explained that local suppliers in the country are faced with key challenges such as limited capacity to access and take advantage of information on existing and prospective market opportunities.

Concerns have been raised about some critical issues that have revealed grey areas in the local content policy for the emerging oil and gas industry.

B&FT has gathered that the concluded draft local content policy, which is to be a model for other sectors including the minerals and mining sector, is expected to be passed into law by Parliament soon and will provide for an initial 50 percent participation by Ghanaians - in terms of staffing companies servicing the sector as well as in the delivery of goods and services.
The extent of local participation is subsequently expected to increase to well over 80 percent within a decade.

“There is a general absence of demonstrated capacity due to poor quality control assurance as well as well structured corporate entities based on integrity and good corporate governance, which is required to pool resources for larger ventures.”

Aryee observed that the country’s mining sector has made modest contributions to the development of the economy at large, but it can and should take up the challenge to catalyse broader-based sustainable development through optimal use of local content strategy.

“It would require enhancing the engagement between government, industry and other stakeholders to implement strategies developed to achieve broad-based local content to benefit the citizens.

Estimates according to the Minerals Commission show that services procured by the mining firms in 2008 alone came to US$680 million, and they continue to go to foreigners because the locals have not positioned themselves to take advantage of these opportunities in the sector.

An estimated total of US$10 billion has been invested in the mineral and mining sector from 1980 to 2009, which is the leading export sector. In 1991 the sector became the single-largest contributor to total merchandise exports, except in 2004 when it was overtaken by the cocoa sector.

Mining however became the leader again from 2005 and has since provided an average of about 42 percent to total merchandise exports.

The major minerals currently being mined in commercial quantities in Ghana include gold, diamond, bauxite and manganese.

More than 24,000 people are employed by the large-scale sector, comprising eight companies producing gold and one each producing bauxite and manganese.