Monday, June 4, 2012

Strengthen mining firms to ensure local content


Government needs to strengthen the capacity of local mining firms and assist in mobilising resources to explore and execute contracts to ensure active local participation in the mining sector, Mr. Ibrahim Mahama, Chief Executive Officer of Engineers and Planners (E&P), has said.

“Local content does not mean give locals the job and that is it. Local companies must be helped to mobilise the needed resources; and when given that advantage, there is no job that a local person cannot do.”

The mining sector, which is currently dominated by foreign companies, has the potential to unbolt significant socio-economic benefits, reduce poverty and grow the economy. However, this has not been the reality in the past in a sector dominated by foreign companies.

“The sector has not been as well-managed and regulated as it should be,” Mr. Mike Hammah, Minister for Lands and Natural Resources, admitted in a recent interview.

The protracted delay in the passage of the local content bill, currently before Parliament, has not helped matters. “The passage of the bill has taken too long. If government wants to ensure local content participation, it must do things quickly,” Mr. Mahama, who heads the only wholly-owned Ghanaian contract mining company, said.

Foreign mining firms seeking to own a mining concession or engage in an exploration activity in the country oftentimes have the financial support of their governments or a financial institution. The situation is different locally where local businesses, in a capital intensive industry, are expected to solely raise capital to undertake exploration activities or to acquire the machinery to undertake contract mining.

“We need to build the capacity of local firms to ensure they have an edge. Foreign companies who apply for concessions here in Ghana have the backing and support of their governments, banks or other financiers. Government should listen to businessmen, not technocrats; people who are walking the walk and talking the talk.” 

E&P, which undertakes contract mining services, equipment hiring, and construction of bridges and dams, is currently engaged by Golden Star Resources Limited to mine its Mpoho concession in the Western Region.
The company operates not only in the Ghanaian mining industry but is currently undertaking contract mining across the West African sub-region for major private mining firms. It has a presence in Liberia, where it is engaged in the mining of iron ore for the world’s largest steel and mining company, ArcelorMittal, at its Yekepa Mine concession. 

It is also in Sierra Leone and Senegal and has been engaged to start contract mining in the DR Congo and Congo Brazzaville.  

 The company has over the years completed key contracts for land-clearing and construction of access roads on mine sites for various mining companies including Bonte Goldmines and Sankara Goldfields.
It has also undertaken earthmoving and haulage of ore materials for mining contractors PW (Ghana) Ltd, Tarkwa Goldfields Ltd, Abosso Goldfields Ltd, and Bogoso Goldfields Ltd.

The company has 100% local staffing at all its mines in Ghana and is set to replicate that module in its operations in other African states. It recruits students from the University of Mines and Technology (UMAT), trains, and employs them: it does not retrench its workers after the closure of a mine. 

The mining industry accounts for about 7% of the country’s GDP. Mineral exports account for 42% of total merchandise exports. Export revenue from the mineral sector in 2011 amounted to about US$5billion. The sector also contributed about 17.5% of the state’s total corporate tax receipts and 28.3% of government revenue.

Government in its 2012 budget statement announced that the corporate tax rate for miners is being increased from the current 25% to 35%, while a windfall profit tax of 10% will be imposed. The new tax regime has generated a lot of debate among players in the industry, but the government has further moved to renegotiate mining contracts.

Source:BFT

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