Miners’ local procurement review to be completed by Dec.

The Minerals Commission says the review of mining companies’localisation plans will be completed by December 2015 to increase the set of items for local procurement from the current level of eight to 18, and provide opportunities for local suppliers to become involved in the mining supply chain.

The review plan, which is being undertaken jointly with the Minerals Commission, Customs Division of the Ghana Revenue Authority and the Chamber of Mines, and in line with Section 50 and 05 of Act 703 and Regulations 2173, is aimed at identifying additional mining inputs that should be excluded from exemptions. 

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

Dr. Toni Aubynn, Chief Executive Officer of the Commission, speaking on the topic ‘Governance as it relates to Local Content in the Mining Sector’ explained that eight items -- namely lime, grinding media, HDPE and PVC pipes, cement and cement products, tyre-retreading, general and special lubricants, explosives and caustic soda -- are likely to increase to 18 after the review by December.

“On procurement of goods, the Mining List essentially determines the items for import duty exemption and is currently due for review. The goal is to complete the review by December 2015 and to identify additional mining inputs that should be excluded from exemptions. 

“The idea is to increase the set of items for local procurement from the current level of 8 to 18; and as such, increase the opportunities for local suppliers to become involved in the mining supply chain. The review will be undertaken jointly with the Minerals Commission, Customs Division of the Ghana Revenue Authority and the Chamber of Mines,” he said.

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 stated.

It was further reduced to the current eight after assessing the capacities of local firms and the availability of materials to meet the demand of 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 the time of implementing LI 2173; gradually we will be going there,” he reiterated.

He explained that some of the country’s mining policies on local content run counter to the World Trade Ogranisation’s policies. 

WTO had not expressed any disquiet, possibly because of the importance of these local content items and would not like to pressure them, he said.

Dr. Aubynn indicated that governments in the sub-region need to develop strategies to transform ECOWAS into a ‘big country to make it a strong bloc and give it that bargaining power for development.

“The ECOWAS region has to be treated as one country, and then identify and support the comparative advantage of each member-country in the production and supply of some inputs. 

“Although this idea needs to be carefully researched, the clear advantage is the vast market that opens up to businesses and support for growth of the regional extractive sector. Ghana can lead such an initiative and take advantage of its long experience of skills and capacity development -- in gold mining in particular --to capture that market segment.”

He suggested: “Ghana, being a leader in terms of mining in ECOWAS, 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, which we think might give an added advantage for our market.”

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

He emphasised 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 clearly state its objective -- which should go beyond providing opportunities for Ghanaians and, among others, the capacity of local companies to meet demands.

 “An adoption of proper local content policy obviously holds the prospect of improving the image of mining companies. Needless to say, it also creates the opportunity for job-creation and attracting investment with the understanding that we have well-prepared work-force,” Dr. Aubynn remarked.