Mining firms ready for local procurement

The Ghana Mining Buyers and Sellers Forum has ended with a call on miners to implement local content procurement strategy so as to increase employment and wealth-creation by local companies, and help grow the economy. “The multiplier effect of this growth on the country’s economy will be many times this incremental increase in direct expenditure,” speakers said. Available data gathered by Supply Managers from some of the mining firms indicate that the sector possibly increase spending on the local manufactured products in the long-term by 66%; from around US$120million per annum to US$200million. This does not include any contribution from new mines or planned expansions to existing mines, or export opportunities within the sub-region. “By working closely in partnership with mining companies as an industry, we will help to shape the government agenda for implementing local procurement frameworks that will achieve broader development objectives; be economically sustainable; and mitigate concerns relating to product quality and continuity of supply,” said Mr. George Brakoh, Regional Manager Local Contractor and Supplier Development at Newmont Ghana. He said: “Now the hard work begins! We will need to work together with our partners to develop a capacity building and import substitution programme that will allow us to meet our objectives.” The Buyers and Sellers Forum was aimed at creating a common platform to encourage mining operators to appreciate the local content procurement policy, help grow the local firms and create employment. It was also to educate the local firms on positioning themselves to take advantage of opportunities in the mining industry. An estimated 34 percent of annual mineral exports currently enjoyed by foreign firms and expatriates providing mining services in the country could pass to locals if they take steps to make themselves capable of providing these services. Estimates according to the Minerals Commission show that these services procured by the mining firms in 2008 alone came to US$680million, and they continue to go to foreigners because the locals have not positioned themselves to take advantage of these opportunities in the mining sector. The World Bank, the Ghana Chamber of Mines and some Civil Society Organisations (CSOs) have said that when mining companies buy more local goods and services than they are presently doing, the country will gain manifold the revenue it is now garnering in royalties from multinational miners. The World Bank revealed that raising the share of local procurement by mining companies will spread the benefits of mining more evenly across a country’s economy, creating jobs and stimulating the sustainable development of local enterprises. “Increasing local procurement by the Mining Industry in West Africa would spread the benefits of mining more evenly across a country’s economy, creating jobs and stimulating the sustainable development of local enterprises,” a new World Bank report has revealed. The WB said local procurement by mining companies could bring significant benefits to a wide range of stakeholders in resource-rich countries, due to the large scale of current and potential mining activity in West African countries. Mr. Daniel Owiredu, President of the Ghana Chamber of Mines, explained that stimulation of economic activity in local areas; attraction of additional investment in local economies; and knowledge and technology transfer are among some of the benefits expected to be derived from implementation of the local content strategy. He indicated that implementation of the local content procurement policy would strengthen trust with local communities by demonstrating a positive impact in local economy, contributing to resource assurance and minimising community dependency post-closure; and a leave lasting heritage independent of the company by building capacity within other sectors and diversifying the customer-base of localised suppliers. “Local content procurement policy will also position the local community to increase confidence in job-stability, leading to investment in the aspirations of employees, their families and their communities -- as well as improvements in local infrastructure, education and health through increasing local tax revenues.”