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Business News Mon, 14 Oct 2019

Large scale local production mining inputs being pursued

The Ghana Chamber of Mines has begun working with the Minerals Commission and the International Finance Corporation (IFC) – being sector regulator and equity financier for mining companies respectively – to identify key mining inputs that can be manufactured in Ghana and produce such inputs in large scale for the mining industry.

As part of ensuring local content efforts, the Chamber insists that its members source certain inputs locally – currently there are 19 such inputs on what it calls the Procurement List – but lots of such inputs even though they are supplied by local suppliers, are imported largely because even the ones manufactured in Ghana are not produced in sufficiently large scale quantities to meet industry demand. This measure leaves the mining companies with no option than to import production inputs. Since this is done through local suppliers, this meets local participation requirements but not actual local content.

Procurement opportunities in the mining industry abound. In effect, the Chamber’s preference is for local manufacturers to manufacture and supply inputs in the value chain of its members rather than importing and supplying them to the industry. Importantly, local manufacturing generates more value to the country through linkages with the mining industry than imports.

The mining companies themselves now adopt a policy of collectively placing orders for such inputs to lower their unit purchase costs based on economies of scale. At the same time, this strategy now presents bigger opportunities for potential local input producer since they would be assured of large orders from one source instead of having to go marketing their products from one mining company to the next, which increases their cost of sales.

Furthermore, the current framework would provide comfort for both debt and equity financiers of production facilities for such inputs since a market of well- managed, large cash flow companies is already ready and waiting.

The move by the Chamber and key mining stakeholders is expected to bring into practice both local participation and local content in the sector. For instance, raw materials and items used for production that can be manufactured in large scale locally, but which are currently being produced in relatively small quantities include but are not limited to steel board, grinding media balls among other items.

When finalized, the new is expected to drive the needed investment in the industry, decrease importation of mining raw materials into the country, among other benefits and contribute entirely to the mining value chain.

Instructively, when there is increasing avenue for local manufacturing of mining inputs, it opens the door for more local people to be employed which also translates to transfer of skills to locals.

In line with the Chamber’s efforts to leverage the mining industry to stimulate the economy, the proportion of mineral export revenue spent on imported consumables declined from 6 percent in 2017 to 5 percent in 2018.

Speaking with the Goldstreet Business during a working visit to the Newmont Goldcorp Akyem Mine in the Eastern Region, Director of External Relations and Communication of the Ghana Chamber of Mines, Ahmed Nantogmah said despite the move for local manufacturing, the Chamber will not compromise on quality of products produced.

“In improving local participation in the mining industry, what is equally critical is the quality [of products], their availability and price competitiveness”, he added.

Source: goldstreetbusiness.com