Expectedly, before the end of this year, Ghana will have new, improved legislation to support increased local content in its mining industry. Importantly, apart from promoting the use of locally manufactured – rather than primarily just locally sourced – mining inputs, the new law will introduce, for the first time, regulations that enforce local equity participation in the mining industry as well.
This is in line with legislation, passed in 2014, for Ghana’s upstream oil and gas industry which reserves at least five percent equity stake for indigenous firms in exploration and production activities. To be sure, local participation regulations in each of the two extractive industries do not quite mirror each other. Impending new mining industry local participation law will not make indigenous equity participation in exploration and the development and ownership of new mines compulsory. On the other hand, unlike with the oil and gas industry, some support services will be reserved completely for indigenous enterprises.
Finally, Ghana’s over a century old mining industry is catching up with the less than a decade old mining industry in these regards. This is crucial in that it will begin to eradicate the conventional wisdom – but untrue – that mining in this country is an enclave industry that only directly benefits the primary operators, who are all foreign anyway. Better late than never.
Now the mining industry is learning from the upstream oil and gas industry that local content and participation can give Ghanaians a sense of ownership which translates into goodwill from the general public, and can enable the economy to benefit from the veritable multiplier effects available from including local enterprise along the value chain.
But there is another crucial lesson that the mining industry can learn from the oil and gas industry too; that the foreign operators who are being required to comply with local content and participation regulations that they are still somewhat circumspect about, are best placed to empower local enterprise and indigenous investors to make them work.
Instructively, Tullow Oil and to a lesser extent Kosmos Energy have been at the forefront of efforts to empower local enterprise to take advantage of the opportunities created by local content legislation without compromising product and service quality. This has involved deliberate programmes to enhance the technical and managerial capacities of local suppliers and support service providers, as well as efforts to help local enterprises that have been brought into the value chain, to secure access to the requisite financing sources.
While we commend the Ghana Chamber of Mines for its efforts to support local content efforts by publicizing opportunities arising – indeed the Chamber kick-started local content initiatives itself even before government enacted legislation to back them up – we now call on it and its members to go another step forward like the international oil companies operating in Ghana are doing, in taking deliberate steps to empower their indigenous suppliers and service providers to do so with international standards of quality.
This is working well for the oil and gas industry, ensuring the success of the local content regulations. We believe with the right push from the international mining companies that must compulsorily now use indigenous suppliers and service providers, it can be just as successful – or even more so – in the mining industry too.