Minerals Commission tackling drop in mining sector local content
The Minerals Commission has indicated its intended decision to serve letters of caution to individual mining companies on the level of compliance regarding the continuous drop in the purchase of mining inputs listed in the procurements list from local manufacturers.
This follows an assessment of reports submitted to the Commission by the mining companies which depicts drops – some marginal but some huge – since 2014 regarding items sourced locally as against what the Commission calls true local procurements.
Local procurements, as officially categorized, include both items that are actually manufactured in the country together and what is being supplied to mining companies by local importers. On the other hand, true local procurements are the ones supplied by local manufacturers exclusively and does not include imports supplied to the mining companies by local enterprises. Instructively the Commission insists that mining companies do well in terms of officially defined local procurement, but falter in the true local procurement.
Currently, there are 29 items on the local procurement list since its implementation in 2014. In effect, once the Commission approves the strategic plans on commitment to local procurement submitted by mining companies, they are mandated to submit semi -annual and annual reports on the implementation of their plans as stipulated in the Minerals and Mining Law Act 703, 2016.
With respect to the plans companies have submitted, the outcome is at par with their commitments. In 2018 for instance, the total procurement amounted to US$426.455 million. But out of this figure, the value of true local procurement was US$253 million, representing just 59 percent commitment level.
In 2017 and 2016, the total products locally procured by mining companies amounted to over US$395 million in each year. However, true local procurement values were at US$250 million and US$206 million respectively. These represent 63 percent and 53 percent similarly in both years regarding compliance level.
This situation implies that mining companies in the country prefer sourcing their mining inputs from local importers rather than local manufacturers.
Mining companies are mandated to source locally the various products listed under the procurements list. They range from grinding media, electrical cables, chain link fencing, cement, explosives among others.
The major areas in which the Minerals Commission expressed dismay were the purchase of chain link fencing, grinding media and haulage services. In percentage terms, chain link fencing recorded just 2.27 percent true compliance in 2018, from 57 percent in 2017 indicating that with regards to certain products the situation is worsening.
Speaking with the Goldstreet Business, Head of Policy Planning at the Minerals Commission, Collins Anim-Sackey noted that firm actions are urgently required to curtail the practice.
“I don’t need someone to tell me commitment has gone down. I don’t need anyone to tell us that people are taking things for granted and that we need to take firm decisions on these things… Someone is sleeping, of course not at my end”, he asserted.
In response, mining companies have raised certain issues concerning their inability to source items from local manufacturers. Such issues raised include quality of products, safety issues and environmental factors.
The Commission has indicated that it is engaging local manufacturers to address the concerns raised.
“We believe that we are not there yet, but we hope to get to a point where we will be able to do 100 percent true local content”, Mr. Anim-Sackey said.