Business Analyst - June 30

Thursday, June 30, 2022
Commission as the industry
regulator, to identify products
which can be supplied by local
enterprises.
Initially though, most of
the locally supplied inputs
were actually imported,
qualifying as locally sourced
only because they were
supplied by locally domiciled
enterprises. But having
recognized the situation, the
Chamber has over the past two
years spearheaded efforts to
increase local manufacturing
capacity. today, Ghana’s local
manufacturing industry has
more capacity to produce
mining inputs in-country than
any other nation on the
continent except South Africa
itself. Importantly, the fact
that these products are bought
by international mining
companies evidences their
world class quality.
Now, with the
commencement of the African
Continental Free trade
Agreement at the start of 2021,
Ghana’s mining inputs
industry has become
potentially more price
competitive than ever before
as a source of products supply
for the continent’s other
mining countries.
the situation is similar
with regards to professional
skills driven mining support
services such as geological
surveying and assaying.
Ghana’s longer experience
than its neighbours in solid
mineral mining, its bigger
levels of activity and its
recently introduced local
content regulations have
combined to make it the most
competent provider of such
services and its closer
geographical proximity and
exchange rate considerations
allow it to be price competitive
against its counterparts in the
western hemisphere which up
till now have been the primary
source of support services to
West Africa’s mining nations.
Add to all these
competitive advantages
similarities in business
cultures as well. Even though
some of this aspect of Ghana’s
competitiveness must remain
unsaid in public, the reality is
that the country’s mining
support service providers
would be more willing to play
by the unwritten rules of
business in Africa – such as
showing “appreciation” to
those who award them
contracts through financial
and other material “presents”
than their counterparts from
the western hemisphere.
the export of mining
industry inputs and services
will be increasingly important
to Ghana in financial terms
over the coming years as local
production levels and
consequent foreign exchange
revenues from the sale of gold
– which accounts for 95
percent of the country’s total
mining revenues – stagnates
and ultimately declines. Last
year’s 12.1 percent decline in
gold production to 4.023
million ounces, from 4.577
million ounces in 2019 was the
sharpest year on year
production fall since 2003.
While the decline was
underlined by the peculiar
circumstances resulting from
CoVId 19 and the effects of
Ghana’s ongoing efforts to curb
illegal artisanal mining, the
fall in Ghana’s
competitiveness as a
destination for gold
exploration, compared to its
sub regional neighbours, is
telling. In 2020 Ghana
attracted uS$84.4 million in
new investment towards
exploration for new gold
deposits, which was less than
the amounts invested in Cote
d’Ivoire, Burkina Faso and Mali
respectively; up to just two
years ago Ghana was the
recipient of the second largest
investment in gold exploration
in all of West Africa.
Inevitably, the shift away
from Ghana towards its
neighbours with respect to
exploration will translate into
a similar shift with regards to
actual gold production. this
makes it imperative for Ghana
to increase its foreign
exchange income from the
export of mining industry
inputs and technical services
to compensate for consequent
falls in gold export revenues.
Just as importantly,
making Ghana a mining
support services hub for West
Africa would accelerate the
process of mainstreaming the
mining industry as a whole to
the benefit of the country’s
wider economy. For the past
century Ghana’s mining sector
had been regarded as an
“Even as the GCM and
its members recognize
the potentials for
Ghana’s mining
support services
industry to become a
sub regional hub, and
the benefits to be
derived from
achieving that
position, it is acutely
aware of the
difficulties and
complexities that will
have to be overcome
first. This is indeed
why it has budgeted
so heavily towards
getting a viable,
practical road map
and is a hurry to begin
implementing it.
enclave industry and correctly
so too, since its linkages with
the rest of the economy were
minimal. Simply put, foreign
mining companies would
come to Ghana explore for gold
and upon finding some, would
build a mine to exploit it. the
gold would then be sold abroad
and the state’s share of the
revenues would be received.
Even employment was
minimal, except during the
mine construction period.
over the past decade or so
though, Ghana’s mining
industry, through the GCM has
been trying assiduously to
create linkages between it and
the rest of the economy and
local content regulations and
targets have been the key
strategy in this regard. the
effort to manufacture mining
inputs locally has significantly
expanded Ghana’s
manufacturing capacity, not
just through the demand the
mining industry creates, but
through deliberate support
initiatives to improve
production quality and
installed capacity.
A recent example of this is
the recent initiative from the
GCM towards the
standardization of electrical
cables used by the industry. In
supporting the introduction of
and adherence to acceptable
international quality
standards for made in Ghana
electrical cables used by the
country’s mining industry, the
GCM, in collaboration with the
Ghana Standards Authority
has ensured that local
electrical cables
manufacturers produce items
that are quality competitive
against those from even the
most renown western
hemisphere manufacturers. In
turn this has positioned them
to take advantage of
opportunities thrown up by
AfCFtA.
By making Ghana a mining
support services hub, the
industry would help
manufacturers of other
products used by the industry
to become internationally
quality and price competitive
too, thus positioning them to
take full advantage of AfCFtA
as well. For input
manufacturers that can
achieve this, huge sub regional
markets would be waiting –
the mining industry in all the
West African countries with
solid mineral endowment are
major buyers of the inputs
they need and their
willingness to patronize any
particular product serves as a
veritable endorsement of that
product, opening the doors
wide for patronage by all the
other industries in the
country.
All of this is still quite
some way off however. Even as
the GCM and its members
recognize the potentials for
Ghana’s mining support
services industry to become a
sub regional hub, and the
benefits to be derived from
achieving that position, it is
acutely aware of the
difficulties and complexities
that will have to be overcome
first. this is indeed why it has
budgeted so heavily towards
getting a viable, practical road
map and is a hurry to begin
implementing it.
For once though, Ghana’s
ambitions of becoming a
regional hub in a particular
type of activity is going beyond
the state’s wish list and is
being actively pursued by the
private sector companies that
stand to benefit directly from
the foreign exchange revenues
that would be generated.
Hopefully, this initiative by
the GCM and the way it is
going about it will serve as a
model for other sectors in
Ghana with sub regional hub
potentials, to emulate. If
indeed that happens, it will
have made Ghana’s mining
industry more than a
mainstream component of the
country’s economy; it would
have made it the trail blazer in
the effort to create a modern
export led industrialized
economy.