DEVELOPMENT AND IMPEMENTATION OF POLICY FOR LOCAL CONTENT IN GHANA

Transcription

1 MINING & SUSTAINABLE DEVELOPMENT FORUM (25-26 th September, 2013, Accra, Ghana) DEVELOPMENT AND IMPEMENTATION OF POLICY FOR LOCAL CONTENT IN GHANA Presented by: Richard Kofi Afenu Manager, Sectoral Policy & Planning Minerals Commission, Accra, Ghana.

2 PRESENTATION OUTLINE Development of the Policies Definitions The legal Framework Implementation Framework Mining Companies Exploration Mine Support Service Companies Concerns and Challenges CONCLUSIONS and WAY FORWARD

3 Definitions of Local Content World Bank definition for domestic preference qualification is based on the percentage of local ownership of the firm. The African Development Bank (AfDB) defines local firms based on place of registration, a majority of board members being nationals, and level of shares held by nationals. The Trinidad & Tobago Local Content and Local Participation Policy aims to maximize the level of participation of its people, enterprises, technology, and capital through the development and increasing use of locally owned businesses, local financing, and human capabilities in the energy sector; defines local content and participation in terms of ownership, control and financing by the citizens of Trinidad and Tobago. 1 It aims to support: Local participation: maximizing the depth and breadth of local ownership, control, and financing, in order to increase local value capture from all parts of the value chain created from the resource, including those activities in which Trinidad and Tobago people, businesses, and capital are not currently engaged, both within and outside of Trinidad and Tobago Local content: maximizing the level of usage of local goods and services, people, businesses, and financing

4 Definitions of Local Content (adapted from world bank) in terms of value addition

5 Definitions of Local Content (adapted from world bank) in terms of local participation

6 Definitions of Local Content (adapted from world bank) in terms of Spend Recognition Levels

7 Development of the Policies Draft Minerals & Mining Policy, African Mining Vision and ECOWAS Mineral Development Policy Inadequate local value addition to minerals produced; Lack of local capital in the mining sector; Developing, attracting and retaining local human resource in the sector; Integrating the sector with the rest of the economy (ensuring backward, forward and side-stream linkages) Developing local industrial capacity for the mineral industry; Contributing to the economic empowerment of Ghanaians by generating opportunities for local entrepreneurship, increasing demand for local goods and services and continuously creating employment opportunities for Ghanaians Artisanal and Small Scale Mining; Promoting the transformation of mining capital into other forms of development capital; Contributing to the economic empowerment of Ghanaians by generating opportunities for local entrepreneurship, increasing demand for local goods and services and continuously creating employment opportunities for Ghanaians;

8 The legal Framework Minerals and Mining Act, 2006 (Act 703) Section 11 (Application for mineral rights) An application for a mineral right shall be accompanied with..., proposals with respect to the employment and training in the mining industry of Ghanaians. Section 50 (Recruitment and training of Ghanaians) (1)...localization policy,... programme for the recruitment and training of Ghanaian personnel as prescribed.

9 The legal Framework Section 105 (Preference for local products and employment of Ghanaians) (1) The holder of a mineral right shall in the conduct of mineral operations, and in the purchase, construction and installation of facilities, give preference to- materials and products made in Ghana, service agencies located in the country and owned by (i) citizens, (ii) companies and partnerships registered in Ghana (iii) public corporations (2) give preference in employment to citizens to the maximum extent possible and consistent with safety, efficiency and economy.

10 Implementation Framework EXPATRIATE QUOTA

11 Implementation Framework Proposed Framework based on Categorization of Staff into: Unskilled Labour Skilled Labour (trades men/artisans, after specified apprenticeship) Clerical Staff Mining Companies Exploration Mine Support Service Companies Technical & Supervisory Staff (after tertiary education) Management Staff

12 Implementation Framework Mining Companies Ghanaian Proportions: Mining Category Commence ment After 2 Years After 4 Years After 6 years Unskilled 100% 100% 100% 100% Labour Skilled Labour 90% 100% 100% 100% Clerical 100% 100% 100% 100% Technical, Supervisory, & Management * 85% 90% 95% 95% Minimum of 3 Expartriates Allowable * After 2 years, special cases where skilled labour is critical; this could be provided for within this limit

13 Ghanaian Proportions: EXPLORATION Category Commence ment After 2 Years After 4 Years After 6 years Unskilled 100% 100% 100% 100% Labour Skilled 90% 100% 100% 100% Labour Clerical 100% 100% 100% 100% Technical & 95% 95% 100% 100% Supervisory Management * Up to 2 Up to 2 Up to 2 Up to 2 No. of Expats After 4 years, special cases where skilled labour is critical; this could be provided for within this limit Implementation Framework Exploration Companies

14 Implementation Framework General Transitional Arrangements: Existing mining operations have up to 2 years to restructure General Special Cases: Extra Expats. will be considered under justifiable instances, e.g.: Specialized Technology Significant comparable Ghanaian Expats Where training (being done but) would require longer than transition period 5 Concessions for Exploration Co s 2 Mining Operations (2 for Head Office) Regional Offices to be justified

15 Implementation Framework Special Cases (contd): Consideration of any such application/request would entail: Review/audit of existing Expat positions Review of proposed additions Recommendation for Minister s approval Discovery of a company s flouting of provisions, without prior approval Sanction: payment of one (1) year salary of the expatriate involved for each month, or part thereof, worked to Government.

16 Implementation Framework GOODS AND SERVICES

17 Implementation Framework Service Companies A wide variety of areas have been identified 1. Mining contractors (large scale) 2. Support to small scale miners 3. Assay laboratories 4. Exploratory drilling 5. Fabrication of equipment & manufacture of consumables 6. Supply of equipment & technical services 7. Haulage 8. Mining Consultancy 9. Mineral exploration services 10. Supply of explosives & chemicals 11. Manufacturing of explosives/chemicals 12. Engineering construction & mine infrastructure development. 13. Buying and export of gold

18 Implementation Framework Service Companies Guidelines have been developed to cover the various activities offered under mine support services companies: Unskilled labour, skilled labour & clerical categories reserved for Ghanaians, except for the Special Cases Considerations may be given to expatriate staff to work in companies Regional Offices Company must have other active operations including offices and staff in the sub-region to get recognition for regional office Expatriates engaged for day to day activities in another sub-regional country - Will not be recommended for permit

19 Implementation Framework Service Companies Companies to submit localisation & training programme within 4 months of coming into force of Regulations or Registration (whichever is earlier), for consideration Companies to submit report on training done during period of the permit and the implementation of the training plan for the Ghanaian counterparts. - Recommendation for grant and renewal of visas, work/residence permits contingent upon these

20 Implementation Framework Service Companies Guidelines recognise Management/Investors in the mine support service. (i) Certain number of expatriates are recommended for each Company (ii) A company which provides more than one service can benefit only once from (i) and not in multiples

21 Implementation Framework OWNERSHIP IN MINING RIGHTS

22 Implementation Framework Government has 10% free carried interest in all mining operations (section 43) Government has right to acquire up to further participation as may be agreed with the holder of the mineral right. Are these provisions adequate?? Can Local capital be employed more in mining which can lead to increased participation??

23 Concerns and Challenges Skilled Ghanaians accepting expatriate positions outside Ghana (Disparity in GH/Expats Conditions of Service) Lack of confidence on part of some personalities of mines in the ability of Ghanaian staff to deliver in the absence of expatriate staff. Non-availability of some products used by mines locally Inadequate support for local supplier development and quality suppliers Narrow range of products currently within manufacturing scope. Need to broaden the scope to encourage local production of high value-added products Monopoly supplier in-country supplying uncompetitive priced products

24 Conclusions and Way Forward Limited local production capacity of the products which is an opportunity for LOCAL COMPANIES to go into the production of these products Health, Safety and Environment concerns. Local Companies need to comply with internationally acceptable (SHE) standards Energy supply and Quality issues. Inadequate and Opportunity for Local or Other Investors Whether local companies could produce to required specifications and standards. training and technology transfer to achieve these Lack of intellectual capital and Limited R&D in the country..conscious Government policy to achieve these Need to optimize local content in the mining industry; integrating mining industry fully with the rest of the national economy.

25