Ghanaian Mining: A Model Support Sector

Ghana’s service industry takes a leading role in West African mining.

Amelia Salutz

Ghana-BLOG
ACCRA, GHANA – Given Ghana’s head-start on mining development in the region, its service sector is poised to grow along with the West African mining boom. The government is working to increase local capacity for mining services to expand their potential beyond its borders by improving the implementation of local content and adding local procurement requirements.

“Ghana is the base that services mining across West Africa and we are looking to expand that coverage to the entire continent,” said Aryee of the Minerals Commission.

For local services suppliers to compete with international players and grow regionally, the Ghanaian market has worked to stay at the forefront of industry practices and adapt to new mining trends.

“Ghana has been mined for well over a century, so there is a lot of skilled labour and expertise here, yet of all the years of mining in Ghana, there has only been about 20 years that we have had open-cut mining. It became a job for expatriates who had the know-how and technology. Local content companies have had to face this challenge from big, international players,” said Henry Ayisi Tandoh, the late general manager of Rocksure International, a Ghana-based West African mining services provider. “Now that dynamic is changing and there is a paradigm shift as the system is turning towards local content to give more opportunities for capacity building and to ensure that the wealth stays in the country.”

Local mining service providers like Christel Engineering & Mining Services (CEMS), which provides engineering services and equipment rental to the mining industry, are able to benefit from tax breaks aimed at the industry. “As registered members of the Minerals Commission, companies are exempt from certain taxes and are able to receive 50% of their payments due in US dollars to facilitate the purchase of equipment from abroad. This is extremely helpful as we have to import most of our equipment and the costs add up,” said Edmund Christopher Amoah, founder of CEMS.

For wholly-owned Ghanaian companies, these fiscal incentives provide them with the capacity to support large mining houses. Particularly in the current downturn, this is crucial for equipment providers who have seen an uptake in equipment leasing. “Companies are hesitant to invest in their own equipment as it adds drastically to their expenses. Leasing equipment from providers such as CEMS provides a viable alternative and one that has become increasingly competitive over the past few years,” said Amoah.

For more established providers to the sector, like Atlas Copco and Komatsu-dealer Panfrican Group, they recognize that Ghana’s mining market is crowded and constrained and are looking to add in new products and services. “Ghana has a long mining history and features some of the bigger mining houses. These majors are able to consolidate services and are aiming to keep as much as possible in-house right now,” said George Apostolopoulos, general manager of Atlas Copco Ghana.

“The fall in gold price is affecting the whole mining industry. There are a lot of companies where there have been layoffs. We encourage our people to work a bit smarter; we are placing more focus on small construction companies and also on different operations like hoses to get additional work in,” added Jakes Luus, regional service manager for West Africa at Panafrican Group.

This strong base of technical expertise and growing market of service providers in Ghana have helped to maintain the sector’s strength during the downturn. Exploration interest in the country has waned, particularly as greenfields in frontier markets of West Africa grow more competitive, yet Ghana remains an attractive mining investment destination due its stability and relative infrastructure advantage. Going forward, the industry has a significant role to play in the development of West African mining.

“By establishing benchmarks in exploration and mining practices and leveraging human and knowledge capital, Ghana’s industry is essentially developing the playbook for best practices. By doing so, Ghana can support the growth of the regional mining sector through technology transfer and sharing of ideas and knowledge,” said Abudulai of CME. “Another role for Ghana is to act as a fulcrum for partnerships among the region’s nations and companies. Encouraging a more regional approach would make it easy for companies to do business across borders and to harness the true output potential of the sub-region.”

This article was written as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Official Mining in Africa Country Investment Guide, will be launched next February 2014, as the only official publication providing country-specific information at Africa’s top mining event, the 2014 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.

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