Continental forum asks African countries to retain value chain in mine

06Dec 2017
The Guardian Reporter
The Guardian
Continental forum asks African countries to retain value chain in mine

THE idea of taking advantage of the full value chain in the mining sector has taken centre stage at an ongoing continental forum on En- hancing Value Addition in the Ex- tractive Sector.

Ghana’s Vice President Dr Maha- mudu Bawumia

Delegates at the conference which started here in Accra, Ghana on Monday said the majority of mineral rich African countries are not only earning the minimum from their resources through the export of unprocessed minerals but are also limiting the employment benefits, wealth creation and leaving them- selves vulnerable to fluctuations of the global commodity markets.

Opening the two day conference, Ghana’s Vice President Dr Maha- mudu Bawumia said that Africa has 30 percent of the world’s mineral resources, 12 percent of oil reserves and 42 percent of gold reserves and yet human poverty is prevalent on the continent.

“The paradigm that we have been pursuing since independence needs a change. We have gone on the path of natural resources extraction with little benefits. Therefore, a new paradigm will require change from Africa’s export of primary commodi- ties, Dr Bawumia said. He noted this could be achieved through local content maximisation.

The Head of Research and Policy at Uongozi Institute, Dennis Rweye- mamu said Africa has an abundance of extractive resources but lacks do- mestic mineral beneficiation, which is the processing of mined output to a product of higher value.

“Most of the minerals are extract- ed and exported in their raw state. Minerals are extracted on the con- tinent but processing is done else- where.

Majority of the African rich min- eral countries are not only earning the minimum from their resources through the exporting of unpro- cessed ore but are also limiting the employment benefits,” said Rwey- emamu.

He told delegates that in many of the African countries, extractives are enclave sectors separated from other economic activities, adding that they are inherently capital in- tensive and provide limited oppor- tunities to host country manufactur- ers and suppliers and labourers.

“This has meant that the extrac- tive sectors have failed to be the source of economic growth through job creation, demand for local goods and services as well as transfer of knowledge and technology,” the Uongozi Institute official noted.

Rweyemamu further pointed out that African countries have relied on revenue in form of royalties, profit shares, corporate income tax and dividends from state held equity in the projects to support develop- ment projects.

But there is now a growing reali- zation, he said, that far greater and more sustainable benefits can be obtained from every gram of ounce mined through development of val- ue addition chains.

Tanzania’s Commissioner of min- erals, Benjamin Mchwampaka said the country is keen on value addition and that given the recent changes in the mining laws, the government is working towards stopping export of raw minerals.

But he said the process is gradual which necessitates inviting of part- ners with technical and financial capacity with the idea of putting up

one or two medium sized smelters. “Of course we have to take advan- tage of economies of scale, so we have to find ways of encouraging countries in the region to come to- gether to put up projects of this nature,” Mchwampaka noted.Wits University Adjunct Visiting

Professor Dr Paul Jourdan said that in some cases, African countries don’t have an idea what quantity of minerals they have. “So even in giv- ing out mining licences, a country may not get a decent deal because of lack of data,” Prof Jourdan said.

Uongozi Institute has organized the conference in collaboration with the Office of the Vice President of Ghana.

Top Stories