Global and local extractive industry

Enterprise around Mining

Containers at a mine in Zimbabwe

Enterprise around Mining (EAM) is a support facility which promotes the integration of the extractive industry into local economic cycles. In most developing countries which extract raw materials, the annual purchasing power of the mining companies operating there runs into billions. Products in regular demand include components, chemicals for processing, and steel balls for rock grinding. These inputs – which, in the main, are not capital-intensive or high-tech – offer good business opportunities for local companies.

However, in Africa in particular, mineral extraction often runs in parallel to the domestic economy, relying on global supply chains and bypassing local firms. This is a wasted opportunity to utilise the extractive industry’s purchasing power to develop a local production sector that creates jobs and facilitates economic diversification.

But why is the extractive industries’ commercial potential for local enterprises underutilised? One of the main reasons is the wide gap between global mining companies’ requirements for deliverability, product certification and quality, on the one hand, and local companies’ capacities, on the other. Many local enterprises are simply too small to access these business opportunities. What is more, difficulties in obtaining investment loans mean that they have little prospect of growing their business.

EAM addresses this issue and aims to build a bridge between industry and local suppliers by promoting business partnerships. This approach is based on the recognition that the African extractive industry is also of commercial interest to established international suppliers. With a local manufacturing partner, production and operating costs can be substantially reduced and new markets accessed. EAM supports international and local companies along this pathway by mitigating risks. Its starting point is a purpose-built model that calculates market size for individual inputs. Drawing on the mining companies’ financial reports, market characteristics can then be identified. More detailed product feasibility studies which also take account of the local production environment are then used to identify goods which may be suitable for local manufacturing. And lastly, advisory services for individual companies are provided by intermediaries such as chambers of industry, commerce and mining and, if appropriate, government authorities; these organisations also facilitate the formation of partnerships.

After a pilot phase in southern Africa, EAM is now being implemented as part of the Africa Mining Vision process in Ghana. A market analysis has been conducted on a regional basis, covering the entire gold mining industry in Ghana, Burkina Faso, Mali and Côte d'Ivoire.

An executive summary of the EAM Study on West Africa is available for download.

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