Mining industry as a catalyst for SMME growth: Terry Heymann – World Gold Council

How mining companies can support economic activities around the mine site.

SIKI MGABADELI: In conversation now with Terry Heymann, who is MD for Gold for Development at the World Gold Council. We are talking about opportunities for the mining industry to act as a catalyst for small business development across the African continent. Terry, thanks so much for your time this evening.

TERRY HEYMANN: Thank you very much for being here, I appreciate it.

SIKI MGABADELI: That was a very interesting conversation that you were having today here at the Mining Indaba. Just tell us the broad context under which this conversation is taking place.

TERRY HEYMANN: There is a lot of work going on around how mining companies can support the economic activities around the mine site, how they can catalyse the development of the small and medium-sized enterprises in particular. And we’ve done some work at the World Gold Council actually quantifying the scale.

   In 2013, US$26bn was spent by mining companies on goods and services; 79% of that was spent in the country where the mine is hosted. So there is a huge potential.
   And in the panel discussion today, we had a range of people, including Johan Ferreira, who is the head of operations for Newmont Africa, including Anita George, who is the senior director at World Bank looking after energy and extractives, coming together and talking about how it is the mining companies can be the catalyst, what needs to happen in terms of policy, what needs to happen in terms of long-term planning.
   There is a real opportunity here – how do we take advantage of it?

SIKI MGABADELI: What were some of the examples that were shared?

TERRY HEYMANN: Some of the examples – Johan Ferreira from Newmont in particular, they’ve got operations in Ghana. Now, they’ve worked quite hard in the Ghanaian context to help build up local companies that can actually supply the machinery that they need for their mine site. Previously they’d have been imported from China; now they are supporters and there is a company that can do this. And the best thing is, it’s not just supporting the one mine site, it’s supporting a number of mine sites and looking for business elsewhere because obviously all mine sites have a finite life and will close.
   So I think there are really interesting examples of how companies really want to seek local products, local suppliers. Obviously they need to make sure that they are compliant in terms of safety and health and have the right project management experience. Well, where those things can be met it’s a bit of a win-win all round.

SIKI MGABADELI: Actually that brings me to my next question around the challenges, because I can imagine quite a bit of mining on the continent happens in areas that are quite remote. So how do you source those types of products – and maybe other challenges that were brought up?

TERRY HEYMANN: Well, I think one of the challenges of being remote is there might not be the skills and capabilities right where you are, and so Anita George from the World Bank actually talked about the long-term development needs and training and education – and clearly that’s hugely important. I think the challenge there is how you balance the short-term interests of a company that has demanding shareholders, particularly at the moment when commodities are at relatively low prices, with the long-term needs in terms of investing in terms of education and all that the associated activities needed to have that capacity.
   The other part, I think it’s worthwhile saying you are not always going to get these businesses placed right next to where the mining company is. So in a Ghanaian context none of the mines are in Accra, but there are companies in Accra that can service those mines and actually the skills and capabilities are around. So I don’t think local always necessarily has to mean right where the mine is. It can mean within the country.
   That being so, I think one of the very interesting areas is what is local and how you actually think about what should be considered a local.

SIKI MGABADELI: Did you discuss whether this should be something that is legislated? In the South Africa we have specific legislation around black economic empowerment. Within that is enterprise development, which is about exactly what we are talking about.

TERRY HEYMANN: We certainly talked about the really important role that governments have to play, particularly in providing the supportive infrastructure and enabling environment, as you said. I think the question of regulation is a really interesting one, because what you want to do is to create an environment where everybody is incentivised to support local content, but not to put a regulation in place that becomes disabling, that actually stops people being able to buy goods and services of the quality they need because of the regulations that are in place. So I think regulation has a role, but it has to be quite thoughtfully and carefully crafted, depending on the circumstances on the ground.

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