Image: African Mining Market
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In October a number of West African mineral producing countries undertook discussions to better integrate the development of local content within their extractive industry policies and strategies. Senegal has a well-established mining industry that produces, construction materials, iron-ore, gold, nickel, and phosphates among many other mineral resources.
One of the main conclusions from the discussions was that extractive industries can play a major role in supporting the ongoing post- COVID-19 pandemic economic recovery of several West African nations. But in order to do so more effectively, the sub-region must have a greater capacity to develop the local private sector, and facilitate the mobilization of domestic resources. A crucial step in this process is ensuring adequate access to markets, and creating favorable conditions for small and medium enterprises (SMEs) to participate more effectively in the mining industry.
According to Ibrahima Guèye, Secretary General of Mines and Geology from the Republic of Senegal, “the statistics from the Extractive Industries Transparency Initiative from 2019 illustrate the gap that our local content policies should bridge. Out of 800bn CFA Francs worth of orders, national companies only obtained 200bn CFA Francs worth, or 25% of the total. Thus, we can clearly see the path that needs to be taken in order to enable local players to have the necessary technical capacity to tap additional market share. This is something that will greatly enable our ability to improve the revenues and profitability derived from the extractive industry.”
Furthermore, Guèye has previously spoken at length about the challenging issue of the weak role of national companies in the mining industry in Senegal and several other West African countries. A number of initiatives have taken place in Senegal over the past three years to help address the issue. The goal is for players in the extractive industry to recognize the constraints that prevent economic actors from seizing a larger percentage of market share through local content and also for them to find better ways to increase value addition locally.
Increasing the role of local content and increasing local value addition in the extractive industries has also long been one of the top priorities for the administration of the President of Senegal H.E. Macky Sall, as well as his region counterparts in neighboring countries throughout the MSGBC Basin such as Guinea-Bissau, Guinea-Conakry, and Mauritania, which have important mineral reserves such as bauxite and iron ore.
One of the major challenges faced by the mining industry around the world is that it is extremely energy intensive. However, both Senegal and Mauritania are set to become major oil and gas producing countries over the course of 2023-2024; as large-scale offshore oil and natural gas projects such as the Greater Tortue Ahmeyim and the Sangomar fields begin large-scale production. Thus, the MSGBC Basin’s emergence as a new oil and gas producing region in the heart of West Africa, a major mineral hub, will provide an abundance of a much more competitively priced feedstock of natural gas that will naturally optimize the efficiency of mining operations throughout the region. And for this reason, the governments of Senegal, Guinea-Bissau, and Guinea-Conakry are working increasingly closely on developing greater cross-border synergies in the extractive industry.
During Africa Energy Week 2021, which took place in Cape Town, from the 9-12th of November the Minister of Petroleum and Energies of Senegal H.E. Sophie Gladima noted that: “in Senegal’s gas-to-power strategy we are going to utilize our natural gas resources to accelerate industrialization. Between Senegal and Guinea-Bissau and Guinea-Conakry we have an abundance of mineral resources such as iron ore or bauxite that require a great deal of electricity for their successful exploitation. We believe that the natural gas that will soon be coming onstream will enable us to better exploit these mineral resources, so that they can be transformed into steel or aluminum and used in sectors such as the production of motor vehicles and others.”
Senegal and the various countries in the MSGBC Basin are aware that a historic opportunity is on the horizon in order for them to be able to increase both local content and local value addition in their extractive industries. As such, both topics will be firmly on the agenda of MSGBC, Oil, Gas, & Power 2021 taking place in Dakar from the 16-17th of December.