Authored by Araba Attua-Afari
CLASSIFICATION OF NEW MINE SUPPORT SERVICES
In this newsletter, we consider the local content and participation implications of the Minerals Commission's recent exercise of its statutory power to expand the list of mine support services occasioning registration with them.
Mineral right holders are required to procure certain services from companies registered for that purpose with the Minerals Commission. The Minerals Commission is the regulatory authority responsible for the regulation and management of the use of the mineral resources of Ghana and the co-ordination of the policies related thereto. Companies registered with the Minerals Commission to provide mine support services are known as "mine support service providers".
Along with existing obligations, such as the obligation to give preference to the maximum extent possible to materials and products made in Ghana, services agencies located in Ghana and owned by Ghanaians, and Ghanaian labour, the classification of certain mine support services as services reserved for Ghanaians aims to help achieve the Government of Ghana's target of achieving 90% local content in the extractive industry by 2020.
There are two categories of mine support service providers, namely, Class A mine support service providers and Class B mine support service providers. One of the main distinctions between the classes is whether or not the class has foreign ownership restrictions. Whilst a Class A mine support service provider need not be wholly-owned by a Ghanaian citizen, a Class B mine support service provider must be a Ghanaian. The list of Class B mine support services consists of contract mining for small scale miners, haulage services, and any other
mining-specific and mining-exclusive service that the Minerals Commission considers necessary for the effective and sustainable development of the mining industry.
The Minerals Commission notice of 30 May 2017 (the "Notice") classified healthcare services on mine sites and air haulage services as Class A services, and classified catering / camp management services and security services as Class B services. The practical effect of the Notice is that, after 30 May 2017,
- a company may be required to register with the Minerals Commission if the service it provides to the mining industry is stated in the Notice; and
- a company that is not a citizen of Ghana cannot enter into a contract to provide camp management services and security services to a mineral right holder.
Though the Notice complies with the constitutional and regulatory prohibitions against unlawful expropriation and retroactive legislation, it does not provide for a transitional period. The Notice specifically provides that existing contracts may continue to be serviced by non-Ghanaian mine support service providers. The Notice is the most recent push by the Minerals Commission to increase local participation in the provision of support services to the mining industry in line with the local content policy target. The steady development of local content requirements in the mining industry echoes the trend in other sectors of the Ghanaian economy.
Originally published in November 2017
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.