CANADA EXPORT CENTRE WEST AFRICA MINING SURVEY

In Articles by admin

A lack of mining equipment providers and services in West Africa.

Despite plentiful mining project opportunities in West Africa, several countries in that region remain under-explored. Excluding artisanal mining (small-scale, subsistence-based mining operations), there are about 253 mines in production and exploration in West Africa.

The controlling mining company subcontracts support services for the actual mining, prospecting and extraction of the ore. CEC interviewed 32 companies providing mine support services in West Africa, 38% of whom had capital assets of over $10 million. The underlying task was to decipher the supply chain of mining equipment and supplies in that region.

After thorough research and interviews, our definitive conclusion is that the mining landscape in this region is becoming crowded with mining projects, and there are not enough suppliers of equipment and mining technology to meet demand.

Our survey found that procurement managers of large and small mining companies are hungry for sourcing alternatives and more product variety in West Africa. When asked “which types of solutions/services are missing or would complement the execution of projects”, over 90% of the buyers stated that the inadequate supply of parts and equipment was a major obstacle in the carrying out of projects.

100% of the procurement managers surveyed expressed an interest in sourcing locally if possible. In fact, 16 respondent companies controlling 42% of the mines in West Africa stated that their companies have a “Local Procurement Policy” included in their corporate guidelines, but it is only implemented where competitive local sourcing is available. Unfortunately, due to the lack of local suppliers, buyers have been forced to improvise complex and inefficient sourcing channels. For example, managers of the five largest mining companies in Ghana emphasized their need to deal directly with overseas suppliers and service providers due to a lack of agents and distributors in West Africa.

West Africa is a region of contradiction.

The few West African companies with inventories available on-site offer limited equipment options at sky-high prices. The 16 companies holding 42% of the active mines in the region are able to maneuver this obstacle thanks to substantial economic resources and procurement managers both locally and overseas, but the remaining 58% of mining projects face high fixed logistics costs and lack economies of scale.

The manufacturers of mining equipment and supplies should view these remaining 58% of projects as a great business opportunity. In the short to medium term, transactional costs of processing and delivering orders is likely to remain a serious obstacle for these companies, presenting opportunities for profit for manufacturers of mining equipment and service providers transacting in West Africa.

Providers of mining equipment and services: West Africa is Ripe for Entry

Establishing the right sales channel is the key. Two possible options are:

  1. Develop a strong direct-sales approach
  2. Generate sales via regional agents or distributors

In either case, a due diligence investigation to scrutinize the target partnership will be required. Canada Export Centre will help your company identify and research suitable target companies in the West African region.

Key points to consider:

More than 90% replied that a reliable supply of parts and equipment is needed in West Africa. The region needs additional suppliers for parts and equipment.  Agents, distributors and end-users of mining equipment request technical assistance from manufacturers on products to be marketed in West Africa.

Artisanal mining has a long tradition in this region, but small-scale mining operations are growing. Large and small projects are in demand of equipment and supplies.

Ghana is the gateway to West Africa. Mining projects are often orchestrated in Ghana, but carried out across the region.  In Ghana, there have been no customs duties applied to mining imports since the 1980s.  Geography, politics and the limited number of qualified individuals make it difficult to identify the right sales tactic for each company; let us show you the way.

Sincerely,

Mark Mensing
President & CEO