Local content and mining code

Taking local content into account in the new 2016 mining code: what’s at stake for Cameroon ?

Convergence towards the consideration of local content.

The extractive industry is a more or less ancient tradition in Africa. In the past, mining was carried out under rudimentary conditions, and consisted largely of domestic satisfaction. After independence, governments began to look into the issue with a view to boosting their economies and development. International Financial Institutions (IFIs), which had the financial and technical capacity to do so, provided support. It was then that several of these countries drew up their very first mining code, following the example of the Democratic Republic of Congo (DRC), Guinea…

A few years later, malpractices and shortcomings such as corruption, poor treatment of employees, inadequate recruitment, mismanagement, environmental degradation, fiscal and financial shortcomings, etc., began to be recorded. …. All these irregularities prompted reflection with a view to change; several generations of mining codes then came along to correct the above-mentioned shortcomings.

Cameroon’s first mining code came into being on April 16, 2001, amending and supplementing federal law n°64-LF-3 of April 06, 1964 governing mineral substances. This code made little mention of the employment of nationals. It was not until the 2010 law that employment and capacity building were taken into account. However, with the lightning passage of mining companies such as C and K Mining and  GEOVIC on the one hand, and the preponderance of the artisanal mining sector on the other, huge negative externalities were generated.

Collective awareness has been relatively heightened and, today aspects such as employment, professionalization, local sourcing, subcontracting issues, etc. have taken the lead and are enshrined in the 2016 New Mining Code (NCM) in Title 7 entitled local content.

Local content, according to Cameroon’s NCM is defined as the set of activities focused on the development of local capacities, the use of local human and material resources, technology transfer, the subcontracting of local companies, services and products and the creation of measurable additional values to the local economy. In addition,

The International Petroleum Industry Environmental and Social Conservation Association (IPIECA) defines Local Content as follows: “The terms “local content” describe the benefits that the oil and gas industry can bring to the regions in which it operates. Companies can bring measurable benefits by: – Employing and training local people; – Sourcing goods and services locally and developing local businesses; – Supporting community development work.”

Cameroon’s position on the issue compared to other African mining states

In view of these definitions, Cameroon has taken a decisive and decisive step in improving its legal framework, compared to certain African mining countries such as Senegal, Mali…which have an old mining culture. Previously, only Cameroon’s 2012 gas code dealt with the issue, and it should be pointed out that the Local Content developed in the 2016 mining code is simply a transcription of the 2012 gas code. In practical terms, after around five (05) years, it’s hard to see the impact on the gas sector.

The effectiveness of the Local Content currently defined, is a real start for the mining sector, which is a foundation on which local governments or Collectivités Territoriales Décentralisées (CTD) and civil society organizations can obviously follow up. This initiative would be a real boon for Cameroon, subject to implementing regulations, if the industrial mining sector really existed : mining companies such as C and K Mining on the one hand, holder since December 2010 of the mining permit for the Mobilong diamond deposit, located in the commune of Yokadouma, Eastern region of Cameroon, sold at the end of 2014 the majority of its assets in this mining project to a Sino-American investor and Geovic Cameroun, a subsidiary of the American-Canadian junior mining company Geovic  Mining  Corp, has abandoned its project to mine the Nkamouna bauxite, cobalt and manganese deposit in the Lomié district of Cameroon’s East region. It begs the question: who is the “local content” legislation intended for? At the same time, countries such as Botswana and Ghana have capitalized on their artisanal mining sector, making it an unquestionable lever for local development. Nigeria, on the other hand, drew inspiration from the Brazilian and Norwegian examples, setting up the Nigeria Content Act in 2010, with the aim of taking 70% ownership of the sector. In addition, Mauritania, as part of the transfer of technology by TASIAST, a subsidiary of the American company KINROSS, has benefited from a major mining school, where engineers are trained on site and in the design phase in the United States of America (USA) with funds from the Company over a period of 10 years.

The local content : a probable Pyrrhic victory

On the other hand, Cameroon’s mining sector is  essentially artisanal, where traditional extraction practices rub shoulders with semi-mechanized ones, and would even constitute the most profitable activity in the sector. However, the will to transform this productive structure remains a dead letter. Perhaps, with the new mining code framing the sector, there could be real change. Without the risk of making a priori judgements, it is nevertheless necessary  to question the quality and content of the current legal framework and the context of the mining sector in Cameroon, in other words, what  is  the link between semi-mechanized artisanal mining and local content in a context where industry still remains a pipe dream?

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