Think Local: Making Mining Work in Liberia
In a place like Liberia, mining companies receive a lot of attention. Government ministries court this sector to bring investment into the country while citizens often look at the presence of multinational mining companies as the path to increased socioeconomic status. More recently many have begun arguing that Foreign Direct Investment (FDI), like that from mining companies, provides the best sustainable opportunity to lift Liberians out of poverty.
Yet the impact of mining concessions in Liberia is muted. While all concessionaires are required by the Government of Liberia (GoL) to help improve the nation primarily through acts of CSR such as building schools and roads, most of a concessionaire’s spending is funnelled directly out of the county through international supplies of goods and services, limiting the impact of FDI.
While some goods and services cannot and will never be procured locally in Liberia (think: high-tech drilling equipment), much of the goods a mining camp depends on – food for their canteens, vehicles, office supplies, printing – can be. Despite this availability, many mining companies find it too challenging to locate local suppliers that can meet their quality, customer service, or safety standards.
Enter Building Markets. We are a middle-man between buyers and local SMEs, linking the two groups through local procurement. We forge new business relationships between buyers and local suppliers through information and the creation of a platform where concessionaires can interact with quality local suppliers.
Through training and matchmaking, we’ve helped four local businesses win over $861,000 in contracts with ArcelorMittal, Aureus Mining, BHP Billiton, Cocopa and Putu Iron Ore. More importantly, these contracts resulted in long-term business relationships with these companies.
“The key factor to my business growth is my participation in a mining matchmaking event held by Building Markets in August of 2012,” says owner of Matelco, Afif Sami Osseily. At the event, Osseily met Aureus Mining and Putu Iron Ore, which both awarded him contracts worth a combined $42,000. Since then, both companies go to Matelco when they need construction and building materials. In total both have spent over $182,000 at Matelco, resulting in the creation of 10 full-time jobs.
Matchmaking is not the only Building Markets service that successfully links local Liberian businesses to mining companies. Advance Construction utilized advice taught in Building Markets’ general procurement training to establish a relationship with mining giant ArcelorMittal. After the training, Advance owner Daniel Doe wrote and sent out “Expressions of Interest” to 70 different companies. Twenty responded, including ArcelorMittal, who has since awarded him $670,000 in construction contracts.
Despite successes like these, doing business in Liberia remains challenging, particularly in the agriculture sector. Liberia’s land is rich yet underdeveloped as most farmers grow just enough to feed their families and sell the little that’s left in the local market. Due to the mistrust that still lingers from the war, farming cooperatives and joint ventures have yet to take off. Yet mining concessionaires, who operate camps for their employees, consistently name local produce as an item they want to purchase locally for their camp canteens.
In order to link local farmers to a large mining company with hundreds of workers, connections must first be made along the agricultural value chain — between farmers, aggregators, transportation and storage companies, packagers, and caterers. Building Markets supports the development of this supply chain by working with NGOs that support farmers such as USAID FED and the ZOA to host matchmaking events in nearby counties linking these groups.
In addition to the agriculture sector, which presents huge opportunities for local SMEs, Building Markets engages concessionaires in policy as well. Through Building Markets’ partnership on the GoL’s National Investment Commission’s local content policy committee, Building Markets is leading an analysis of the mining sector in Liberia through the production of an Extractive Overview Report (similar to our annual Market Overview Report). Each mining concessionaire operates in phases, such as exploration, construction and operation that last for years and require different goods and services. Because concessionaires’ agreements with GoL span decades, mining companies provide a perfect environment for SMEs to meet their needs in future phases. The report will identify which goods and services will be needed in the future and which can potentially be provided by local suppliers. Further, concessionaires can use the report to guide their ability to not only find local suppliers, but to help build up the capacity of those businesses that could meet their needs in the next phase.
In Liberia mining concessionaires represent opportunity. Yet they can also symbolize a missed opportunity when goods and services are purchased outside of the country. Building Markets works to ensure that the money invested in Liberia stays in Liberia and helps build and strengthen the Liberian economy. Though it’s not easy, Building Markets – by filling the information gap and building business relationships – is up to the challenge.