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Local Content in the Niger Resource Sector Stefano A. Borghi Drill Masters Africa Ltd

Local Content in the Niger Resource Sector Stefano A. Borghi Drill Masters Africa Ltd The First UK-Niger Investment Forum 2012 London, 14 th June 2012. Summary. The Impact of Local Content on the Economic Development Which Local Companies to Develop? The West African Drilling Market

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Local Content in the Niger Resource Sector Stefano A. Borghi Drill Masters Africa Ltd

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  1. Local Content in the Niger Resource Sector Stefano A. Borghi Drill Masters Africa Ltd The First UK-Niger Investment Forum 2012 London, 14th June 2012

  2. Summary • The Impact of Local Content on the Economic Development • Which Local Companies to Develop? • The West African Drilling Market • Drill Masters Africa: An Emerging Company from W. Africa • Proposals to Promote the Local Content in Niger • Next Steps

  3. 1. The Impact of Local Content on the Economic Development

  4. 1.1 Why Local Content Is Also Important to Mining MNCs • The availability of skilled manpower affects the exploration costs and timing • Local content • reduces the lead time of exploration programmes • improves the relationships with the local communities • ensures that mining is more sustainable • constitutes a competitive advantage in an increasing competitive mining market • Ultimately, LC ensures that the “licence to operate” is renewed by the local Governments to the miners!

  5. 2. Which Local Companies to Develop? Source: Balmoraltrust 2012

  6. 2.1 Who is Ahead of the Game? The Local Content Index is here defined as: (regional share of world drillers) / (regional share of world gold production) i.e. Australia has been able to capitalise on its natural resources, to create a large - export oriented - drilling sector….. Why should not W. Africa do the same? Source: Balmoraltrust 2012

  7. 2.2 Drilling Companies by Ownership • At least 95% of the shares of listed Drillers are owned by OECD countries • The great majority of Directors of those companies are from OECD countries • Listed OECD companies account for $1bn per year of drilling contracts in West Africa – a missed opportunity for local businesses Source: Bloomberg

  8. 3. West African Drilling Market • Mining companies are increasingly directing their exploration expenditure into previously under-explored emerging markets, such as Africa • West African mineral exploration spending in 2011 was approximately $924 million, up 70% from 2010 • Since 2007, exploration spending has grown at a Compound Annual Growth Rate of 25.7%, surpassing the global average of 13% • The emerging markets drilling sector is fragmented and underserviced • Barriers to entry: availability of skilled labour, lead times for ordering new equipment and opportunity cost of alternative investments in West Africa • Ghana, a top exploration play, is a net exporter of drilling workers worldwide! Sources: Westhouse, Bloomberg

  9. 4. Drill Masters Africa – An Emerging Company from W. Africa • Ghana based drilling company servicing the booming gold exploration industry • Profitable, fast growing business • Re-investing all the cash flow, debt free • Strong management team with proven record at building successful businesses • Only local company competing in the Ghanaian market • Wholly owned and managed by West Africans

  10. 4.1 Drill Masters Africa – A Pioneer in Local Content • Employs and train mostly local staff (90%) • Operates an extensive Training Programme and Bonus Schemes • Helps the local communities (drilling wells as well) • Opening new local companies in partnership with locals in West Africa

  11. 5. Proposals to Promote Local Content in Niger • To extend the Article 19 and 21, respectively, of the Niger Mining Code 2006 and the Niger Oil Code 2007, which gives preference to local workers , giving also preference to LOCAL COMPANIES (defined on ownership, staffing and local value added) • To Establish a Fund to promote local SME in the service sector, funded by the revenue from the resource sector (Kristina Svensson, World Bank, January 2012, Indaba) • To Promote Local Early Stage Exploration Companies • To create a Mining And Drilling College to support Investment in Mining in Niger, foster Local Content In Niger and create the basis for an Export Industry of Drillers and a source of foreign remittance

  12. 6. Next Steps • Drill Masters Africa is prepared to participate into a local Joint Ventures, providing • Full transfer of technology and know-how • Management Support during the start -up • DMA would warmly welcome proposals by the Government or local partners to participate and support the JV • DMA is available to provide technical assistance and on-the-job training to a Nigerien drilling college (*) (*) The usual limitation for training is the lack of available rigs to allow trainees to gain practical experience

  13. The End Thank You! We look forward to meeting you next year with some progress and news. Address: Drill Masters Africa
2 Rose Street, Abelenkpe
PO Box CT5812, Accra, Ghana

Phone/ fax: +233 302 784729
Email: info@drillmastersafrica.com

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