Develop local skills and empower African communities
By LM Louw
05 September 2020 – Developing local skills and empowering host communities is a non-negotiable for companies operating in Africa. Mark Bristow, CEO of Barrick Gold, and before that CEO of Randgold, followed this recipe for years and has been extremely successful – and he has the record to prove it.
Trying to predict what will happen in Africa in the next year or five is, at best, a guessing game. At worst, it is like attempting to see what is in front of you with your eyes closed. For me, there has always been one consistent indicator to determine what lies ahead for the mining industry in the top jurisdictions of Africa: the actions of Mark Bristow, previously CEO of Randgold, and now the head honcho at Barrick, the largest gold mining company in the world. Bristow’s success in Africa has been astounding. The South African knows where the big deposits are located, how to unlock them, when to go in and when to get out. Above all, he has an uncanny ability to build lasting relationships with governments, and even more impressive, with local communities, in the countries where the companies he leads, operates their mines.
While pondering developments in Tanzania last week, where president John Magufuli has clamped down on mining companies (including Barrick) that does not play by his rules, a report reached my desk, that I later thought might be an indication of what to expect from the “the Bulldozer”, as Magufuli is often referred to by the locals. Magufuli will not give an inch to foreign mining companies, especially when it comes to empowering local companies. Barrick, of course, has always had the same agenda, and empowering communities in which it operates, has always been a non-negotiable for Bristow when he was CEO at Randgold, and now that he is CEO of Barrick.
But when Barrick bought Acacia Mining’s Tanzanian assets in 2019, the deal came with a bag full of baggage. Not only was Magufuli on Acacia’s case because of what he referred to as unpaid taxes, it irked the president that foreign companies, Acacia especially, employed so many expats rather than using local skills and Tanzanian companies. But Magufuli is not alone in insisting on developing African skills.
Across the continent there is a big drive by governments to empower the local population through the activities of big business, especially primary sectors involved in extracting natural resources. Most countries now require local content and partnerships to be part of the deal when applying for a mining licence. Even before governments made it a legal requirement, Randgold (now Barrick), under Bristow, started training and growing local talent, and using local suppliers and service providers.
In Mali and in the DRC, Randgold not only established the richest gold mines on the continent, but the company build solid relationships with the governments in power at the time, and with local communities through developing and empowering local talent. The risk is that all rules can change in a flash when a new regime takes over (which happened in both Mali and the DRC recently). However, if a mining company has the host communities on its side, it will be difficult for the powers that be to break that bond. Barrick has nurtured local relationships through actual empowerment and not by paying them lip service. So, it is telling that Barrick recently announced that it has appointed Nguvu Moja Security Services (NMSS), a 100% Tanzanian owned and managed company, to replace an international security firm at all its Tanzanian gold mines.
According to Barrick’s chief operating officer for Africa and the Middle East, Willem Jacobs, this move is in line with its policy of leveraging its supply chain and procurement to maximise local economic development, something close to the heart of Bristow and a move that will, hopefully, placate Magufuli.
Jacobs says that NMSS has already been active at Barrick’s North Mara mine, and will be fully deployed at the Bulyanhulu and Buzwagi mines by the second week of September, taking the total number of Tanzanian security personnel working at the mines and the administration office in Dar es Salaam to 462.
According to Jacobs, NMSS employees have been fully trained in the basic legal principles regarding security and the legal framework they work in, the conduct of security personnel, the effective use of their equipment and, importantly, International Security and Human Rights Principles and the Voluntary Principals on Security and Human Rights. Their drivers have also undergone advanced training.
“Our supply chain is one of the most direct ways that our operations can improve and create economic opportunities for members of our host communities. This in turn supports our licence to operate while creating effective and stable supply chains close to our mines,” says Jacobs.
It is clear that in a post Covid-19 Africa, the procurement of local content, and the real empowerment of host countries and local communities, will have to top of the list of things to do, for any foreign company that wants to do business in Africa. It is no longer business as usual, and more emphasis will be placed on local procurement, local supply chains, and local skills development and empowerment. Bristow read the signs a long time ago – and got it right. In 2019, for example, Barrick procured more than USD4.4-billion of goods and services from suppliers based in its host countries
In another, totally unrelated, but not surprising move, Barrick, and AngloGold Ashanti, agreed to sell their 80% interest in the Morila gold mine in Mali to Australian company Mali Lithium, for cash consideration estimated at between USD22- million and USD27-million. The sale is subject to certain conditions, including the acknowledgement of the transaction by the new state of Mali, which holds the remaining 20% of the Morila gold mine.
Barrick said the decision of the current shareholders to sell their stakes in Morila, offered the potential for the mine to continue under a new ownership structure which would bring access to additional resources and a different approach to how the infrastructure is used to extend the life of operations. This would allow Barrick to focus on its strategy of discovering, developing, owning, and operating Tier One assets. The parties are targeting the closing of the deal before end of October 2020.
The discovery and development of Morila, which poured its first gold in October 2000, laid the foundation for Barrick legacy company Randgold Resources’ growth into one of the world’s leading gold miners. Known in its heyday as “Morila the Gorilla”, the mine produced 6.9 million ounces of gold and paid more than USD2.5- billion to its stakeholders in the form of taxes and dividends. It served as the base for Randgold’s expansion into Africa, among other things through the development of Loulo-Gounkoto in Mali and Kibali in the Democratic Republic of Congo. Both these mines are now part of Barrick’s Tier One portfolio.
In 2015, Morila transitioned to a stockpile and tailings treatment facility and was forecast to close in 2021. Jacobs says the proposed acquisition by Mali Lithium offered an opportunity for a new owner to extend the life of the mine by utilising the existing infrastructure, applying different planning and evaluation criteria, and accessing additional satellite resources which would continue to benefit Morila’s in-country stakeholders.
The lesson in all of this is that if you want to operate successfully in Africa, do what those that have been most successful has done. Bristow’s record speaks for itself.