Major companies operating in the extractive sector recently gathered at the 9th Mozambique Mining and Energy Expo Conference to share their experiences and strategies for building capacity of Mozambican companies. What came out of it?
The Local Content Law has not yet been approved, which we all know. This (apparent) weakness is leading to the adoption of other strategies to materialise the objective of directly involving national companies in the business of major projects.
The concern is that, in the absence of a more consistent legal instrument to guide the rules of Local Content, each company develops its own policy, strategy and plan for this purpose. This issue has always been viewed with some suspicion, in the sense that multinationals have no concern for developing local business.
True or not, the truth is that the issue was raised at the 9th Mining and Energy Exhibition Conference of Mozambique, an event held recently in Maputo and which served to share the different models of Local Content development that are being implemented by companies.
What happens in gas
Sasol, a South African oil company that explores onshore natural gas in the Pande and Temane basins, Inhambane province, was the first company to showcase the best of what it does to ensure the participation of local companies in its ventures. It is an experiment that began in 2019, when Sasol signed an agreement with the Government to safeguard Local Content, and then developed a joint plan with the National Petroleum Institute (INP).
The National Petroleum Institute underwent a restructuring that created two portfolios, one of which was called the Business Development and Compliance portfolio.
In his presentation, Sasol’s country manager, Ovídeo Rodolfo, revealed that the company’s plan includes five pillars, but highlighted only two.
The first has to do with the development of the capacity of Micro, Small and Medium Enterprises (MSMEs) whose implementation began in 2020 and has already trained more than 100 companies, most of which are from the province of Inhambane in business management.
The second pillar concerns the creation, two years ago, of a fund to support MSMEs and which has already disbursed more than one million meticais in favour of dozens of companies, improving their production process and market insertion.
… And in coal
Present at the conference, Sanjeev Gupta, director of Vulcan in Mozambique – a mining company that after acquiring the coal mines of Brazilian Vale became the main operator in the national market – revealed that “when we started the operations initiated by Vale, our commitment was not only to follow our obligations, but to follow above what was being done in terms of Local Content”. He continued: “it is possible to develop the company while developing the community. I think this can benefit the whole country and this is our operating model”.
The official clarified on the occasion that Vulcan is also working with the local government to develop the city of Moatize. “For us to grow as a company we need to attract the best. It turns out that the best tend to come to Maputo, because Tete is not the best option.
So we want to develop the small town of Moatize to attract the best and make it an attractive place where people want to go,” Sanjeev Gupta promised without elaborating further.
Lessons from the last ten years
On the occasion, the coordinator of Local Content at the level of the Ministry of Mineral Resources and Energy (MIREME), António Cumbane, recalled that despite the lack of a Law “we have some guidelines to ensure the maximisation of the value collected in Mozambique from Oil & Gas projects and we have a Local Content group that is formed by several public institutions.
In terms of strategy, we favour three pillars: the training or capacity building of human resources, the capacity building of MSMEs and the development of financing lines for companies.”
On capacity building, Mr Cumbane said that middle and senior technicians had been trained to serve companies and to ensure their employability in major projects. Vocational and technical-vocational education institutions have also been equipped.
As for the capacity building of companies, he recognises that there are limitations in terms of the provision of technological means and quality certifications, “so we opted for the certification and capacity building of companies through joint ventures between national entities and international companies with experience in the provision of goods and services”.
What is the regulator doing?
Recently, the National Petroleum Institute (INP), the sector’s regulator, has undergone a restructuring, creating two directorates, but the focus is on just one, which is geared towards business development and called the Business Development and Compliance Directorate.
It has two directorates: one looks at Local Content compliance and monitoring, and the other follows up and ensures that the guidelines for national private sector participation in the value chain are indeed maximised or as effective as possible.
Natália Camba, Director of Promotion and Development of the Private Sector at INP, speaking at the session, explained that “the legal framework brings some provisions regarding the obligation to train and empower both local labour and MSMEs, in addition to some principles that concern the procurement of goods and services for the oil and gas sector”.
There are also some legal provisions that refer to the obligation of multinationals, such as the Decree Law that already brings the obligation to present a Local Content plan…”
In contrast, the Association of Miners of Mozambique believes that “we must have a clear and objective industrialisation strategy. We have loose legislation on Local Content, and no clear strategy for industrialisation based on mineral resources.
We bring here a proposal on what would be the way to achieve this industrialisation”, pointed out Reinaldo Gonzales, president of the Association, proposing solutions in two stages, namely planning and institutional support to have clarity on who and how to conduct the process.
E&M Magazine
