9. BGR LION Model
As part of its development policy commitment to local value addition in the resource sector, the Federal Institute for Geosciences and Natural Resources (BGR) has developed LION, which stands for Local Investment Opportunities in Natural Resource Projects. The innovative approach blends primary data about mines‘ cost split percentages for individual procurement categories with publicly available cash operating costs. Total procurement spend hovers around US$ 5 billion per year in the Copperbelt (Zambia & Democratic Republic of Congo), and slightly more than half for gold mining in West Africa, that is US$ 2,6 billion, where the tool was initially developed. Here you can find the results of both studies.
LION Model in Gold-Producing West Africa
The West Africa LION model allows users to generate spend estimates for 32 demand categories using public available financial reporting. The model covers 2010 – 2017 data for 27 gold mines in the region, across 14 companies in four countries, namely Burkina Faso, Cote d’Ivoire, Ghana and Mali.
LION Model in the Copperbelt
The Copperbelt LION model allows users to generate spend estimates for 32 demand categories using public available financial reporting. The model covers 2013 – 2017 data for 18 gold mines in the copperbelt region, that is Zambia and the DRC.
Examples of How LION Model Can be Used:
LION offers an efficient analytical tool for policy makers, local suppliers and potential JV partners to understand the scale and nature of the market for mines products and services. It supports decisions that increase local procurement, such as indicating attractiveness of markets for various products. It is low resource, easily updatable, and publicly accessible.
The model can be used by various stakeholders:
- Governments can use the data to cross-check submissions against targets in local procurement plans;
- Potential JV partners can use the data to assess the investment viability of their investments, such as by assessing the market requirements v/s market share they would need to get to achieve that, either in one country or in the region;
- Governments and investors can evaluate whether investments in suppliers development in a product grouping makes economic sense, given the size of the opportunity;
- The data can assist investors during their consultations with policy makers and provide information specific to their product portfolio.