EITI Report tracks the impact of the global commodity price downturn.
As Mauritania is highly dependent on extractive industries, with 29% of GDP in 2013 stemming from the sector, the country has felt the impact of the global downturn in commodity prices. Its 2013 EITI Report shows that while output has continued to rise for all commodities, except for petroleum, the government’s take has dwindled on the back of lower prices.
A well-established iron ore producer for over half a century, Mauritania’s extractive industries have diversified significantly in the past decade with new production of gold, silver, copper and oil.
Production of hard minerals continued to increase in 2013 (12% to 13 million tons for iron ore, 24% to over 9 tons for gold and 22% to 0.35 tons of silver). Copper production remained stable with 38 thousand tons output. Only oil output at Mauritania’s sole producing oil field fell slightly by 2% to 2.2 million barrels.
While oil prices remained high throughout 2013, the global downturn in mineral prices hit Mauritania’s public finances hard. Government income from the extractive industries fell by 24% to USD 408 million in 2013, of which 76% was transferred to the national budget. The remainder went to the sovereign wealth fund, the FNRH.
Mining revenues represent 85% of total extractives revenues. Of these, 81% stemmed from the Société Nationale Industrielle et Minière (SNIM) – the country’s state-owned miner – alone, the only producer of iron ore.
Meanwhile oil and gas revenues fell 13% to USD 55 million. Of these, the Société Mauritanienne des Hydrocarbures et de Patrimoine Minier (SMHPM) received 10% of in-kind oil while the state received another 16% directly.
Indirect impacts of the sector
While the impact of lower commodity prices on the government’s budget has been sharp, its influence on local communities is less so. The report highlights the generally low level of employment generated by this fiscally important sector, with only 4% of Mauritania’s active labour force engaged in the extractive industries, and provides details of each company’s staffing levels. Falling revenues have not hurt employment.
Payments to government are significant, but companies contribute to the national economy in other ways and the latest report provides details of both mandatory and voluntary social payments. In total, social payments from oil and mining accounted for 3% of total revenues, or USD 11 million, up 6% on 2012 levels.
Poor data quality
Mauritania’s latest EITI Report is an important contribution to understanding of how lower commodity prices are affecting local economies. Yet more work needs to be done to ensure the reliability of figures: while all but one of the reporting companies provided certifications from their auditors, none of the five government agencies provided any assurance about the quality of their disclosures. Given the lack of auditing of public sector accounts by the Court of Auditors, the inter-ministerial discussions scheduled for May to improve quality assurance in 2015 appear timely.