Ambatovy has considerable economic impacts at the national, regional and local levels. Our mission is to significantly contribute to Madagascar’s development and to maximize the economic returns of our operations in local communities. When evaluating the overall economic impact that our presence delivers at national, regional and local levels, we track our “economic benefit footprint”, which includes payment of taxes, royalties and fees to the Government; the procurement of local goods and services; payment of local salaries, wages and employment benefits through our local recruitment efforts; and community investment and donations spending that goes above and beyond our obligations and commitments.
At the national level, with Ambatovy’s exports beginning in 2012, nickel has become one of the top exported products for the country. Nickel and cobalt export earnings have helped to curb the external current account deficit, maintain the value of the local currency (Ariary), and build up adequate foreign reserves. Locally, significant economic returns have already been seen in the form of salaries, wages and employment benefits, training and capacity building, improved infrastructure, and business opportunities.
Payments to Government
Every year, Ambatovy makes payments of taxes, royalties, duties and other payments to the Government. In 2019, these payments amounted to more than $27.6 million, excluding royalties. After enabling legislation was adopted, Ambatovy was able to make the first payment of mining royalties to the Decentralized Territorial Collectivities, including the two Regions and 20 Communes in our operating areas, in 2018. In 2019, our royalty payments amounted to nearly $4 million, bringing our total royalties payments since 2012 to nearly $26 million. We strive to ensure that these payments are openly and transparently reported so that our contributions to national, regional and local governments are recognized, and to encourage accountability for the spending of those funds. Towards that end, Ambatovy has been a strong supporter of the EITI process and is an active member of the Multi-Stakeholder Group (known as the National Committee in Madagascar), comprised of representatives from government, extractive industry companies, and civil society.
National & Local Procurement
A significant component of our economic benefit footprint results from the purchase of goods and services from local suppliers, reflecting our commitment to maximizing the economic returns to local communities as well as counterbalance any negative economic impacts, such as inflation, that our operation can cause in our local economies. Ambatovy spent more than $219 million on local purchases in 2019, and more than $2.5 billion since the start of our operations in 2012.
For example, we purchase local produce directly through bulk purchasing centers that work directly with local farmers to procure fruits and vegetables. Every year, this equals around 1.5 tonnes of produce provided by the nearly 3,000 local farmers collaborating with these purchasing centers in Toamasina and Moramanga.
Ambatovy has also implemented a range of programs and has made support tools available to local businesses and entrepreneurs so that they can provide Ambatovy with goods and services that meet our standards of procurement and quality. The Ambatovy Local Business Initiative (ALBI) was established several years ago to support this commitment and to uphold our local procurement policy of “buy locally, hire locally.” Due to this initiative, every year, local suppliers account for 40-50% of our total yearly purchasing.
Community Investments and Donations
We endeavor to achieve maximum local impact with the funds we spend on community investment and with the donations we make. A significant portion of our community investment spending in recent years has been through the Social Investment Fund (SIF), a US$ 25 million fund established in 2012 in partnership with the Government of Madagascar. The SIF supports several projects, such as rehabilitating public infrastructure, like schools and electric generators, and constructing new structures like markets and roads. Every year, Ambatovy also sets aside funds to respond to requests for donations and sponsorships. Our donations have funded activities related to Covid-19 response, World AIDS Day, International Women’s Day, cyclone relief and other similar initiatives.