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Report Shows Global Mining Industry Reporting more on Local Procurement as CSR Issue

The Mining Shared Value venture of Engineers Without Borders Canada is excited to present Local Procurement and Public Reporting Trends across the Global Mining Industry: An Analysis of Company Reporting, 2012-2013. The report provides an overview of the global mining industry’s prioritization of local procurement. It does so by measuring the degree to which the largest 40 mining companies publicly report on local procurement in their corporate responsibility or annual reports.


Report Available for Download Here

 

It is hoped this report will encourage all mining companies to increase their reporting on local procurement, and in turn, improve their performance in this area.

 

Local procurement is increasingly gaining the attention of industry and development stakeholders as a key sustainability issue for the mining industry. Increasing local purchasing by mining companies is an important way in which developing host countries can increase the economic and social benefits from natural resource extraction. In host countries, purchases of local goods and services by mining companies can create local jobs, promote skills and technology transfers, increase the integration of local companies into global value chains, and aid in the formalization of the local economy.

 

For these reasons, key actors have been devoting resources to showing countries and companies how local procurement can be increased. Last month the World Bank released A Practical Guide to Increasing Mining Local Procurement in West Africa, and this past November the Canadian government announced it would have its foreign embassies train Canadian companies to purchase more locally to improve the impacts of their investments.

 

Increasing Attention from the World’s Largest Companies

Our analysis of corporate responsibility reporting from the 40 largest companies showed that:

 

  1. The majority of the largest mining companies in the world are publicly reporting on local procurement

  2. Companies that used the Global Reporting Initiative (GRI) Sustainability Reporting Framework to structure their corporate responsibility reports were more likely to have more detailed local procurement information publicly available, than companies that did not use the GRI Framework to structure their public reports

  3.  There is a significant opportunity for the examined mining companies to strengthen the extent to which their local procurement strategies are publicly reported

The data from this analysis demonstrates that the majority of the 40 largest mining companies are already reporting on local procurement in their corporate responsibility or annual reports. As a whole, from 2012 to 2013, the level of detail in local procurement reporting by the largest mining companies increased. This trend suggests that more companies are reporting on their prioritization of local suppliers, local procurement programs, definitions of local procurement, local procurement statistics, and supplier conduct.

 

Leaders in Reporting

The leaders in local procurement reporting for 2012 and 2013 were Anglo American, Newmont Mining, Rio Tinto and Barrick Gold. These companies provided thorough information on their approach to local procurement, such as polices, programming and statistics.

 

This detailed level of reporting makes it easier for stakeholders, like representatives from local chambers of commerce or industry associations, to engage with companies. Such stakeholders can use this information to find points of intersection between their interests and a company’s goals, such as coordinating local supplier development programming.

 

An Opportunity for Improvement

This study shows that local procurement is becoming more of a mainstream issue of focus for the mining industry. The majority of the 40 largest mining companies are already reporting on local procurement in their corporate responsibility or annual reports, and many are providing detailed statistics on spending.

 

However, there are opportunities for improvement. Some of the largest mining companies still do not report on local procurement. In addition for 2013, while 19 of the analyzed companies reported prioritizing local suppliers, only 6 of companies reported having a local procurement policy.

 

This report marks an exciting opportunity for the largest mining companies to plan their local reporting for 2014 and beyond. Increased reporting will encourage companies to better track, and subsequently, better manage their local spending. In the long term, this will improve the social and economic impacts of mining activities for all stakeholders.


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Comment by Stan Slagmolen on March 14, 2015 at 23:16

Great to see this report, I have seen many practical failures in countries that were just developing its mining industry & even in other parts of Africa were its more established.

One of the key issues once again corruption, but also chronically underestimating of logistics skills, customs processing, infrastructure capacity required by suppliers and mining companies. Fit for purpose and more engineered approach than a accounting approach usually leads to a far better outcome. And really reduces cost.

Another thing is also assisting developing countries with getting there legislation online in clear & easy to understand registers.

There is also the trade off to be considered between expertise & quality of products sourced from local suppliers and foreign suppliers. It is good to see that this debate is not only an issue in developing countries, but also an ongoing issue in developed countries, where competitiveness between suppliers is a key driver to get these right for the relevant customers. If local suppliers become more competitive & have the advantage to deal with relevant legislation & organisations quicker they will develop into a good additional source of local income & tax revenue. 

Regards

Stan

Comment by Kristian Lempa on March 12, 2015 at 9:14
Hi Jeff,

thanks, this is a very interesting piece of work. The main challenge seems to be the lack of comparability of the data companies are reporting. This starts with different definitions, different categories and so on. You might find the socrecard system the Sierra Leone Local Content Unit is currently preparing interesting. It will increase transparency quite a lot.

I would be very interested to discuss with you if global reporting standards on local content are actually feasible. Can you send me your Email address?

Regards,
Kristian

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