Mining News

Mining companies expanding local purchasing for mining projects

Posted by Alana Wilson on 3/11/2014 3:14:33 PM

By Alana Wilson

Canadian mining companies operating abroad are increasingly buying goods and services locally, according to a Financial Post article on PDAC 2014. Motivations for doing so include helping local communities while also securing much needed local support for mining projects.

“We’re under increasing pressure from civil society organizations and the media to demonstrate that mines can have a significant positive impact on local development,” said Aaron Steeghs, manager of corporate social responsibility at Iamgold Corp.

Mining companies can contribute to economic development in developing countries by giving local companies opportunities to provide a range of goods and services, including uniforms, catering, housekeeping, construction, security services and mining equipment repairs.

The article also notes some challenges to local procurement. These include language difficulties between international buyers and local companies, limited information available on local businesses, and a lack of capacity within local businesses to supply goods and services at the quantity and quality needed. Companies are responding through making local procurement a key part of their business models and providing training and capacity building to local companies.

The article also notes partnerships between mining companies, NGO’s and governments as a way to ensure that local procurement benefits community members most in need:

The discussion shouldn’t just be about whether or not companies are purchasing locally, but how they are doing it, said Wilson Prichard, assistant professor of political science at the University of Toronto.

“It’s one thing for a mining company to show up in a country and buy a whole lot of equipment from one supplier who becomes very wealthy. It’s a very different thing for a mining company to come into a community and work proactively with the local community in order to help people within that local community to build …. business models that can be sustained beyond the life of the mines,” he said.

Despite these challenges, mining companies and their local purchasing decisions can have a significant positive effect on local development. The author notes that “[m]ining dollars could make contributions to economic development in poor countries that outstrip the value of Canada’s foreign aid disbursements many times over” citing the example of Iamgold which spent four times more on local purchases in Burkina Faso in 2012 than CIDA delivered in foreign aid to the country during the 2011-2012 fiscal year.




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