Four mining companies adopt Mining Local Procurement Reporting Mechanism

27th January 2021 By: Donna Slater - Creamer Media Contributing Editor and Photographer

Mining Shared Value (MSV), a nonprofit initiative of Engineers Without Borders Canada, reports that four mining companies have, so far, adopted the Mining Local Procurement Reporting Mechanism (LPRM), with two more confirming their plans to do so shortly.

Ivanhoe Mines became the first company to use the international transparency standard in 2019, and Lundin Gold, Golden Star Resources and Teranga Gold have now published their sustainability reports using the framework.

The LPRM is a publicly-available information-sharing framework that was created by MSV in partnership with the German development agency, to increase and standardise information on mine site level local procurement processes and results.

The procurement of goods and services is the single largest payment made in-country by virtually all mine sites, though for mining governance it has traditionally received less attention than the payment and prudent use of mining company taxes and royalties, according to MSV.

The Mining LPRM is structured like the Global Reporting Initiative, providing a set of disclosures for companies to provide information on key elements, such as local procurement policies, how much is spent in host countries, and supplier development programmes.

It is designed to provide information to satisfy the information needs of other standards including the World Gold Council’s Responsible Gold Mining Principles and the Initiative for Responsible Mining Assurance Standard.

MSV MD Jeff Geipel says that, with hundreds of millions of dollars spent each year by a typical mine site, local procurement of goods and services has huge potential to not only create economic and social benefits for host communities and countries, but it is also an incredibly effective way of strengthening a mine’s social licence to operate.

“We created the Mining LPRM as a public good because there was no information-sharing framework for this environment, social and governance (ESG) issue that has such immense potential impact in host countries.”

Ivanhoe group sustainability manager Jasmine Abrahams says it is imperative to build local capacity across the supplier value chain. “The Mining LPRM allows us to communicate to stakeholders, including investors and ESG ratings agencies, that we have systems in place to understand and prevent risks associated with procurement.”

She adds that Ivanhoe has implemented robust enterprise and supplier training and capacity development programs for businesses and entrepreneurs within its host community. “It is our goal to identify, nurture and harness talented suppliers within our procurement supply chain, with a view towards establishing long-term transformative opportunities for local communities.”

When comparing Ivanhoe’s year-on-year jurisdictional procurement spend, Abrahams says the company’s procurement in the Democratic Republic of Congo increased by 133%, while procurement in South Africa increased by 72%.

According to the MSV, whether companies buy from local suppliers in a significant way is becoming a high-profile issue for the sector, and governments in the last few years have implemented regulations requiring local sourcing in countries including Ghana, Tanzania, Saudi Arabia, and the Argentine province of Salta.

Indigenous communities in both Canada and Australia have also been able to secure local procurement commitments as part of binding community development agreements.

As such, stakeholders want to see concrete results that mining sector activity is contributing to host country economic benefits, says MSV.

Golden Star Resources, which released its first sustainability report using the LPRM in September, operates in Ghana where the government is in the process of increasing regulations on the mining sector regarding local procurement.

Golden Star executive VP and sustainability head Philipa Varris says that, for Golden Star, local procurement participation has long been recognised as a vital element of retaining and enhancing the value of its operations for host communities.

“The Mining LPRM provides a standardised method for ensuring transparency and in practical terms has guided our efforts and performance improvement.”