Mike Scott reports on how using local suppliers and hiring indigenous people offers business benefits for companies like Indonesia's Bumi Resources, Canada's Imperial Metals and Cameco
One area where miners could make a big difference relatively quickly is in procurement, where companies often ignore local suppliers in favour of companies from their home markets. “Procurement is often the single biggest payment a mining group makes, so it has the biggest impact in creating revenue and jobs,” says Jeff Geipel, managing director of NGO Mining Shared Value.
The main concerns for companies are quality, volume and reliability, he adds, but there are many things they could buy locally but do not because procurement departments are not incentivized to find local suppliers. “There is a lack of information on local suppliers and there are quality concerns, to be sure, but sometimes that is used as an excuse. One company operating in Africa used to import chickens from Brazil. There’s no way that’s cheaper for the company – but if you change it, any cost savings will come over the longer term. There may be upfront costs.”
Governments are starting to take local procurement more seriously, through initiatives such as the Africa Mining Vision
Historically, local procurement has not been dealt with well, he adds, “but companies have come quite a long way in the last few years”. The Responsible...