Mining Shared Value is an advocacy framework to promote increased engagement between the international mining sector and community business operators in host economies.
When global mining companies source local goods and services, they unearth vital economic and social benefits for host communities.
Mining Shared Value is a mission to increase local procurement by the global mining industry. By maintaining strong links to the domestic economies in which they operate, mining corporations can create significant mutual benefits – for themselves and local communities.
The Mining Shared Value venture is a framework to promote increased engagement between community providers and the international mining sector. This ensures the relationships between local communities and global corporations are reciprocal and mutually beneficial, meaning both parties share in the value generated from mining.
A groundbreaking approach to fostering host economies.
Mining Shared Value collaborates with a diverse group of stakeholders to encourage industry-wide adoption of innovative local procurement practices.
The venture works closely with:
- International development institutions.
- Canadian government agencies.
- Global mining companies.
- Local communities in host economies.
Mining Shared Value equips the mining sector and its key stakeholders with techniques to maximize local sourcing of goods and services. This is achieved through a threefold strategy:
- Create practical and applicable resources for companies.
Mining Shared Value develops tools, processes and materials to help mining corporations engage in and operationalize local procurement.
- Foster connections between key corporate groups and local community members.
Mining Shared Value connects industry personnel with development practitioners, to create a mutually beneficial supply chain based on robust service partnerships.
- Champion advocacy.
Mining Shared Value works with prominent mining bodies to embed the model for local procurement practice in company frameworks, industry standards, and government policies and programming.
The shared benefits.
The significant economic impact of mining operations means that procurement can be a major driver of economic growth in host countries.
Mining companies’ annual spending on local goods and services at mine sites in developing countries is often significantly larger than many bilateral aid agencies’ budgets for those same areas. The potential for positive impact is enormous.
‘The World Gold Council reported that in 2013, local suppliers accounted for 71% of in-country expenditures ($37, 402 million), making local suppliers the biggest recipients of host country spending by mining companies.’
World Gold Council, Responsible Gold Mining and Value Distribution, 2013 Data: A Global Assessment of the Economic Value Created and Distributed by Members of the World Gold Council (2014) London, page 3
When mining activity fosters strong up-stream links (also referred to as backward) with domestic service economies, the benefits are both mutual and multiple.
The benefits for communities:
- Mining activity creates jobs in host economies.
A sudden or ongoing increase in demand for goods and services creates a need for human resources, and the opportunity for local community members to fill employment gaps.
- Mining promotes skill and technology transfers.
In developing regions where there may not be enough qualified local suppliers, companies can partner with NGOs and local governments to invest in enterprise and skills development; and provide training, technology and educational resources. These activities build local capacity, provide infrastructure for healthcare, and improve housing and sanitation.
- Mining presence can increase community integration into global supply chains.
By establishing standardized skills and liaising with mining networks, local suppliers can establish platforms to win business and provide services in larger, more scalable capacities.
- Mining activity can aid in the overall formalization of local economies.
A single mining corporation’s development projects can deliver benefits to more than 2.6 million people, with direct positive impact on the livelihood and earning capacity of around 260,000.
The benefits for companies:
- Lowered procurement costs.
Due to lower product prices and improved supply chain efficiency, local engagement can lower long term operating costs. Purchasing from advanced country-based companies usually comes with a higher premium than practitioners in developing economies.
- Streamlined logistics.
Local procurement shortens lead times and minimizes the complexities associated with resource deliveries.
- Strengthened social license for operation.
By creating benefits for host economies and communities through local purchasing, mining companies can improve relationships with local stakeholders and governments. Delays due to community conflict or slow permit approvals can be extremely expensive. For example, a week long delay for a mine with $3-5 billion in capital expenditure can result in $20 million in lost revenue.
Davis, Rachel and Daniel M. Franks, “Costs of Company-Community Conflict in the Extractive Sector,” Corporate Social Responsibility Initiative Report No. 66 (2014) Cambridge, MA: Harvard Kennedy School
Key outcomes from Mining Shared Value.
Development of the Global Mining Procurement Standard.
In partnership with the German Federal Ministry for Economic Cooperation and Development (BMZ) through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Mining Shared Value will develop a reporting standard for local procurement in the mining industry.
Standardised reporting makes it easy for local stakeholders, like local chambers of commerce and industry associations, to engage with global companies. Local operators can use this information to find commonalities between their businesses and a company’s goals.
Founding Member of the World Bank Extractives for Local Content Development Community of Practice (CoP)
Mining Shared Value is a founding organization in the World Bank’s new Extractives for Local Content Development Community of Practice (CoP), which connects the world’s leading practitioners and experts on local procurement.
The CoP distributes research and guidance on local procurement to key global stakeholders.
Our reports and publications include:
Local Procurement and Public Reporting Trends Across the Global Mining Industry: An Analysis of Company Reporting, 2012-2013 – Canadian Mining Supplementary Edition
Local Procurement and Public Reporting Trends Across the Global Mining Industry: An Analysis of Company Reporting, 2012-2013
Local Procurement by the Canadian Mining Sector: A Study of Public Reporting Trends[TA1]
Measuring Public Reporting Trends by the Global and Canadian Mining Industries.
By reporting on local procurement industry-wide, Mining Shared Value promotes increased engagement in procurement policies and programs.
In response to these reports, many mining companies have reached out to Mining Shared Value for guidance on strengthening local procurement strategies and measurement techniques.
An advisory role on best practice local procurement for mining companies.
Mining Shared Value is able to provide guidance on best-practice local procurement.
This ranges from light-touch advising and presentations through to the creation and development of extensive local procurement strategies.