Modern Mining June 2021

to tackling the resource curse?

sites. In addition, it increases transparency in the procurement process to deter problematic practices such as corruption.” Increased uptake Adoption of the LPRM is really starting to take off, reports Geipel. Ivanhoe Mines became the first com- pany to use it in 2019, reporting on its sites in South Africa and the DRC, followed by three more compa- nies in 2020 – Golden Star Resources, Teranga Gold and Lundin Gold. In 2021, at least two more companies have adopted the LPRM, including New Gold, which has mine sites in Canada. “We are confident by the end of 2021 there will be at least eight mining companies reporting in accordance with the LPRM. In addition, the Extractive Industries Transparency Initiative (EITI) in Senegal is now using some of the LPRM’s disclo- sures in their information requests to all mining and oil and gas companies,” explains Geipel. Commenting on why Ivanhoe Mines opted for the LPRM, Jasmine Abrahams, group manager, Sustainability says the company believes that 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 rat- ings agencies, that we have systems in place to understand and prevent risks associated with pro- curement,” says Abrahams. “We have implemented robust enterprise and supplier training and capacity development pro- grammes for businesses and entrepreneurs within

good because there was no information-sharing framework for this ESG issue that has such immense potential impact in host countries.” Why use the report mechanism? Using the reporting mechanism, says Geipel, will help structure mining company local procurement practices in alignment with best practices, and MSV has already seen companies put in place new poli- cies and initiatives in order to meet the requirements of the standard, thus improving their performance. In addition, mining companies are being asked to provide detailed information as part of ESG reporting, and providing more information on local procurement efforts and supplier due diligence will help improve scores by ESG ratings agencies, and access to capital. Additionally, if companies cannot demonstrate the specifics of their local procurement efforts and results, says Geipel, this increases the likelihood of host country governments enacting the wrong type of regulations on local content. “It is in the inter- est of both mining companies and governments to increase data and transparency for this vital topic, to help inform the targeting of supplying opportuni- ties,” he adds. “The LPRM helps mine sites report on local pro- curement to improve internal management in mining companies to create more benefits for host countries and to strengthen their social licence to operate,” he says. “It also helps empower suppliers, host governments and other stakeholders with practical information that helps them to collaborate with mine

Above: There has been a noticeable improvement across mining companies operating in Africa when it comes to their local procurement policies and practices over the past decade. Left: Local procurement is the single largest payment made in host countries by virtually all mine sites. Photo by Bruna Fiscuk on Unsplash

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