Local Procurement in Canadian Mining Sector
In February 2014, Engineers Without Borders Canada released a
Laying awake (jet-lagged) in Kyrgyzstan, I managed to catch up with some optional reading. Some truism adopted in the
The EWB study examines CSR reporting of Canada’s 50 largest mining companies. The study finds that public reporting on local procurement receives less attention relative to other CSR issues. However, the study also finds that reporting on local procurement has increased by 25% from 2011 to 2012. The local procurement reporting examples highlighted in the study include
Why does it seem such an apparent chore for mining companies to maximize and report on their local procurement? This topic deserves further examination by the Engineers Without Borders Canada’s future studies.
After reviewing the best practice examples noted above, I revisited a couple of recent CSR reports to which I contributed and their coverage of the local procurement topic.
Examples mentioned include considering advance payments for materials and equipment to reduce the suppliers’ working capital requirement, and tracking and evaluating its international purchases to identify changes in local availability of suitable substitutes. In 2012, such a review identified 15 consumables that had become available from Kyrgyz sources. Kumtor also hosted an Open Day for Suppliers Forum, welcoming 55 participants who were interested to learn more about our procurement practices and opportunities.
Kumtor reported a total spend of $265 on goods and services in 2012. This included approximately $74 million procurement within the Kyrgyz Republic. When adjusting its procurement figures by excluding original equipment manufacturer (OEM) capital equipment and parts, major consumables, and reagents that are not available for purchase in the Kyrgyz Republic, and fuel import from Russia, over 70 percent of its total procurement expenditures in 2012 qualified as purchases within the Kyrgyz Republic.
Kumtor’s report does not stop there. It also highlights other local business development-related activities outside of its own supply chain. These included microfinance schemes (focused on agriculture sector), and capacity-building partnerships, such as one developed with the European Bank for Reconstruction and Development (
As part of its joint initiative with the EBRD, Kumtor commissioned a study to map the businesses of the Issyk-Kul administrative region, which hosts the Kumtor gold mine, and held number of related workshops to inform local businesses about the results of this study. Over 1,000 small businessmen and women took advantage of the complimentary seminars presenting results of the study. During these workshops, those who attended were also provided with information about the EBRD’s business consulting services and training, ranging from business planning to marketing.
However, similar to the mining sector more broadly, Centerra continues to have its work cut out to demonstrate how it is adding value to the local economies where its operations are located. In Centerra’s case there may be a bigger sense of urgency. The need to demonstrate positive local economic impacts comes against a backdrop of
Why do you think is reporting of local procurement practices by the Canadian mining sector still somewhat underdeveloped compared to other CSR issues? What are other good local procurement reporting practices in the Canadian mining sector? - You may also be interested in this blog (Inspiring Women associated with Kumtor Gold) in which I reflect on an inspiring meeting with a female entrepreneur who forms part of Kumtor's local procurement and supply chain.