On the 3rd of July 2017, Jeff Geipel, Venture Lead for Mining Shared Value (an initiative of Engineers Without Borders Canada), launched the organisation’s Mining Local Procurement Reporting Mechanism (LPRM) to a room full of industry professional, development professionals, academics and students. Here he tells us about how the LPRM disclosures work and how the seed of the idea was planted whilst studying for his MSc in Development Studies at LSE.
Earlier this month we had the honour of launching the Mining Local Procurement Reporting Mechanism (LPRM) at a session hosted by the Department for International Development at the London School of Economics.
The purpose of the Mining LPRM is to increase and standardise information being provided by mine sites on their efforts and results in purchasing goods and services in host countries and communities. It builds on a multitude of initiatives working to improve the management of mineral resources, including the Extractive Industries Transparency Initiative (EITI), and the Africa Mining Vision (AMV).
Procurement of goods and services usually has the single largest potential positive economic impact of mining in the countries that choose to host it – usually more than taxes, salaries, and community investment combined.
It is for this reason that countering the “resource curse” – the phenomenon where developing countries with high natural resource production paradoxically tend to underperform relative to those without it – requires the effective management of this single largest potential economic impact of mining.
This is why the Mining Shared Value initiative of Engineers Without Borders (EWB) partnered with the German development agency GIZ and a multitude of mining industry stakeholders to create the Mining LPRM – a set of disclosures that we seek to have all mine sites report to their suppliers, host county governments, and other stakeholders.
If we can provide a common language for the global mining industry to use when working with host countries to maximize local procurement, we can improve management and empower stakeholders to turn goals of a more inclusive mining sector into reality.
Roots at the LSE and Albert Hirschman’s Backward Linkages
It was an honour to be able to first present the Mining LPRM at the London School of Economics because in many ways this initiative owes its existence to my time spent in London for the 2011/12 year. As part of the MSc Development Studies programme, I was inspired by the Albert Hirschman’s concept of backward and forward linkages, and the idea that investment should be prioritised in sectors that create more of both. Forward (or downstream) linkages refer to the use of a product in further stages of production, and backward (or upstream) linkages refer to the use of domestic inputs in the creation of a product.
Since I finished at LSE and started the Mining Shared Value initiative of Engineers Without Borders Canada to promote local procurement by the global mining sector, I have constantly come across key institutions emphasising the importance of backward supply chain linkages from mining activity to host economies.
The Africa Mining Vision for example, a policy document agreed to by all African heads of state in 2009 to improve the outcomes of mining, has as one of its central aims to increase backward linkages. In addition, a multitude of global organisations have been making efforts to guide the mining sector and host countries to maximize these linkages, including the World Bank group and many of the United Nations agencies.
However, moving from broad goals in development policy to practical implementation is so often where we have seen efforts fall short. There is little disagreement that local procurement needs to be increased in most developing countries with mining activity, both for the benefit of those countries and so that mining companies can operate smoothly without conflict. However, broad goals of increasing mining local procurement have not always been matched with strong implementation, and the global mining system is still characterized by relatively ad-hoc efforts to change this.
We are proposing that if all mining companies and their individual mine sites report on local procurement in the same manner, we can systematically change the global mining system to create better outcomes. Common reporting will help ensure data-based decision making, and drive increased collaboration.
Turning goals and theory into reality requires proper measurement, transparency, and the full engagement of all stakeholders in the mining industry. These goals are greatly enhanced if all actors are using the same language and utilizing the same information in their efforts.
Thus, our goal with the Mining LPRM is to help turn the theory of Hirchman’s linkages into practical reality for mining host countries.
Having launched the LPRM we are now trying to work as systematically as possible to ensure it is used by the global mining system. We are reaching out to the world’s largest mining companies, but also to the various actors that guide their behavior, including industry associations, investors and sustainability thought leaders.
We also will show host county governments how having information created by the LPRM will help them better govern their mineral resources.
The global mining industry has in recent years made broad progress in improving its economic impact on host countries through local procurement. It is hoped the Mining LPRM will help turn further goals of improved economic impacts into a reality that can be measured, reported, and discussed for the benefit of the countries that choose to host mining activity.
You can learn more about their work promoting local procurement by the global mining industry at miningsharedvalue.org. Also, follow them on Twitter @ewb_msv and Linkedin in for the latest news and developments on mining local procurement from around the world.
Jeff Geipel is Venture Leader at Mining Shared Value and MSc Development Studies alumni (2012) from the London School of Economics.
The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science.