The Relationship Between Local Procurement Strategies of Mining Companies & Their Regulatory Environments, Namibia and South Africa

Countries

South Africa, Namibia

Focus Area

Engaging
Communities and Sharing Benefits

Status

Completed

Contact

Cecilia Gruber

sustainable development goals

Budget

$198,365

Funders

Global Affairs Canada

Who Benefits

Direct:

Mining regulators in South Africa and Namibia

Indirect:

Other mining regulators in Sub-Saharan Africa

Current and future Sub-Saharan African local-supplier businesses

Current and future mining companies operating in Sub-Saharan Africa

 

Delivery Partners

Engineers Without Borders Canada

With contributions from:

SEF Canada Ltd.

Norman B. Keevil Institute of Mining Engineering, University British Columbia

 

The Challenge

Sub-Saharan Africa has one of the largest endowments of mineral resources in the world. However, decades of mining activity have not created corresponding advances in socio-economic development. One of the causes of this paradox is the lack of supply chain linkages between domestic suppliers and mining investment in Sub-Saharan African countries. International mining operations in this region have tended to import goods and services to meet the needs of their operations, rather than prioritize purchasing from local suppliers.

CIRDI's Approach

This collaborative project was inspired by a growing debate about the role host-country governments can play to ensure that benefits from mining activities are shared more equitably between mining companies and host countries.

The project was designed in four phases:

Phase I – Foundational Research

Phase II – Field Research

Phase III – Knowledge Sharing

Phase IV – Evaluation

The research team consulted with stakeholders from government, communities and industry throughout the four phases of the project, ensuring that the research developed in this study reflects a range experiences and that its findings are felt beyond the project completion.

Project Details

The project examined the local procurement regulatory framework of South Africa and Namibia and the extent to which the local procurement strategies of the mining companies that operate within those countries align with and are affected by this framework. Research also identified common factors that influence mining companies as they create local procurement strategies.

Following field research in Namibia and South Africa and consultations with stakeholders, the final report was released in February 2017.  Findings were shared with mining regulators and other stakeholders in Namibia, South Africa, and globally. The research findings in the report focus on:

  • The relationship between local procurement and development outcomes
  • Specific, anticipated benefits of local purchasing in Namibia and South Africa
  • Extent to which mining companies are upholding local procurement regulations
  • Local procurement strategies of mining companies operating within South Africa and Namibia
  • Factors influencing mining companies to develop local procurement strategy in a particular way

Cross-cutting Themes

Gender

  • Interviews included women from regulators, mining companies and other stakeholder groups to ensure their perspectives were represented in the research.

Environment

  • Study recommendations encourage responsible sourcing by mining companies to integrate environmental and social considerations and requirements into procurement policy.

Governance

  • Study supports Sub-Saharan mining regulators in informed decision-making on local procurement regulations.

Results and Impact

The final research report was launched at Mining Indaba 2017 in South Africa and at the Namibia University of Science and Technology (NUST), where the findings of the report were shared with mining regulators and other stakeholders from across Sub-Saharan Africa. Further dissemination has occurred via CIRDI’s and EWB’s networks and at the Prospectors and Developers Association of Canada (PDAC) conference in March 2017. The project team has proposed further work in collaboration with African universities and NGOs to advance the report’s recommendations and explore opportunities for future research.

 

The research generated through this project is highly relevant to Sub-Saharan African mining regulators as it examines the extent to which local procurement regulations have been effective in incentivizing mining companies to purchase local goods and services. Key research findings were shared with mining regulators from the countries of focus via the final research report to increase awareness among regulators and mining companies on the mutual benefits of local procurement. It is hoped that this knowledge exchange will enhance awareness and increased adoption of local procurement policies that contribute desired social and economic development outcomes.

Sustainable Development Goals – Project Contributions

No Poverty

Explores the development potential of local procurement and supplier capacity and demonstrates how local procurement can increase jobs and revenue for host countries, in turn helping to alleviate poverty.

Decent Work and Economic Growth

Identifies how linkages between local businesses and the mining supply chain can be improved to create local jobs and drive economic growth.

Industry, Innovation and Infrastructure

Explores how procurement policy affects growth of the local supply base in the two countries of focus, and highlights the need for comprehensive support systems and resources for the domestic suppliers. Local procurement policy can incentivize improved performance by domestic suppliers to meet demand and improve cost, quality and speed of delivery.

Reduced Inequalities

Provides examples of progressive local sourcing and procurement policies, which help to spread the economic benefits of mines and mitigate increases in inequality that can accompany large-scale mining. Goals for economic empowerment must align with, and not counteract, goals for industrial growth.

Responsible Consumption and Production

The report encourages responsible sourcing by mining companies to integrate environmental and social considerations and requirements into procurement policy.

project team

resources

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