Copyright© GIZ/Michael Duff
Local Procurement Local Procurement by the Mining Sector: The Potential for Economic Development and the Role of Transparency
On the 21st of September 2021, the Sector Program “Extractives for Development” organized an event on local value creation in cooperation with the Mining Shared Value (External link) (MSV) initiative. Moderated by Linda Carstens (X4D), Dr. Sören Dengg, Head of the Department for Energy, Infrastructure and Raw Materials of the German Federal Ministry for Economic Cooperation and Development (BMZ), welcomed the participants and introduced the topic of raw material extraction and the relevance of local value creation.
Copyright© GIZ
Speakers of the LPRM Event in September 2021
Rob Pitman of the Natural Resource Governance Institute (External link) (NRGI) showed the potential of local sourcing: New jobs can be created, and the local economy strengthened. At the same time, there are several challenges, such as corruption in local value creation, which can be combated inter alia through greater transparency. Large mining companies spend hundreds of millions of dollars on their procurement. However, this money often flows out of the country and to large international suppliers.
This is where the Local Procurement Reporting Mechanism (LPRM) comes in. In the event the LPRM and its success story were presented by Jeff Geipel from MSV. The LPRM is a reporting standard for extracting companies to provide information on local procurement. It has been developed by MSV and GIZ with support from BMZ since 2017. As of September 2021, it is used by eight companies with locations in twelve countries. Data from the LPRM help to strengthen local mine procurement. The newly available data enable a better economic development in producing countries.
By awarding more supplier contracts to local businesses in mining host countries, the local economy is strengthened through increased local business capacity, formalization, and job creation that can then be used to target opportunities in other sectors.
The LPRM creates a new availability of data and thus transparency. Thanks to the LPRM, governments and local enterprises have the chance, some of which for the first time, to receive reliable and comparable information on procurement processes and the products and services demanded by the mining sector. Based on this data, the necessary legal framework, local production, and training measures can be better aligned with the actual needs of mining companies.
A factsheet with further information on the LPRM was published in English and in German.
The entire LPRM is available in English, French and Spanish.
For further information, please contact Johannes Lohmeyer (External link).