Sector Programme
Extractives and Development
Abbau mit schweren Maschinen

Local Value Addition Increasing Local Value Creation through Transparency: the LPRM

The mining and oil and gas sectors together spend around 1 trillion USD annually on procurement of goods and services. Mining companies typically spend 50-70 % of their payments in host countries on suppliers in producing countries (World Gold Council 2014). Thus, usually procurement accounts for the biggest share of their expenses – and also for the potential economic benefits for host countries.

By awarding more supplier contracts locally, the local economy in producing countries is strengthened and jobs are created. Expectations for economic benefits of local neighboring communities and decision-makers are often high. In many cases these expectations are not met in countries of the Global South, which can lead to tensions and opposition to mining.

While governments bemoan the lack of integration of the extractive sector into the domestic economy, mining companies emphasize their social investments in the form of financing local infrastructure or supporting small businesses in mining areas.

Mining Local Procurement Reporting Mechanism

Mining Local Procurement Reporting Mechanism

File type PDF | Date of status 07/2017 | File size 11 MB, Pages 78 Pages

In order to bring transparency and comparability to these different practices, strategies and policies and to strengthen local procurement in the long term, the Mining Local Procurement Reporting Mechanism (LPRM) was developed.

Sector Programme Commitment

LPRM Factsheet

Factsheet: How mining can support economic growth

File type PDF | Date of status 08/2021 | File size 434 KB, Pages 2 Pages

The Sector Programme “Extractives and Development” developed the LPRM together with the Mining Shared Value Initiative (External link) of Engineers without Borders Canada (External link) in 2017. It provides a reporting structure for companies to disclose information on the following aspects:

  • Framework and context data of the company
  • Processes for procurement and special consideration of local suppliers, if applicable.
  • Breakdown of procurement by category and region of procurement
  • Due diligence requirements and processes for local procurement (e.g. anti-corruption)
  • Support measures for local suppliers
  • External requirements to which the company is committed in the context of local value creation.

Since its publication, the LPRM has been taken up by the Extractive Industries Transparency Initiative (EITI) (External link), the Initiative for Responsible Mining Assurance (IRMA) (External link) and the International Council on Mining and Metals (ICMM) (External link), among others. Companies such as Ivanhoe Mines, Lundin Gold, Golden Star and Teranga Gold Corporation use the standard for their reporting. A list of previously published reports can be found here: Mining LPRM - Mining Shared Value (External link)

Local Value Addition
A woman worker breaks down stones at Gudah mine in Bikaner, Rajasthan

Construction Raw Materials Internal link

Construction raw materials can be a powerful driver for local value addition. The Sector Programme conducts activities to support the sustainable handling of construction raw materials.

Local Value Addition
ANTAMINA 6

LION - Local Investment Opportunities in Natural Resource Projects Internal link

LION models procurement expenditures of mining companies to provide local decision makers and suppliers with information on the huge procurement demand in the mining sector.

Local Value Addition
GEOLOGIA MINERA BATEAS

Assessing the economic viability of mineral deposits Internal link

The toolkit provides competent mining supervisory authorities with guidelines for a first assessment of the profitability calculations presented to them for planned projects for the extraction of mineral raw materials.

Good Governance
Engineers at an open pit mine in Peru

Extractive Industries Transparency Initiative (EITI) Internal link

The Extractive Industries Transparency Initiative (EITI) advocates for greater financial transparency and accountability of public revenues in the extractive sector. Read here how the Extractives and Development Sector Programme is involved.