Local procurement in mining: A central component of tackling the resource curse

Abstract

This thought piece will argue that a central issue that deserves far more attention in the cause of improved mineral resource management is local procurement. In most cases procurement by a mining operation is the single largest potential economic impact in a host country, more than payments in taxes, wages and community investment combined. However, technical assistance institutions, civil society organizations and overseas development assistance providers are not giving as much attention to this issue relative to other mineral extraction impacts. Mining companies themselves also have an economic interest in purchasing more goods and services closer to their sites of activity, in the form of improved relations with stakeholders and lower supply chain costs in the long run. In addition, bilateral and multilateral aid providers and development organizations have an important role to play to support economic development planning utilizing the procurement spending of mining companies. While local procurement is not a silver bullet to defeat the resource curse, the current slowdown in global mining activity provides a chance to “get it right” and drastically improve the development outcomes of mining.