Mining Local Procurement Reporting Mechanism

Share & add to the conversation on Twitter using #LPRM

• Twitter: @giz_gmbh • Twitter: @ewb_msv • LinkedIn: https://www.linkedin.com/ • LinkedIn: linkedin.com/company/ company-beta/1664949/ mining-shared-value • Website: www.bmz.de/rue/en • Website: www.miningsharedvalue.org

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

1

Mining Local Procurement Reporting Mechanism

14 June 2018 CIM Environmental & Social Responsibility Society Webinar

Supported by

Developed by

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

3

Why • Procurement is the single largest payment type most mining operations make – therefore the largest potential lever for economic and social development • New KPMG survey of Canadian mining executives finds community relations/SLTO #4 risk (political risk was #6) • Mines sites that are unable to demonstrate meaningful local economic benefits will face conflict, stranded assets • Virtually every country updating its mining regulations are adding local content laws.

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

4

Procurement Spending in Context

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

5

Why if we have a common way of reporting on tax payments, energy use and other impacts do we not all report in the same way for the single largest economic impact?

Where it started Where it started • Examining mining company public reporting trends on local procurement • Increased reporting drives performance, particularly for companies with less sophisticated systems

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

7

Where it started Where it started: Scorecards push companies

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

8

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

9

Global Steering Committee

Global Steering Committee

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

10

Objectives • Improve internal management in mining companies to create more benefits for host countries and to strengthen their social licence to operate. • Empower suppliers, host governments, and other stakeholders with practical information that will help them collaborate with mine sites. • Increase transparency in the procurement process to deter problematic practices, such as corruption.

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

11

2018-06-14

12

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

13

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

14

LPRM categories of disclosures

2018-06-14

15

Sample disclosures (Select LPRM 200 - required)

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

16

Sample disclosures (LPRM 300 - required)

2018-06-14

17

2016 Oyu Tolgoi National Spend Report (Mongolia) http://ot.mn/spend-report-en/ 2018-06-14

18

2018-06-14

19

2018-06-14

20

2018-06-14

21

2018-06-14

22

2018-06-14

23

2018-06-14

24

2018-06-14

25

Implementation • Mining LPRM is not meant to “sit on the shelf” – it is meant to create data that empowers stakeholders and brings in additional resources (ODA for example).

• Goal of having LPRM included in CSR and governance frameworks. Integration – not a new separate system like the EITI.

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

26

Consultants • Consultants set up strategy, metrics and reporting for companies – The LPRM offers a template to report to report to for any local procurement strategy

• Ex: DAI • One of the effects we hope for with the LPRM is to “rise all seas” for practitioners helping mine sites set up systems 2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

27

Investors • Companies that are not able to demonstrate positive economic impacts for host communities and countries face significant risks • A company reporting in accordance with the LPRM as a signal to show management commitment to the issue • The LPRM serves as a framework for CSR/Sustainability metrics to look to on the issue of local procurement, rather than conflicting standards and systems 2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

28

ODA, NGOs and Impact Investing • Billions in aid and impact investing are flowing to developing countries to support SMEs and do private sector development • Much of this funding goes to the wrong businesses, or is done without the involvement of the actual customers of the potential goods and services.

• The LPRM creates data to help identify the right places to fund private sector support 2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

29

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

30

Concluding Remarks • If mining site report on their local procurement in accordance with the LPRM – host country benefits will increase.

• The LPRM allows companies to improve their social license and better engage with governments on local content regulations.

• The LPRM provides a template of best practice on both reporting and local procurement management itself – preventing every actor from re-creating the wheel.

2018-06-14

Mining Local Procurement Reporting Mechanism (LPRM)

31

Share & add to the conversation on Twitter using #LPRM

Website: www.bmz.de/rue/en Twitter: @giz_gmbh

2018-06-14

Website: miningsharedvalue.org Twitter: ewb_msv Mining Local Procurement Reporting Mechanism (LPRM)

32