- Backward Linkages (Supplying Extractives)
- Local Procurement Policies, Agreements, and Requirements
- Extractive Company Procurement Policies and Procedures
Extractive Company Procurement Policies and Procedures
At a Glance
- Companies are increasingly developing internal policies and procedures to make local procurement a business priority as they recognize the risks to social licensing and strive to achieve meaningful development outcomes in the areas they operate.
- The International Finance Corporation (IFC)has developed a guide based on their experience supporting companies to develop robust local procurement programs.
- When examining company policies and procedures related to local procurement, it is useful to understand the priorities driving them. These priorities are a strong indicator of where is likely to be the greatest resolve to advance local procurement, and where government intervention can provide complement.
- An organizational maturity chart can be used to assess the maturity of a company’s local procurement strategy.
Recognizing the risks to their social license to operate, and through being committed to supporting meaningful development outcomes in regions where they operate, companies are increasingly developing internal policies and procedures to make local procurement a business priority. Internal policies and procedures provide the necessary priorities within the company to resource and move local procurement efforts forward. The International Finance Corporation (IFC) has developed a guide based on their experience supporting companies to develop robust local procurement programs, and IFC-supported efforts include best practices identified in the guide.
Some examples of companies’ local procurement policies in extractives include:
- Anglo American's local procurement policy
- Newmont's Stakeholder and Stakeholder Engagement Policy which includes value chain aspects
- Total's Fundamental Principles of Purchasing which includes aspects to give local businesses an opportunity to develop their businesses
- Kumtor Gold Company's local procurement policy
When examining company policies and procedures related to local procurement, it is useful to understand the priorities driving them, as these priorities give a strong indication of the areas where there will be the most industry resolve to advance local procurement, and areas where government interventions are a necessary complement. To assess the maturity of a company’s local procurement strategy the organizational maturity chart presented in Procuring from SMEs in Local Communities: A Good Practice Guide for the Australian Mining, Oil and Gas Sectors, found in the key resources below, is a useful tool. The chart categorizes company policies and practices in 5 classes - disengaged, basic, compliant, committed, and leading – helping policymakers to gauge the level and type of intervention needed to guide investment towards the desired local content outcomes.
- Guide to Getting Started on Local Procurement (International Finance Corporation)
- Procuring From SMEs in Local Communities: A Good Practice Guide for the Australian Mining, Oil and Gas Sectors (Mary-Anne Barclay, David Brereton, Ana Maria Esteves, Daniel Samson)
- Local Procurement Strategy (Kumtor Gold Company)
- Creating the Foundations for a Linkage Program in a Rural Setting: Lessons Learned from the Early Stages of the Ahafo Linkages Program in Ghana (International Finance Corporation, Newmont Ghana Gold Ltd.)
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