HOUSTON--(BUSINESS WIRE)--Mining firms across the globe could be at risk of losing valuable exploration and operating licenses unless they step up their efforts to award work to suppliers in the locality of contracts.
That’s according to global supplier information company Achilles, which today issued a white paper about the challenges multinational mining companies face in complying with Local Content Development rules – based on an independent survey of industry professionals across the globe.
Amid falls in commodity prices, multi-nationals are increasingly shifting their focus towards opportunities in new and emerging markets as a source of revenue
Yet in a market survey, less than half (45%) of large buying organizations in the mining industry said they would be making an extra effort this year to use local suppliers in contracts.
It could mean they risk getting caught out by a raft of new Local Content Development rules, unless they take steps now to upgrade their approach to procurement and managing information about suppliers.
Governments around the world – including in Africa, the Middle East, Australia and South America, have introduced local content development policies that require mining companies to ‘give back’ to local communities via employing and training local people, or investing in infrastructure. This includes the recently updated Broad-Based Black Economic Empowerment (B-BBEE) Act in South Africa.
The changes have put greater onus on operators to gather accurate data on their supplier base to prove compliance.
Yet despite the growing need for data and information about the supply chain, 45% of survey respondents admitted in the same market survey that they are not confident that their data on suppliers is accurate.
The market survey was carried out by independent research consultancy IFF, which conducted telephone interviews with 300 procurement professionals from large businesses across the UK, Spain, Brazil, The Nordics and the USA. This included 64 large firms in mining, oil and gas.
It was commissioned by Achilles, which works on behalf of more than 40 multinational mining firms to manage information about more than 6,000 suppliers – ensuring they meet critical standards in compliance and CSR before they are considered for work. Achilles also manages Regic – a supplier information community for Latin America and South Europe.
Gareth Palmer, Achilles Regional Director for the Middle East and Africa, said: “Without clear and accurate data on their suppliers, an operator would not be able to distinguish which contractors meet Local Content Development requirements.
“With growing pressure from governments and investors, businesses need to put in place fair and transparent systems for assessing and selecting small and local suppliers.”