Local Content Policies in the Mining Sector: Scaling up local procurement

This report analyzes local procurement policies (LCPs) in the mining sector, examining how governments can increase the purchase of goods and services from domestic suppliers to foster industrial development and economic diversification. It details various ways to define "local"—through geography, value addition, or ownership—and evaluates demand-side and supply-side policy instruments, ranging from mandated percentages and targeted lists to supplier development programs and access to finance. The document emphasizes that LCPs are most effective when supported by a conducive business climate, reliable data, and complementary capacity-building measures for local firms.

• Governments implement local procurement policies for several strategic reasons: to address fiscal crises following commodity downturns, to align with regional visions like the Africa Mining Vision (AMV) and global Sustainable Development Goals (SDGs), to secure a social licence to operate amidst public unrest, and to respond to pressure from civil society organizations such as the Extractive Industries Transparency Initiative (EITI).
• The definition of "local" typically follows one of three criteria: geography (location of the business), value addition (the proportion of processing performed in-country), or ownership (participation of nationals in equity, management, or employment).
• Demand-side policy options used to compel or encourage local sourcing include mandated percentages of local spend, targeted lists of goods and services (set-asides), requirements for companies to submit local procurement plans, tax preferences, and "best efforts" clauses requiring preferential treatment "to the extent feasible."
• Supply-side policy options focus on enhancing the capacity of local firms to compete. These include technology transfer requirements, mandated R&D spending, Supplier Development Programs (SDPs) providing mentorship and training, improving access to finance for SMEs, and the creation of supplier portals to bridge information gaps between mines and vendors.
• Community Development Agreements (CDAs), such as Impact Benefit Agreements (IBAs) in Canada and Indigenous Land Use Agreements (ILUAs) in Australia, allow for tailored local procurement targets negotiated directly between mining companies and host communities to secure a social licence to operate.
• Successful implementation of LCPs requires several pre-conditions: a detailed analysis of local supplier capacity, a conducive business climate, investments in business capacity, time-bound targets to avoid dependency, robust monitoring and enforcement, and strong governance to prevent corruption and "fronting" (where shell companies are used to circumvent requirements).
• Specific national examples of LCPs include South Africa's 2018 Mining Charter, which mandates specific spending percentages for historically disadvantaged persons and women/youth-owned companies; Ghana's use of a targeted list of products (initially eight, then 19, and moving toward 29) that must be sourced locally; and Kazakhstan's requirement for a CT-KZ certificate of origin to qualify as a national manufacturer.

APA

Nickerson, E., & Geipel, J. (2019). Local Content Policies in the Mining Sector: Scaling up local procurement. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/local-content-policies-mining.pdf

Chicago

Nickerson, Emily, and Jeff Geipel. Local Content Policies in the Mining Sector: Scaling up local procurement. International Institute for Sustainable Development, 2019. https://www.iisd.org/system/files/publications/local-content-policies-mining.pdf.

Wikipedia

{{cite report |last1=Nickerson |first1=Emily |last2=Geipel |first2=Jeff |title=Local Content Policies in the Mining Sector: Scaling up local procurement |publisher=International Institute for Sustainable Development |date=March 2019 |url=https://www.iisd.org/system/files/publications/local-content-policies-mining.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nickerson2019local, author = {Nickerson, Emily and Geipel, Jeff}, title = {{Local Content Policies in the Mining Sector: Scaling up local procurement}}, institution = {International Institute for Sustainable Development}, year = {2019}, month = mar, url = {https://www.iisd.org/system/files/publications/local-content-policies-mining.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }