4 minute read
Jeff Geipel (Mining Shared Value)
In January I had the opportunity to speak at the Future Minerals Forum in Riyadh, a new event that organisers plan to hold annually to bring together the mining sectors of the Middle East, North and East Africa, and central Asia.
One of the reasons I was excited for the opportunity to attend the Forum was the chance to visit Saudi Arabia and interact with the government there regarding their efforts to harness mining for economic development.
In our non-profit work promoting local procurement by the global mining sector, we always emphasise the need to situate local content as part of a much wider industrial policy. We also stress that to meaningfully build up suppliers of goods and services to the mining sector, and use these capacities to diversify into other sectors – the creation of horizonal linkages – leaving it to the market alone is simply not an option. The government has to be involved to nudge investment
into the right places, and provide meaningful capacitybuilding support for suppliers and other actors around them.
Because of this, I was looking forward to seeing Saudi efforts to build its mining sector as clearly they have a strategy of attracting significant investment in the wider ecosystem of mining, rather than just liberalising investment and hoping economic and social benefits will occur naturally.
Case in point – the Forum itself. The government spared no expense in flying representatives of the mining sector, governments and even civil society to take part in the event, helping it to achieve the critical mass of discussion that so often eludes events outside the largest ones like Mining Indaba and the PDAC Convention.
It takes money to make money and the government of Saudi Arabia clearly understands this, using the event to seek
Jeff Geipel
Mining Shared Value founder
Jeff Geipel is the founder and managing director for the Mining Shared Value initiative at Engineers Without Borders Canada. This initiative works to improve the development impacts of mineral extraction in host countries through increasing local procurement by the global mining industry. Through this work, Jeff is also the community manager for the World Bank’s Extractives-led Local Economic Diversification Community of Practice. Originally from Vancouver, Jeff holds a master’s degree in international development from the London School of Economics in the UK. Jeff’s work and articles have been featured by the Guardian, Devex, the Globe and Mail, National Post, Next Billion, Mining Weekly and Hill Times Magazine. Jeff currently resides in Toronto.
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investment into all parts of the value chain.
It was also very positive to see local content as an issue highlighted throughout the event as an explicit goal of the Kingdom of Saudi Arabia in its vision for mining.
Here too, initial policy towards this goal has been much more comprehensive than the approach so often seen in sub-Saharan Africa where demand-side requirements are placed on mining companies, without being buttressed by meaningful investment in suppliers and the wider ecosystem around them.
As an example of this, the government has invested in the creation of two industrial cities devoted to the mining sector value chain, Wa’ad Al Shamal and Ras Al-Khair.
Thus, while international mining companies who invest in Saudi Arabia may have to form joint ventures with national companies who have significant local content ambitions, the government is providing significant support for the suppliers of the mining sector. In our experience international mining companies do want to buy goods and services as local as possible – after all this is cheaper – but forcing them to do so without supporting those suppliers is a recipe for frustration and constant tensions.
This is not to say that all state interventions to attempt to increase local procurement, hiring and other forms of domestic participation in the mining value chain work and should be encouraged. Governments can focus on the wrong goods and services to support, and there is always a real risk that corruption can interfere, as suppliers with government ties can often be the real beneficiaries of such government interventions. However, it is also crucially true that there is really no example of any state in the world that has meaningfully harnessed its mining sector for economic and social development without intervening significantly.
As such, while I would like to have the opportunity to dig deeper into Saudi Arabia’s mining regulations and local content approach, what I saw in Riyadh was very promising. Their strategy merits further examination and other countries working on their own strategies should take note.
