P rocurement is one of the largest expenditures on a mine’s balance sheet, often averaging 70 per cent of a company’s spending on goods and services that will keep operations running each year. Despite its scale and strategic importance, procurement, and particularly local procurement, has long received less attention than other aspects of mining performance.  

“I don’t think the general public and civil society understand [procurement spending] numbers that well,” said Jeff Geipel, founder and CEO of Mining Shared Value (MSV), in an interview with CIM Magazine. “There is a real fixation on taxes (which is reasonable) and direct jobs, but there are far more jobs directly in supplier business than on the mine site, for example.”

Sourcing goods and services closer to a mine site, in theory, can reduce costs, shorten supply chains, improve reliability, support more sustainable operations and strengthen a mine’s social licence to operate. In practice, however, Geipel said many companies fall into established procurement habits that end up disadvantaging local suppliers.

“Companies get stuck in the inertia of existing procurement relationships and that’s where the limits of local procurement are normally reached,” he said. “You do things the way you always did them and it’s hard to change. Procurement people have their existing relationships with international suppliers or far away suppliers, and they don’t want to change or risk those by switching to a local supplier.”

To better understand how mining companies are performing globally on local procurement, MSV—a non-profit program of Engineers Without Borders Canada—partnered with the World Gold Council (WGC) to assess the practices of 24 WGC member companies and provide recommendations for improvements on local procurement.

The findings showed progress, but also persistent gaps. The most significant area of improvement identified, said Geipel, is the formalization of local procurement processes. Many companies such as Gold Fields, Endeavour Mining, Kinross Gold Corporation, Sibanye-Stillwater and AngloGold Ashanti have moved away from “ad hoc or piecemeal approaches,” and are beginning to embed local procurement more clearly into corporate policies to ensure implementation at the site level.

Companies that demonstrate clearer guidance, provide detailed supplier information and publish procurement-specific contact details on their websites create lower barriers, build trust and improve supplier access for particularly underrepresented groups, said the report.

Another area of progress is how companies measure and categorize their procurement spending. Historically, many miners tracked spending in broad terms, such as domestic versus international suppliers. Increasingly, research is showing that companies that are breaking this down into more granular categories (local, regional, provincial, national or women-owned) have more in-depth local procurement processes.

“What you measure, you manage; and so, the more you’re able to see how much spending is going to each category of suppliers, you can start to think about where you can shift a little bit of that spending closer and closer to the mine,” said Geipel.

Supplier categorization, he said, also allows companies to go beyond one-size-fits-all procurement rules. Once suppliers are clearly classified, companies can differentiate how they engage with them regarding payment terms and supplier development efforts.

“If you categorize the suppliers this way, you can then differentiate your preferences in policies,” said Geipel. For example, companies can set preferences such as all local community suppliers will be paid within 15 days, while national suppliers might be paid within 30.

Differing payment terms matter because access to finance and cash flow constraints remain some of the biggest barriers facing smaller suppliers, especially in low- and middle-income countries. Long payment periods limit their ability to invest in equipment, hire staff and build capital.

Geipel added that a deeper understanding of how credit and finance shape supplier competitiveness is an area that requires far more focus across the industry. “If a business can’t get a loan at a low or competitive interest rate, it doesn’t matter how much training or preference you give them—they’re not going to be able to offer competitive prices,” he said.

One area that is often overlooked, said Geipel, is the role of end users, such as the engineers, maintenance teams and operators who ultimately use the goods and services being procured. “A lot of companies might not think about how important it is to bring your end users into this vision of local procurement,” he said. “End users have a huge role to play in supporting businesses to refine their specifications and their products, so they work.”

The report pointed to the need for stronger and more consistent engagement with tier 1 suppliers. A significant portion of mine spending flows through major contractors, yet expectations around local procurement at this level are, again, very informal. Some mining companies encourage tier 1 suppliers to source locally; but few require formal local procurement plans or assess performance during tender evaluations. Formalizing these expectations, the report concluded, would significantly expand the reach and impact of local procurement efforts across the mining value chain.

Canadian leadership in Indigenous procurement

Overall, local procurement practices are improving across WGC member companies and are a trend that mirrors broader progress across the mining industry. Still, Geipel added that “not all the companies have progressed as far and even within the same company, some sites are better than others on local procurement processes and policies.”

Canada stands out as a jurisdiction performing better on local procurement largely because of the central role that Indigenous rights and relationships play in the country’s procurement practices.

“Canada is separated from the rest of the world when it comes to Indigenous procurement in the mining sector because of our rights,” said JP Gladu, founder and principal of Mokwateh, an Indigenous consulting firm, in an interview with CIM Magazine. “Companies now understand that if they’re going to operate in the backyards of communities, they need good relationships that are inclusive of procurement, employment and training.”

Beyond direct mine services and supplies, Gladu added that opportunities are increasingly extending into energy, roads and infrastructure, creating pathways for Indigenous equity participation alongside traditional procurement.

Canada’s leadership in Indigenous procurement emerged from a lot of pushbacks. According to Sean Willy, president and CEO of Des Nedhe Group, an organization that worked to create employment and business opportunities for the English River First Nation in northern Saskatchewan, early mining projects often advanced with little Indigenous engagement until political, legal and regulatory pressure forced change.

“First Nations leaders pushed the envelope,” Willy said in an interview with CIM Magazine.

In jurisdictions such as northern Saskatchewan, where uranium mining on Crown land heightened scrutiny, provincial policies and surface lease agreements placed explicit obligations on companies to engage locally. Over time, Willy said, the strongest operators moved beyond minimum compliance. “The good companies [realized] that if they were going to do this, they needed to do it right and make sure it adds value,” he said.

That shift produced tangible results. Across northern Saskatchewan, Alberta’s oil sands and the Northwest Territories’ diamond sector, Indigenous procurement has generated billions of dollars in economic activity, Willy said, driven initially by regulation but sustained by performance.

“At Cameco, we started to see real value to us,” said Willy, who previously led corporate responsibility at the company. “Our Indigenous suppliers were committed to us.” They understood Cameco’s safety and regulatory requirements, and they supported the company through permitting and licensing.

Today, Des Nedhe Group operates across professional services, construction and retail, supporting mineral and agriculture companies including Cameco, Nutrien and Mosaic. Willy said the focus has shifted from securing an initial contract to building long-term, repeat business. “The goal isn’t just the first opportunity,” he said. “You want the second, third and fourth.”

Both Willy and Gladu emphasized that achieving that continuity depends on early planning and formalized procurement systems. Without visibility into upcoming work and clear performance metrics, Indigenous suppliers struggle to invest, scale and manage risk.

“We’re better as a First Nation supplier if there’s that structure that we see what’s coming and there’s sustainability to it so that we can grow,” said Willy. “The win for mining companies is not only that you have an Indigenous supplier but that you have an Indigenous workforce and then you can build up your workforce over time.”

Gladu added that time is also a critical and underestimated factor. “The level of sophistication is still emerging within the Indigenous business space,” he said. “Most Indigenous businesses are only 10 to 20 years old, whereas the private sector has had over 100 years because they haven’t been hamstrung by the Indian Act or segregated or colonialized. There are a lot of learnings for First Nations.”

When mining companies fail to engage early and help prepare communities for upcoming opportunities, Gladu warned, they risk undermining their own procurement objectives. “What tends to happen is a rush job near the end,” he said. “Then they say, ‘We don’t have many Indigenous businesses that can compete.’ Then what will happen is ‘rent-a-feather’ [arrangements] start popping up.”

Rent-a-feather cases are when “a large company will partner with a First Nation, Inuit or Métis individual to be a front as an Indigenous business on paper,” Gladu explained. But the benefits of the partnership do not accrue to the community and instead flow to a single individual.

“Rent-a-feather [arrangements] happen—and they shouldn’t,” said Gladu. “There has been a lot of work that’s been put into this space, and we shouldn’t give up on it. We just have to put in more time to work out the kinks.”

Willy echoed the belief that Indigenous procurement cannot be treated as a box-checking exercise. “If you’re serious about Indigenous procurement, don’t just look at it through a legal or regulatory lens,” he said. “There are companies that are doing procurement with Indigenous companies because it’s good business.”