IGF report delves into local content policies for resource-rich countries

A new publication developed by the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) is aiming to help resource-rich countries find more sustainable and inclusive economic solutions, fostering stronger linkages between mineral resources and the rest of the economy.

IGF Guidance for Governments focuses on local content policies, which are being used more often by governments, and strategies created by agencies requiring mining companies to use local goods and services when operating in another country. It also highlights how countries can move away from commodity dependency and diversify their economic base.

Greg Radford, Director of the IGF, said: “An estimated 90 % of resource-rich countries employ some sort of local content policy…In countries where there are only a few other strong sectors, the success of these policies is critical.”

Radford said it remained unclear which local content policies work best, produce results and minimise unintended consequences.

“Our IGF Guidance for Governments takes these on-the-ground realities into account.”

The IGF cautions there is no one-size-fits-all solution for local content policies.

“Each country has different resource endowments, different skills sets in their supply and labour force, and different infrastructure assets and investment environments,” it said.

Radford continued: “The success of these local content policies depends on the success of other policies and regulations, such as education, science and innovation, infrastructure and finance.”

The responsibility for these critical issues is spread across multiple ministries and requires effective coordination and coherence. The publication takes this into account by guiding policy-makers towards workable made-in-country solutions, the IGF said.

The guidance document also covers three cross-cutting themes:

  • Ensuring goals are achieved in a gender-equitable way
  • Exploring the relationship between local content policies and countries’ obligations under trade and investment law, and
  • Exploring the implications of technological advances on the success of local content policies.

The IGF, which receives its core funding from the federal government of Canada, is an international government forum that supports close to 70 nations committed to leveraging mining for sustainable development to ensure negative impacts are limited and financial benefits are shared.

The International Institute for Sustainable Development has served as Secretariat for the IGF since October 2015.

The full IGF Guidance for Governments is available here.