Local supply chains
One of the most effective ways to support socio-economic development in the countries where gold mining takes place is to provide business opportunities for local companies. Gold mining companies build local supply chains wherever possible, thereby encouraging entrepreneurship and helping existing businesses grow.
A recent member survey conducted by the World Gold Council found that 71% of all expenditure by mining companies, incurred in host countries, is paid to local suppliers.
“According to the World Bank these suppliers of goods and services are responsible for creating over 86% of new jobs. These jobs directly benefit those at the bottom of the pyramid, and are the most powerful weapon in the fight against poverty.” Scott Gilmore, Founder and CEO, Building Markets.
Case study: Local purchasing in Kyrgyz Republic
Centerra’s Kumtor mine is the largest private sector purchaser of goods and services in the country, with over $70 million procured within the Kyrgyz Republic in 2013.
Due to quality issues, metal grinding balls were only procured internationally until 2012. These metal balls are used to crush and mill ore in preparation for the gold extraction processes. In 2012, Vulcan Plus was established in the Kyrgyz Republic with the primary purpose of supplying Kumtor with a portion of its grinding balls. In 2013, Kumtor purchased $1.7 million grinding balls from this supplier.
Another example is the safety and specialist working clothes worn by workers at the Kumtor mine. Many are supplied by a local company Aiko Seiko LLC, based in Karakol, which was founded by a female entrepreneur. Aiko Seiko demonstrated it could consistently meet Kumtor’s quality, quantity and safety requirements, becoming a preferred supplier. Established in 2003, the company now employs approximately 120 people.