Written by Isabelle RamdooSenior Associate and Development Economist with the Intergovernmental Forum in Mining, Minerals, Metals and Sustainable Development.
Mineral-rich countries are increasingly promoting local content requirements in their policy and legal frameworks, notably to deliver on the creation of more and better-paid jobs, the promotion of domestic supply chains and the transfer of knowledge, skills and technologies. In the short term, this is a tactic to move up the value chain. In the longer term, it is a matter of survival: mining-dependent countries need to transform and diversify their economies, achieve higher living standards and reduce poverty, manage expectations of an increasingly informed population and leave a decent legacy to future generations. They need to do all of this on the back of a finite stock of resources. Therefore, competencies, notably acquired through effective local content policies (LCPs), are a necessary springboard for broader linkages.
One of the core pre-requisites for effective LCPs is the availability of the required skills and capabilities to meet the demands of the industry throughout the life cycle of a mine. The ability to develop new skills sets and adapt existing ones to rapidly respond to technological changes is also crucial. Recent studies have confirmed the likely impact of new technologies on the nature of jobs, highlighting how, in the mining sector, new skills sets will be required not only for new occupations, but also for existing ones, as current operational jobs will most likely have to adapt to automation.
The mining industry offers few direct job opportunities. Yet, employment remains a major ‘political’ objective, for host governments and mining firms alike. For the former, this relates to meeting people’s expectations regarding economic benefits derived from mining activities. For the latter, it is about obtaining and maintaining a social licence to operate.
Typical LCPs meant to meet employment objectives take the form of (i) explicit mandatory and binding targets on firms to recruit local staff in specific roles, as is the case in Ghana or South Africa; (ii) compulsory submission of localisation and succession plans for the replacement of foreign labour by locals, the latter’s specific roles and responsibilities as well as plans for training of local staff, including through support to the creation of training facilities as required in Tanzania, in Ghana and in Zambia; and (iii) limitations on the entry of foreign workers through visa restrictions. In some cases, fiscal incentives may be given to reward mining firms for training, as seen in Papua New Guinea. Direct financial support may also be provided for the conduct of local staff training and foster partnerships between governments and mining firms, as seen with Canada with its First Nations.
Emphasis in current LCPs is clearly placed on direct employment. However, although training and skills development is explicitly mentioned in most regulations, it is less clear how this is done and monitored, and to what extent the policy is linked to the overall needs of the industry and the national skills development strategy.
While jobs matter, placing greater emphasis on providing the labour force with the necessary capabilities to meet the dynamic demand of the industry is needed. To address this, it is necessary to tackle one fundamental structural challenge. Governments rarely have a comprehensive understanding of the industry’s needs, including on the latter’s future plans, or a good grasp of the skills gaps in their labour force. Strong partnerships are hence needed among governments, industry and training institutions as in, for example, Australia.
Many barriers that prevent local workers from taking up job opportunities with the mines remain unaddressed. For example, there are still significant gaps in technical and science-based skills (i.e. science, technology, engineering and mathematics – STEM) and problem-solving skills, which are critical for the industries of tomorrow. Softer and more practical skills, such as creativity and critical thinking must also be fostered. Importantly, educational pathways in secondary and post-secondary schools, technical schools and university programs must be in sync with the competencies and future skills required by the mining industry, to adequately prepare the workforce for the technology-intensive, high productivity jobs.
Supply chain development
Skills requirements in LCPs rarely focus on the supply chain: the target is often jobs in the mining industry. On the supply side, a few training programs focus on practical support to businesses to meet health, safety and technical requirements, or on administrative support to access procurement markets. But that’s about it.
Yet, scaling up the capabilities of local suppliers is critical. Good practices exist in Chile, Peru, Brazil and more recently Ghana, on innovative ways to stimulate supply chains, through the establishment of suppliers’ development programs. These programs, often led by industry, have succeeded in creating competitive mining suppliers, notably thanks to tailor-made initiatives to improve the capabilities of local suppliers, foster innovation and entrepreneurship.
Providing local suppliers with an environment to develop ideas and with access to knowledge, technology and facilities to foster innovation is key to helping them move up the value chain. LCPs should therefore provide more incentives to encourage partnerships with and between firms and centres of excellence to facilitate the creation of knowledge and innovation hubs and innovation clusters, to provide suppliers access to state-of-the-art technology to respond to future challenges and needs of the industry. This is the case in most advanced mining rich countries, like Canada.
Skills for the future
There is a clear disconnect between the mining industry’s thinking about their future scenarios and the way governments are designing their LCPs. In fact, there is little strategic thinking in policy circles on how to manage disruptions in labour markets and how to equip the local workforce with the skills and knowledge to compete in a world where the mining industry will be driven by advanced technologies and artificial intelligence.
It is clear the future workforce in a mine driven by advanced technologies will require different, higher educated skills sets. All mining jobs will not totally disappear. Their numbers will decrease, but more importantly, their nature will change.
The industry will be faced with a double challenge: (i) win the race towards productivity and flexibility, while maintaining a bargaining power with local communities; and (ii) continue to employ local people with the requisite skills. Governments will still have to manage expectations regarding jobs in the mining sector and adapt their labour markets to meet changing demands. These will have to inform the design of LCPs, looking forward.
Finally, LCPs should insist in particular on the transferability nature of skills sets: mining should be able to nurture skills for other economic sectors. Incentives should be given to encourage partnerships between mining firms and other industries for the reskilling and retraining of labour in an effort to smoothen the transition between economic activities.
The Intergovernmental Forum in Mining, Minerals, Metals and Sustainable Development (IGF) supports more than 60 nations committed to leveraging mining for sustainable development to ensure that negative impacts are limited and financial benefits are shared. It is devoted to optimizing the benefits of mining to achieve poverty reduction, inclusive growth, social development and environmental stewardship. The International Institute for Sustainable Development (IISD) has served as Secretariat for the IGF since October 2015. Core funding is provided by the Government of Canada