In April 2015, the Mining Shared Value (MSV) venture of Engineers Without Borders (EWB) Canada visited Cameco’s operations in Saskatchewan. As a supporter of EWB and its work in the mining industry, Cameco invited Mining Shared Value to its corporate head office and its McArthur River Mine to learn more about its local purchasing strategy, particularly within northern Saskatchewan.
The scale of Cameco’s local procurement in northern Saskatchewan is immense. In 2013, Cameco spent $450 million on locally owned northern Saskatchewan companies, which represented 67% of its total spend on services for its northern Saskatchewan operations. This is significantly larger than the total value of Cameco’s community investment spending (over $24 million) between 2009 and 2013, on organizations and community groups located in the areas where it operates. As such, the economic and social benefits of local procurement for local communities, such as job creation and skills transfers, far outweighs the impact of traditional corporate philanthropy.
Mining Shared Value’s previous experience in local procurement case study research has been heavily focused in developing countries. In this context, local procurement usually refers to companies’ purchasing from small- and medium-sized enterprises. This was not the case with Cameco, even though it operates in a low-income region within Canada. Many of Cameco’s local suppliers are multi-million dollar, majority-owned Aboriginal businesses that employ hundreds of people, such as Points Athabasca.
A preference for local suppliers: “It’s Your Procurement to Lose”
During our visit, Cameco’s Manager of Corporate Responsibility, Peter Dodson, and Cameco’s Manager of Business Development and Northern Affairs, Darrell Burnouf, highlighted that the company has prioritized purchasing from Northern Saskatchewan-based suppliers from the start, given the strong business case to do so. With tension around the issue of uranium mining in Saskatchewan, Cameco knew that it had little room for error in terms of corporate responsibility, and so creating meaningful economic benefits for the local area has been a constant goal.
In its collaboration agreements with northern Saskatchewan communities, Cameco works with local communities to outline the way in which it will partner with local residents to build the technical expertise of local businesses and the labour force. This enables local businesses to be integrated into the mining supply chain, and to diversify their client base, in order to be sustainable in the long term. In addition, the company’s local procurement strategy includes a supplier development program that builds the business skill of local companies.
During our visit we met with several suppliers working with Cameco. In an interview John Scarfe, President and CEO of Points Athabasca, revealed that this company was created by Cameco through an Impact Management Agreement over 15 years ago. This Aboriginal-owned general construction and consulting company has since done over $500 million of work for Cameco, and has diversified its client base by working with other companies in the Saskatchewan mining industry.
Cameco’s supply chain mangers explained their approach to prioritizing northern suppliers by simply saying, “It’s your procurement to lose,” meaning that they would always use a local supplier if it was possible. This approach has clearly created benefits across the region in terms of economic and social development.
Benefits for Cameco and the Creation of Shared Value
At MSV, we are always trying to show the global mining industry that there is a business case for local procurement. Cameco’s experience in northern Saskatchewan really showed that mining companies gain meaningful benefits by creating shared value from local spending.
Creating a strong supplier base in the region has the effect of building up a large number of skilled tradespeople. With many baby-boomers retiring from Cameco’s operations, the company has a need to ensure it has a reliable supply of skilled tradespeople it can hire. It was quite interesting in our interviews just how many supplier employees used to work for Cameco, and vice versa. Being able to hire from communities close to operations also lowers costs, in that the company spends less on transporting employees to their operations, and employee turnover rates are lower than with workers from other provinces.
Director of Corporate Responsibility Sean Willy made the point that having successful communities in the region also helped employee retention. With the large-scale oil sands operations in neighboring Alberta drawing labour from all over Canada, Cameco has a business interest in contributing to communities so they are desirable places for its employees to live. Local procurement is one of the key strategies to accomplish this contribution.
The trip to Cameco operations provided a very interesting revelation to us in terms of our research on business motivations for local procurement. While generally we focus on local procurement’s role in securing a social licence to operate, as well as lowering supply chain costs in the long term, this aspect of employee recruitment and retention is an exciting aspect we have not come across before in a meaningful way.
Next Steps: A Research Project in Collaboration with the Canadian Council for Aboriginal Business
With this experience in mind MSV is launching a national research project in collaboration with the Canadian Council of Aboriginal Business to investigate current practices in Aboriginal procurement across the Canadian mining industry, and further investigate the business case for procuring from Aboriginal contractors. This research will involve interviews with procurement site staff, representatives from Aboriginal Economic Development Corporations, and other important stakeholders. The goal of the project is identify leading practices in procurement from Aboriginal owned business, and to share those across the mining industry. The results from the research will be presented at various venues across Canada, including the PDAC Convention in March, the CIM Convention in May, and the World Indigenous Business Forum in August. Cameco is the leading funder of this research and we are excited to be working with them to promote responsible mining in Canada.
For further information or questions regarding this research, please contact Anthea Darychuk, Research Coordinator, at firstname.lastname@example.org.
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