ICMM (2011) 'Utilizing mining and mineral resources to foster the sustainable development of the Lao PDR'

In facilitating private sector investment for a diversified economy and exploiting added value at a domestic level, a major objective of Precept 10 lies with supporting resource-linked development. New sources of demand, such as for labor services and goods, can be met by local sources. The report provides a number of insights on a successful case of adding domestic value through local content policies.

 

Recognising that resource projects can have both negative and positive local economic, environmental and social effects, Precept 5 outlines the internationally accepted frameworks governing resource extraction.  The report provides insight on some of the measures which can be taken by mining companies to mitigate adverse effects and contribute to development. In addition, the case study demonstrates the importance of early community consultations.

 

Through a case study of the Lao PDR the report provides support for adopting local content policies. The two mines in the country have had a significant contribution to local development through a number of local content projects. These have focused primarily around four areas: employment generation, procurement of local goods and services, training programmes and enterprise development. For both mines, 35% of employees come from local districts and 50% of goods and services are procured nationally. Since 2011 these policies have led to a significant improvement in mortality rates, 14% higher literacy rate than at national level, five fold total village income increase and a seven fold per capita income increase. These figures come from biennial surveys, which are conducted to monitor social, economic and health status of local communities and serve as a basis for programme prioritization.

 

The authors find however that such success it highly contingent upon the mine’s ability to work with and understand the local community actors and streamline the companies policies with government institutions at local and national level.  It is also noted that the most important mechanism for wealth generation is through the consumption linkage, which arises from spending on goods and services and also the multiplier effect from employees spending their wages.

 Access the report here.

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