Promoting local enterprise development in Peru

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Over 800 million people still live in extreme poverty and almost a third of the world's population still lives on the equivalent of about US$3 a day. A lack of decent work opportunities erodes the social contract underlying democratic societies: that everyone must share in progress. Sustainable economic growth depends on creating the conditions that allow people to have decent jobs that stimulate the economy while not harming the environment.  All ICMM members implement the 10 principles that underpin our Sustainable Development Framework. Principle 9 requires companies to continually improve their social performance, and contribute to the social, economic and institutional development of host countries and communities.

When the UN’s Sustainable Development Goals (SDGs) officially came into force in January 2016, the nations of the world committed to mobilise efforts to end poverty, fight inequalities and tackle climate change. Business has a significant part to play, alongside governments and civil society, in creating pathways for a greener, safer and sustainable future for us all. Metals and minerals are essential to almost all aspects of everyday life; they enable farming, healthcare, communications, construction, transport and energy and water supply. And they will arguably become more important as they help to deliver the infrastructure required for a low-carbon future. This is one of a series of case studies gathered from our members to highlight how companies are working to enhance their contribution to society and help industry to manage potential adverse impacts their activities may have on the realisation of some of the SDGs.

Gold Fields is supporting local enterprise development in Hualgayoc province in Cajamarca, one of the poorest regions in Peru. A partnership with the NGO Swiss Contact since 2014 helps local entrepreneurs to build supplier capacity in areas such as service quality, safety and sustainability performance. The project then assists them to diversify their businesses with the goal of reducing dependence on the mine.

With a long history of mining dating back to pre-colonial times, the local residents of Hualgayoc province have seen many mining companies come and go with little benefit to the community. Around 85 per cent of the 17,000 people in the province obtain a living from subsistence agriculture and livestock farming. Few people are employed in the mining sector.

When Gold Fields commenced construction on the Cerro Corona mine in 2006, the local community had high expectations for employment and procurement opportunities. However, the local suppliers could not offer the standard of service required by the company, which instead contracted with suppliers from Lima or abroad.

Gold Fields identified the issue as a national priority in line with SDG 8 (Decent work and economic growth). The initiative aligns with the company’s commitment to support host economies through local procurement, as outlined in its Material Stewardship and Supply Chain Management Policy. 

The company decided to build up their procurement department to engage with local suppliers and support collaborative enterprise development. They increased the department from three to ten staff members. The role of the additional employees was to work with local suppliers and help build their capacity to provide services to the mine.

Partnership for project delivery

SDG 17 encourages partnerships between all stakeholders to enhance impacts and outcomes. In 2014, Gold Fields found an NGO partner to assist in implementing the enterprise development project. The NGO, Swiss Contact, developed a programme financed by Gold Fields to provide professional development support to local suppliers. Local enterprises could subscribe to the programme for a small fee and benefit from the following support services:

1. Business assessment and planning

Upon registration, Swiss Contact carried out an assessment of each participating business, and helped them to develop an improvement plan. Of the 64 companies assessed, only 10 per cent were considered to be competitive.

2. Training

The programme involved a series of training workshops to cover different business-related skills and tools, according to the needs identified and in line with their improvement plans. The topics covered included: quality customer service; management skills, sales techniques and business ethics; good practices and certification in food handling; labour, tax and financial tools; and implementing Gold Field’s occupational health and safety (OHS) system.

3. Supplier certification

To ensure a high level of service quality and adequate OHS and sustainability performance, the project helped suppliers to obtain nationally recognised supplier certification from SGS Peru. This certification is a prerequisite for suppliers under Gold Field’s OHS and Environment system. Of the participating companies, 24 have obtained supplier certification.

4. Diversification

The key to the sustainability of these local enterprises is the diversification and extension of their client base. To this end, the project helped companies to investigate and analyse the local market and identify demand. Linked with the capacity building around quality and customer service, the companies are now better equipped to identify gaps in the market and move to fill them.

5. Monitoring and review

Gold Fields has set up a local supplier management system led by the procurement department. It captures feedback on the performance of local suppliers from the safety, environment, procurement, community relations and operational departments.

To date, the programme has supported 64 local suppliers starting with an initial assessment of their operations and development of a work plan. Of these, 52 have begun implementing this plan and are on average 70 per cent of the way through.

Already, the percentage of companies assessed as being competitive has risen to 40 per cent, from the 10 per cent noted at the beginning of the programme. An important indicator of the success is that 20 local suppliers have identified opportunities with new clients other than Gold Fields and have signed at least one other contract.

"I use to work as a farmer, but now with Gold Fields I have the opportunity to work as an entrepreneur. I started my business with only one “combi”. As I was doing well, I bought more vehicles and now have 5 units. I am grateful to Gold Fields La Cima because it has given us the opportunity to get ahead. Now I'm not only working with Gold Fields, I also have contracts with different companies like Marsa. I also work in other cities like Pacasmayo." Armando Chuquiilin Muñoz, Empresa Transporte y Servicios Generales, Chuquilin EIRL

The local enterprises in Hualgayoc are now well on the way to becoming more robust and sustainable businesses that are positioned to help grow the local economy beyond the activities of Gold Fields La Cima. As they find other clients in the private sector, Gold Fields and Swiss Contact are also encouraging the enterprises to seek opportunities in the local public sector and to create linkages amongst themselves to improve their competitiveness and ability to respond to demand further.

ICMM members supporting the SDGs