Knowledge Hub

Lundin Gold – 2019 SDG Leadership Awards

Primary SDG Focus

Secondary SDG Focus

How was your primary SDG focus identified and prioritized in the company’s value chain?

Lundin Gold is developing the Fruta del Norte (FDN) gold project in remote southern Ecuador. Local communities are largely dependent on smallholder agriculture, have low education rates, and a high degree of outmigration due to limited employment and economic opportunities. At a national level, Ecuador is a new mining jurisdiction and Lundin Gold is committed to ensuring that FDN demonstrates that mining can be a powerful catalyst for inclusive, sustainable economic development and create shared value for local communities.

In 2015, the company conducted extensive stakeholder engagement . Two of most important issues to stakeholders were for local communities members to benefit from employment opportunities and for local businesses to have opportunities to secure business/procurement contracts.  These directly contribute to SDG 8 – Decent Work and Economic Growth.

As a result, the Lundin Gold executive leadership team prioritized local workforce development and local procurement in the company’s overall risk management strategy. The leadership team reviews performance in these areas on a quarterly basis as part of its company risk assessment. The leadership commitment to developing a local workforce and leveraging its purchasing power for local economic growth has been pivotal to the company’s success in contributing to SDG 8. It has led to a three year, multi-million dollar investment into a workforce development program targeted at community members around FDN and a comprehensive and strategic local procurement policy and program that is catalyzing the growth of local suppliers.

How was your primary SDG integrated and anchored throughout your business?

The early commitment of Lundin Gold’s executives to create a local workforce and catalyse local suppliers was crucial and set the company on course to deliver the following outcomes:

  • a) Qualified Workforce – In 2015, early in the mine planning and development phase, the Company established a senior cross functional team from human resources, operations, sustainability, community investment and the Lundin Foundation. This team was tasked with developing a local workforce development strategy that addressed the company’s employment projections, skills requirements, and project timelines. This resulted in the Company developing in partnership with the Foundation, a multi-year, multi-million dollar Training for Operations program to ensure the availability of a qualified workforce from local communities when the mine begins operations in late 2019. The company gave priority for training programs and employment positions to community members closest to FDN, and members of indigenous communities to maximize benefits as the local level.
  • b) Local supplier development – In 2015, the company created a senior cross functional team that included the purchasing, sustainability, community investment departments and the Foundation. Together with local communities, the Company developed and adopted a local procurement policy which defines priority zones based on proximity to FDN. Preferences are given to small businesses that originate from, generate value for, and create employment or business benefits for communities nearest to FDN. In partnership with the Foundation, the Company also launched a multi-year local supplier development program to ensure high potential businesses had access to management advice, business training and financing necessary for success.

Did you employ any innovative approaches in your efforts to implement the goal?

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Delivering on SDG 8 outcomes required an innovative approach and fit-for-purpose community investment programs:

Workforce development: In 2016, three years in advance of employment needs, the Company and Foundation launched a two-stage strategy that addressed key barriers to employment. The first phase was an accelerated high school equivalency program for local community members to obtain their high school diploma.  This paved the way to phase 2. In 2018, a specialised training program was launched to train local community members for underground mine and process plant operator positions. The program included a tailored training curriculum, state-of-the-art simulators, and was based in Los Encuentros (the community closest to FDN) to maximize the accessibility for local communities. The program gave priority to local community members, was explicitly marketed to women, indigenous communities and local construction phase contractors as an opportunity to upskill and qualify for longer-term employment at FDN.

Local Supplier Development Program: A tailored local supplier development program was developed and included the launch of local company owned by former catering staff to deliver catering and hospitality services to FDN. The Company and the Foundation supported Catering Las Peñas (CLP) with a working capital loan, management and governance training. The company has performed exceptionally well and has become the region’s third largest employers ( behind Lundin Gold and another multi-national mining company, Ecuacorriente) with over 270 employees, nearly all from local communities. In 2017, the Company was recognised by UN Global Compact Regional Networks for Colombia and Equador for it’s support. In 2018, the Foundation continued to work with CLP to develop its own local supplier program, helping over 70 local small-scale agricultural producers to meet CLP’s procurement requirements and further embedding economic benefits into the local economy.

Were any partnerships leveraged or created?

Lundin Gold works in close partnership with the Lundin Foundation to deliver the workforce development and local supplier development programs. The Foundation works with the Lundin Group of Companies, 13 publicly traded mining and oil and gas companies around the world to develop strategic community investment programs that ensure communities share on the benefits of resource development through employment and local business growth.

Additionally, the following strategic partnerships were created and leveraged to achieve results in support of SDG 8:

  • The Ministry of Education in Ecuador was instrumental in the launch of the accelerated high school equivalency program, ensuring that local community members received a recognized credential upon completion of the program;
  • Fe y Alegria – an NGO that provides education training to underserved communities was the key implementer in the high school program;
  • Asesorias Mineras Integrales (AMI) – a regional Company that provides training for the mining sector. The Training for Operations program was unique for AMI in that it was the first time it had delivered such training to communities next to a future mining operation. This demonstrated both the direct benefits and also the scale of such a program, with over 300 local trainees currently involved.
  • Universidad Técnica Particular de Loja (UTPL) – a large regional private catholic university has been an important partner in the Training for Operations program
  • Fundación para el desarrollo empresarial y social (FEDES) – a local business and social enterprise incubator has supported the local supplier development program.

What communications strategy did you employ to share the initiative with your stakeholders?

The Company’s community roundtables are integral platforms for engagement with local stakeholders. Each community roundtable is a focused on specific theme (e.g., local employment, local suppliers) and meet every 6 weeks to discuss program status, pending issues, upcoming needs and to answer any questions.

Each strategic program had specific communication strategies that included a mix of radio, print and social media to promote program broadly and to communicate through strategic partners.

Explicit efforts to promote the training program to women was undertaken to ensure gender diversity and equality both during the training program, and also to improve gender diversity within the Company’s workforce.

More broadly, in 2017, the Company was recognised by the UNGC Regional networks of Columbia and Ecuador with a Best Practice Awards in Sustainable Development for its work with Catering Las Peñas. This recognition helped promote the SDGs within the mining sector by providing a clear example of how mining companies can be a strong catalyst for achieving the global goals.

How were KPIs and the levels of success outlined and defined?

Each of the community roundtables focuses on a priority issue.  High-level target outcomes are defined through close consultation with local community members. From here, the Foundation and Company define specific KPIs for each initiative to support program management and track activities, outputs and outcomes.

Workforce development:

Target outcomes: Improved employment opportunities for local community members through education and training.

Output and outcome KPIs include, the following with data disaggregated by gender and members of indigenous/non-indigenous communities

  • Graduation rates
  • Post-graduation outcomes (employment, continuing education, entrepreneurship)
  • Post-graduation income (to assess relative changes to baseline)

Local procurement:

Target outcomes: Enable local businesses to become suppliers to FDN, reach profitability, create local employment, and expand customer base to reduce long term dependency on FDN.

Specific KPIs include:

  • Number of small businesses supported, and number of new suppliers to FDN
  • Business-level data including:
    • Annual revenue growth
    • % of revenues from contracts to FDN
    • Profitability
    • Jobs created and employment retained (gender disaggregated)
    • Wages paid (relative to national minimum wage)
    • Number and value of non-FDN customer contracts
    • Third-party financing leveraged.

The above datasets allow for the broader analysis of cost efficiency/return on investment for each program including:

  • Cost savings
  • Economic impact / funds invested through programming
  • Wage improvements relative to national minimum wage/national benchmarks

How were reporting and monitoring conceptualized and undertaken?

The monitoring and reporting activities integrated bottom-up needs from communities and programs, and then aligned with international frameworks and best practices in impact management to ensure alignment with SDGs (e.g., national level targets, SDG matrix for energy, natural resources), IRIS and leading global frameworks such as Impact Management Project.

Bottom-Up Approach: The results of the community roundtables defined the target outcomes of the programs.  From here, the Company and the Foundation developed a fit-for-purpose impact management strategy that begins first with the target outcomes, a theory of change, and specific program KPIs. These are then cross-referenced against relevant SDGs.

Additionally, baseline information is captured to allow for longitudinal analysis of impact and our contribution.

KPI data is collected on a monthly basis and reported to senior management.  This data informs the Company’s risk assessment on a quarterly basis to determine whether any adjustments are needed. An annual review of impact data is undertaken to compare year-on-year performance and trends.

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What were some key lessons learned?

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Some of the key lessons learned include:

  1. Demonstrate a clear business case for the SDGs – Being able to articulate the business value of creating a local workforce and local suppliers to senior management (in this case, as it relates to the risk management strategy) paved the way for the innovations and investments needed to support the goals.
  2. Be solutions oriented – Think outside the box and be creative in removing barriers to success. For example, in the beginning, CLP, as a small local start-up could not present a competitive bid to the company. Rather than disqualifying them immediately, the Foundation advocated for, and the Company granted, a short-term contract that allowed the Foundation to provide necessary management support for CLP to improve its operations and cost effectiveness, and to prove to its capacity to deliver a high quality and competitive service. Finding acceptable opportunities to provide accommodations for local suppliers can greatly facilitate a local business’s ability to succeed.
  3. Create cross-functional teams within the company – The CLP example would not have been possible without close coordination and support between the community investment team, the Foundation, and the procurement department. Building support across company departments and demonstrating shared benefits is essential to ensuring that achieving the SDGs is a joint effort across the company.

What were the key impacts and results?

The training programs and local supplier development programs have produced the following results against SDG 8:

Through education and skills training programs:

  • 531 people trained (64% male, 36% female)
  • 97% graduation rate
  • 90% of graduates employed or continuing education
  • 99% of Training for Operations graduates to date (110 people) hired by FDN in skilled positions; this includes 17% female and 4% Indigenous members

Local Supplier Development

  • 95 new local suppliers (direct and indirect) to FDN (as defined by community roundtables)
  • $25 million USD in sales generated by local suppliers since January 2017
  • $3.3mn in wages earned
  • 879 jobs created/employment retained