It’s pretty simple math: The economic value of mining companies procuring from Saskatchewan-based supply companies

The focus of the various “buy local” campaigns that have taken place since pandemic-induced lockdowns threatened small businesses throughout the province have largely centered around hospitality and retail industries. But the mining industry does buy local too, and its impact on the provincial economy is significant. Playing matchmaker at the centre of it all is the Saskatchewan Industrial and Mining Suppliers Association (SIMSA).

Shop local

“We try to enable the buyers to shop local, so BHP, Nutrien, whoever it is, we try to make it easy for them to shop local,” says Eric Anderson, executive director of SIMSA. SIMSA’s strategy includes maintaining a solid database of local suppliers and networking events. So, their goal is to educate supply companies on how to work with mining companies operating in the province, provide hints on where the industry is going so that supply companies can prepare, and offer connections not found in most of the country.

“Our relationship here I think it’s better than anywhere else in the world,” says Anderson. “The reason I say that is I regularly hear ‘I wish there was a group like SIMSA in … name the province.”

Climbing numbers

And if membership growth at the association is any indication, the mining supply business in the province is going strong. Anderson says the association’s membership has grown more than 40 per cent during the pandemic, and, according to a recent media release, now has over 300 members. In 2016, the association had 74 members. So, there have been significant additions, but the reason for this growth is multifaceted.

Having 23 of 31 critical minerals, a stable government, and a favourable tax and infrastructure environment, Saskatchewan remains the top region in Canada to invest in mining. In 2021, the sector generated $8.6 billion in sales, the second highest level on record. Exploration expenditures continue to increase and are estimated to reach $263 million in 2022.

Opportunity ahead

So, mining has a strong future in Saskatchewan, and that means a lot of opportunity for supply companies as well. Plus, Anderson suggests recent conflicts in Europe could increase demand for many of Saskatchewan export products, including potash and uranium. That means, in the short term, if products can get to market, a boon for the province’s resource economy.

“[The world] needs more food and fertilizer and energy,” says Anderson. “Well, that’s what we produce and that’s what [the global marketplace] just lost [due to the invasion of Ukraine].”

Bringing it together

Thankfully, most major mining companies in the province have a local procurement strategy. BHP in particular has been actively working with SIMSA, the Mid Sask Municipal Alliance team and the Humboldt Chamber of Commerce to educate local suppliers on how to do business with the global mining giant, and help BHP better understand the business capacity of the region and province.

“Our member database that BHP is using is one of the key ways to source local suppliers,” says Anderson. “I know BHP has done well over 24,000 searches on it in the past two years or so. They keep using it, and they refer people to join it.”

Mosaic Company’s Indigenous engagement strategy claims that by 2025 “15 per cent of our procurement activity will be with Indigenous-owned companies, and we will increase the use of Indigenous employment by contractors on our sites to 15 per cent.” That could mean millions in local procurement dollars going to First Nations in the province.

Similarly, Cameco—a clear leader in procuring locally—has a Northern Preferred Supplier program. While not a guarantee, the program claims “that when suitable work becomes available, Cameco looks first to our northern partners to perform that work.” As of December, 82 per cent of Cameco services in 2021 were procured from northern suppliers representing over $4 billion in spending since 2004.

Likewise, a long-standing collaboration between Cameco, Orano, and northern communities provides significant investment into northern regions. In 2020, the combined impact of these agreements through workforce and business development, community investments, and environmental stewardship, despite negative headwinds from the COVID-19 pandemic and poor uranium prices, was almost $112 million. For a sparsely populated region, the economic benefits are significant.

But these supply companies need to be in the province for these benefits to really show their value.

Big impact

“The economic impact for the province is about four times greater if [mining companies] spend it with the Saskatchewan company than if they spend it with the Alberta company or Manitoba or wherever else,” says Anderson. “So, it’s a four to one. That’s the simple value to the province for procuring local. So, it’s pretty simple math.”

According to a PriceWaterhouseCooper report commissioned by SIMSA in 2019, when the association’s membership was just over 200, the local to out-of-province spending split, excluding utilities, was 63/37. The impact of in-province purchases generated “$1.51 in total economic output for the province, compared to the $0.39 that would be generated by purchases from out-of-province suppliers.”

At the time of the report, the association’s membership generated a total of $3.9 billion in output, $2.1 billion in GDP, $870 million in labour income, $529 million in total tax contribution, and employed over 33,000 people as full-time equivalents. Improving the in-province versus out-of-province ratio in favour of local suppliers is a clear win for the province.