Procurement helps community growth
LIKE MOST SOUTH AFRICAN mining companies, De Beers is making a concerted effort to buy the goods and services they need for their mines from companies owned or operated by historically disadvantaged South Africans – and that programme is already showing significant results.
De Beers Consolidated Mines (DBCM) has already exceeded its target of sourcing from historically disadvantaged suppliers by 7% to more that 50% and is now focusing on increasing the goods and services it buys from companies near its operations, business worth around R2,4bn/year.
Gary Joseph, a supply chain manager at DBCM, says it’s had what’s called a “preferred procurement drive” in place for a number of years to promote the buying of goods from companies controlled and operated by historically disadvantaged South Africans. That’s all part of efforts in many areas of society to try and transform ownership in the economy to reflect SA’s demographics.
“Currently, we’ve procured 51,6% by value of our goods and services from black empowered, black-owned enterprises and we’re targeting a figure of R1,5bn this year,” says Joseph. Over the years Joseph and his colleagues at the mines have employed a number of tactics in order to achieve that.
“We’ve driven that process through direct engagement with suppliers about transformation and have encouraged them through different incentives to bring black South Africans into their businesses and management structures,” says Joseph.
In some instances – due to some organisations’ complex structures – DBCM has encouraged companies to set up special companies and units that will serve DBCM’s mines specifically and employ local black entrepreneurs in management.
DBCM is now working harder to encourage local procurement with larger companies being asked to establish units around its mines. “Instead of transacting directly with the Johannesburg office, we’re encouraging the transaction and servicing base more with local agents so they have better capacity to service not only our mines but the broader public,” says Joseph.
DBCM has been working with local development organisations near some of its mines to support local enterprises as they work to become competitive suppliers in areas that are remote and have limited infrastructure. By increasing the size of the market such companies can offer their goods and services at more competitive prices.
“We want to identify the role of development organisations to help support those companies. In Limpopo there’s the Limpopo Development Corporation and we’re engaging small to medium sized enterprises,” says Joseph.
DBCM has finalised an Enterprise Linkages Initiative co-operation agreement with SA’s National Business Initiative; it will focus on SMEs and black supplier programmes.
De Beers has also established its Matlafalang Business Development Fund, a special purpose vehicle to promote the development of SMEs. “We’re looking at establishing development hubs near our Venetia mine west of Musina and in Kimberley and one on the Namaqualand coast,” says Joseph.
KZN Oils is an example of a business that’s grown as a result of becoming a DBCM supplier. It started in the Nineties supplying fuel and lubricants to Government and public corporations, such as Transnet. It was successful in winning a 10-year contract to supply all fuel requirements at DBCM’s new Voorspoed mine. DBCM is KZN Oils’ first private sector client.