Kumba Iron Ore’s investment in supporting mining communities to procure products and services has increased by 75% to R2bn
In an iron-clad commitment to supporting the small businesses operating within the communities in which it operates, Kumba Iron Ore (KIO) has grown its procurement targets by 75% from R 500m two years ago, to a target of R 2bn by the end of 2019.
The Anglo American-owned company is focused on increasing the number of black-, women- and youth-owned businesses in its host communities by creating the opportunity for them to supply products and services across the mining value chain to the tune of R2bn this financial year.
Small businesses in South Africa are critical drivers of both the economy and job creation and Anglo American has been on an exciting and impactful trajectory in the last few years. “In 2017, we set a R500m target for procurement directly from our mining communities in order to create a more inclusive supply chain – not only did we exceed this target by R20m, but we were able to do business with 160 local suppliers, adding resilience and diversity to our supply chain and ultimately contributing to local and regional economies,” says Vusi Maseko, General Manager for Supply Chain at Kumba Iron Ore.
Kumba’s inclusive procurement policy aligns with the value creating principles for the mining industry, as expressed by President Cyril Ramaphosa at the Mining Indaba in February this year. The President urged mining companies to foster inclusive growth in the areas where they operate; reinforcing that companies, government and labour work together to create shared value and ensure the benefits of mining are more widely spread.
Kumba understands the importance of upskilling businesses in mining communities. “When we unpack the numbers, the impact we’ve been able to create is clear,” Maseko points out. “Kumba invested R 1.4bn in local businesses last year by sourcing products and services needed to run our mines from 267 local businesses, and this year we have doubled our target to R 2bn,” he explains. Achieving such targets has meant cross-functional teams have worked diligently to put in place policies, processes and procedures to support supplier verification, due diligence on BEE deals and revising clauses in contracts relating to BEE ownership.
As a responsible miner, we’ve been helping entrepreneurs build small businesses for years. The company’s financial investment in the businesses of entrepreneurs who have qualified from its 24-month supplier development programme has grown to more than R168m from R12.5m in just four years.
One example is KELE Mining Solutions, a 100% black-owned and operated company that has increased its revenue by more than 3,000% in the two years since working with Kumba. “It was hard in the beginning until we started working with Kumba through its supplier development programme,” said Jomo Khomo, who’s business is situated in the John Taolo Gaetsewe municipality in the Northern Cape. He and his wife Kefilwe learnt how to run operations, how to market, and other business principles to such an extent that the mining solutions company now employs more than 150 people. “We believe we’ve changed the lives of many people here,” says Khomo.
Similarly, Postmasburg entrepreneur Bucks Sibiya won a contract to help build the town’s new medical complex in 2015 as part of the same programme. Now Nomulwethu Construction and Projects is a respected local supplier to Anglo American, and in 2017 won its first project inside the Kolomela Mine. Today the business supplies full-time employment to 17 locals and contract work to many more depending on the needs of current projects. “Apart from the consistent pipeline of work, which has allowed my company to grow, Anglo has provided intensive business skills training and mentorship,” says Sibiya.
In another large project, Kumba Iron Ore initiated the concept of Africa’s first mining and industrial park, which will support local suppliers located in and around the strategically located town of Kathu in the Northern Cape. The Kathu Industrial Park Development Project is now being progressed through a joint development agreement with IDC. The concept is modelled on global best practice adapted for South Africa to provide cluster synergies, outsourced logistics, create a shared services infrastructure and provide supply chain benefits.
“We are clear about our purpose to ‘reimagine mining to improve people’s lives’. Sustainability is no longer a ‘nice-to-have’. We have put our minds to this inclusive procurement policy and firmly believe it can work by engineering it in such a way that local businesses and people on the ground can take part,” concludes Maseko.