Insight
Mining Charter III : huge impact on service providers
Attention should be paid to the significant impact Mining Charter III will have on service providers , writes Chimae Goncalves , director of Supply Chain Partner .
Despite mining rights holders only reporting compliance of 63 % with the procurement requirements under the 2010 Charter in 2016 , the latest amendments under the 2017 Charter increase the procurement compliance target by 10 % – from 70 % to 80 % – with mining companies obliged to increase their procurement from black-owned companies from the date that the 2017 Charter takes effect .
Mining rights holders must now ensure that at least 80 % of their total spend on services is sourced from South African companies , of which a minimum of 65 % of total spend must be sourced from black‐owned companies with a minimum of 50 % + 1 vote being held by black people , 10 % from black‐owned companies with a minimum of 50 % + 1 vote of its share capital owned and controlled by black women , and 5 % from black-owned companies with a minimum of 50 % + 1 vote of its share capital held by youth .
It is unclear whether there are sufficient service providers in the market who would satisfy the detailed procurement requirements . The level of detail on suppliers is not always available in the system to indicate ownership percentages of black women and youth . This makes supplier tracking and enterprise development extremely important .
Procurement departments often lack resources , technology and leadership , yet they are expected to deliver such a vital function that is central to everything . When it comes to mining , getting ore out of the ground gets all the budget . Production is the focus . However , saving costs is also a key way to make money . There is a need to look at back‐office efficiencies and systems and to streamline processes across the entire system of suppliers , buyers and users to harness the value in procurement .”
South Africa is behind in the procurement space . Cloud procurement is still foreign to most South African companies . Collaborating with suppliers is unheard of as they are not treated like valuable partners . This needs to change for companies in the sector to comply . Supply Chain Partner focuses on introducing efficiency within the supply chain side of local companies , with special expertise in implementing the SAP Ariba Suite , including the strategy development , change management and supplier onboarding that goes with the adoption of a new tool . SAP Ariba is driving rapid innovations to simplify procurement , fulfilment , and financial supply chain management processes . Mines can have up to 3 000 suppliers to manage with complex risks in the commodities that these suppliers provide – consider explosives versus stationery . The start is having the right information – and maintaining it .
According to Goncalves , giving buyers and suppliers cloud-based tools to manage everything from source to settlement – all in one place – makes a huge difference to the frequently manual processes and multiple excel sheets prevalent in procurement departments that make tracking , reporting and governance challenging .
About the author Chimae Goncalves is a director of Supply Chain Partner , a supply chain solutions business with extensive mining experience .
[ 40 ] MINING MIRROR JANUARY 2018