LEGAL & FINANCE
SUSTAINABLE mining economy Having a sustainable mining industry means that local mining must play a strong role in the local economy. In South Africa’s case, this extends to building a better national scenario. By François Ribeiro dos Santos*
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here is a need for coordination between mining and manufacturing. This can unlock value within the ecosystem and, for these advantages to be realised, there must be cooperative buying from players in both sectors. For this to happen, local Mining Charter targets should be 70% mining budgets spent on locally manufactured goods and 80% of services sourced from South African companies. While the Mining Charter falls short in boosting business confidence within the sector, its goals have the potential to integrate complementary local sectors of the economy within mining. A key focus of the charter is to promote local content through inclusive procurement, supplier and enterprise development.
Challenges with sustainable mining economies In South Africa, where the landscape is changing and social issues are becoming more prevalent, organisations must strategically position themselves to capture benefits from these changes and build a sustainable competitive advantage. For mining companies, this translates into emphasising strategic areas that align with the societal context and developing viable, local supplier bases. Developing economies face a variety of country-specific challenges in their supply chains, restricting the achievement of procurement objectives. For example, the supply chain has a shortage of local suppliers and insufficient core capabilities and resources.
These characteristics have instigated change in the operating environment, including new legal requirements, as outlined in South Africa’s Mining Charter III, as well as social requirements to operate within a community. The procurement function can react to these changes and ensure long-term operational efficiency by shifting the fundamental approach to supplier engagement and management. By developing an understanding of local issues and collaborating to develop mechanisms that address these issues, procurement teams can develop practices that facilitate the creation of shared value. In a developing economy, procurement can play an instrumental role in not only developing existing suppliers but also establishing new suppliers. To generate shared value, the procurement team must be committed to resolving core social issues with tailored solutions that deliver a substantial, sustainable impact. Context-specific initiatives, as well as a localised approach, are essential to delivering shared value and achieving procurement objectives alongside sustainable social development in the community.
A sustainable mining economy Done right, localisation can be a win-win: making a significant socio-economic impact throughout the community while also creating numerous benefits for the organisation, including shorter lead times, higher-quality products and
Four archetypes of suppliers reveal that sub-strategies that consider local characteristics are required when defining a localisation programme
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