Mining Procurement: 3 Trends You Need to Know
As the mining industry continues to emerge out of a downturn, procurement and supply remains a critical part of mining business’ ability to succeed and remain profitable.
So what areas are mining companies focusing on to tighten cost control, efficiency and productivity through procurement? We’ve complied three trends you need to know for mining procurement in 2015.
1. Automating processes to increase efficiency
In the constant push for cost efficiencies and greater productivity miners are re-examining their processes and how they manage every aspect of their operation. They are striving for greater visibility in order to gain a deep understanding of how they work, who works, and their workflow, in particular with contractors.
The automation of procurement processes, which is deemed as a big cost saver due to its ability to overhaul traditional way of managing supplier contracts and processes (i.e. delving into realms of paper), is a more efficient way to improve governance, visibility and control over contracts in real time.
According to Mining IQ’s 2015 Procurement and Supply Chain industry report, nearly half of all respondents said automation and standardization of procurement is vital to business improvement in 2015. The report also revealed automation a of procurement processes to improve efficiencies was ranked by respondents as the number one priority for mining procurement activities in 2015.
2. It’s time to cut costs even further
Maximizing savings through procurement has always been important in the mining industry. As the sector continues to come out of a down-turn, many companies are now looking for new and more effective ways to cut costs even further to improve operational efficiency in an unstable market.
According to Yolanda Di Rosso, regional contracts manager at Barrick Gold, finding new ways to improve savings through procurement contracts can be challenging in a climate which leaves many mining companies without the necessary budget to invest in new technologies or resources needed to meet KPIs.
“A few years ago we came to the conclusion we were in a position where we couldn’t hire more staff to come in and work on a special project, and we simply didn’t have the money at that point to engage in an external consulting firm to help us,” said Yolanda.
As a result, Yolanda and her team took a hands-on approach and created a ‘spending roadmap’ for procurement teams across Barrick’s organization, a model which is based on tapping into the expertise within the existing business to improve results. Many mining companies seem to be in the same boat as Yolanda and her team when it comes to cost cutting--2015 will be the year that many look for new ways to decrease costs even further.
3. Cost is not the only differentiator when it comes to supplier relationship management
The change in economy and ongoing uncertainty around the future of resource prices has caused many mining companies to look at existing supplier relationships and contracts and determine whether they really are the best option in the current market environment.
It’s easy during tougher times to assume customers swap contracts or suppliers based on cost only. However, Mining IQ’s Procurement and Supply Chain industry report revealed that cost is not the main factor influencing companies to seek new suppliers. When asked which factors most influence the decision-making process when switching to a new supplier, over 40 percent of 2015 respondents said that quality and product service were number one.
This shows that while many suppliers are trying to differentiate only on cost at the moment, it is clearly not the determining factor for most and other qualities are considered more business critical.
Previously posted on MiningIQ.com.
AngloGold Ashanti establishes BG Umoja JV in Tanzania
AngloGold Ashanti, in line with it s strategy to ensure a sustainable contribution to the economies of host countries, has established the BG Umoja joint venture (JV), in Tanzania.
Awarded a $186m two-year mining contract for the Nyankanga and Geita Hill underground mining projects, the 80/20 joint venture is a partnership between Africa Underground Mining Services (AUMS) Tanzania, a subsidiary of Australia’s Perenti Group, and local drilling services and mining- supply company, Geofields Tanzania Limited.
The partnership is modelled on a similar underground mining joint venture at the Company’s Obuasi Redevelopment Project in Ghana between AUMS Ghana and Accra-based, wholly Ghanaian-owned Rocksure and will help build local specialised mining capacity.
“We’re working with our experienced mining contractors to assist in establishing local joint ventures for long-term transfer of sustainable skills, and to continue building on our sustainable local procurement programmes,” commented Sicelo Ntuli, AngloGold Ashanti’s Chief Operating Officer: Africa.
“AngloGold Ashanti is building sustainable local procurement programmes that will allow it to stimulate economic and social development at all of its operations, evidenced by the significant contribution Geita has made to the fiscus and people of Tanzania.”
AngloGold Ashanti’s annual expenditure with indigenous Tanzanian suppliers has almost tripled to $162mn since 2016. The company’s local team in Tanzania has set itself an ambitious target of 60% to 70% of all expenditures with indigenous Tanzanian companies, by 2025.
Scope 3 Emissions
In addition, AngloGold Ashanti’s Geita Gold Mine has awarded a two-year fuel transportation contract, worth approximately $10.8m a year, to two local contractors - one of which is originally from Geita. This is in line with the mine’s commitment to contribute to the economies of host communities. The Geita-based company was part of Geita Mine’s supply chain capacity building initiative for host community suppliers, a partnership between the Mine and the National Economic Empowerment Council.
To influence Scope 3 emissions, trucks are to be compliant with EURO IV emissions standards, tankers are to be made of an aluminium alloy material to reduce weight and the age of the fleet will be maintained at less than six years.
Diversity & Inclusion
The contractors already employ women fuel tanker drivers, fulfilling the Mine’s requirements for diversity and inclusion. The two contractors both own workshop facilities in Geita town and participate in social initiatives aimed at uplifting the lives of host community residents.
AngloGold Ashanti has been operating at Geita Gold Mine for more than 20 years, with the project initially a single pit mine, evolving now to a predominantly underground operation, employing 5,700 employees and contractors.
Earlier this year, the Government of Tanzania recognized AngloGold Ashanti’s contribution to the economy of the country, awarding it for its outstanding performance in a number of areas, including environmental and safety performance, corporate social investment, the best taxpayer in the mining sector, the runners up in local business content and overall best performer in the mining sector in Tanzania in 2019/2020.
Geita Gold Mine
Geita, one of AngloGold Ashanti’s flagship mines, is located in north-western Tanzania in the Lake Victoria goldfields of Mwanza region, about 120km from Mwanza and 4km west of the town of Geita. It has been in operation as a large-scale mine since 2000.