Kumba

KUMBA IRON ORESUSTAINABLE DEVELOPMENT REPORT 2011

CASE STUDIES

CASE STUDY

DEVELOPING LOCAL SUPPLIERS AND SMALL AND MEDIUM ENTERPRISES

KUMBA BUSINESS DEVELOPMENT CENTRE
Tebogo Malusi, community developer, with Maggie Katong, office assistant, outside the Kumba business development centre in Kuruman, near Sishen mine.

“We don’t just do it for Kumba: we do it because it’s the right thing to do.” So says Kenneth Kgomo, manager: governance and supply management, about the development of local suppliers and small and medium enterprises (SMEs) in the area of Kumba’s operations.

Kenneth continues: “We want a good footprint. Kumba views local communities as partners in business. Working together creates a thriving community and avoids a dependency syndrome. It increases employment opportunities and helps people achieve their goals.”

Furthermore, the policy of local procurement is recognised as being of strategic importance to Kumba, playing a key role in securing and maintaining the right to mine, creating efficiencies in the supply chain, and ensuring reliable access to supplies.

Developing local suppliers and SMEs is not without its problems. Chief among these is an absence of a skills base in the rural areas where Kumba’s operations are situated. Skills effectiveness may be measured on a matrix that includes both complexity and availability. Skills such as cleaning, bookkeeping and gardening are plentiful, but they are less so in the case of commodity suppliers.

Challenges lie in the fact that each mine’s social and community development (SCD) department is responsible for its own operation’s local economic and enterprise development, and for ensuring that the mine meets its social and labour plan (SLP) commitments. Much of Kumba’s development work, however, extends far beyond the scope of the various SLPs.

Kenneth says: “SCD departments close the gap between community and company. Their purpose is to bring about sustainable development and mutual benefits. Kumba employees involved in this work are passionate about and committed to the development of their local area.”

“ Kumba views local communities as partners in business. Working together creates a thriving community.”

Preferential procurement

Key performance indicator   Kumba has a local procurement policy for all its operations which stipulates that targets must be established, set at a percentage of total spend and tracked on a monthly basis. By 2014, the Mining Charter has set targets for mining companies to procure 40% of capital requirements, 50% of consumables and 70% of services from black economic empowerment (BEE) suppliers. Currently, 59% of capital requirements, 45% of consumables and 44% of services are procured from these suppliers at Kumba.

A preferential procurement and transformation committee has been established to encourage existing suppliers to transform, to track procurement performance against targets, to verify the BEE status of existing suppliers and remind them when certification expires, and to provide suppliers with relevant information.

There are many success stories in the area of local procurement, some of which are outlined below.


Enterprise development

Kumba’s SCD department works with Zimele to co-ordinate the company’s enterprise development initiative.

Most of Kumba’s enterprise development activities are driven out of the business simulation hubs at Kathu and Kuruman which have offices and training facilities. These hubs provide training, funding, advice and ongoing mentoring and facilitate partnerships. The Kathu hub was created in 2008 and, in January 2011, the Kuruman business support centre was established to help service entrepreneurs from the rural areas of the John Taolo Gaetsewe district. Kenneth describes the hubs as “homes of hope for SMEs, and you only have to listen to the entrepreneurs who have been assisted to hear how the hubs have helped them to transform their lives”.

Since June 2008, 54 businesses have been established, 451 jobs created, R24.7 million provided in loans, and 111 SMEs assisted and advised. The turnover of these small businesses amounts to R129 million and loans to the value of R9.4 million have been repaid.

New businesses established include Butterland Bakery in the town of Thabazimbi, hydroponics farming in the Kolomela mine area, I & M Thaps Bakery, New Horizon Restaurant, Excelle Canopies and Ausleo in Kuruman. In addition, Blichoko Bakery was upgraded.

Since June 2008, 54 businesses have been established, 451 jobs created, R24.7 million provided in loans, and 111 SMEs assisted and advised.

The future

Kumba’s focus for enterprise development from 2012 to 2016 includes the setting up of business hubs in Postmasburg at Kolomela mine, at Thabazimbi mine and at Saldanha Bay. Increasing activity is expected in Postmasburg as the mine ramps up to full production. Such is the effort and commitment being put into the partnership between Kumba and the community by all concerned that success in enterprise development seems assured.

FARM WORKERS AT THE SKYFONTEIN HYDROPONICS PROJECT
Nomsa Mteshepeni and Martha Sebelego are two of the farm workers at the Skyfontein hydroponics project at Postmasburg, near Kolomela mine.