The role of B-BBEE enterprise and supplier development in the South African mining industry

Seane, Edwin Pule
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This research evaluates the impact of the Procurement and Enterprise Development element of the Mining Charter in South Africa. This was investigated by evaluating the nature of goods and services procured by the Platinum Group Metals (PGM) mining sector from black-owned suppliers, and the procurement practices and policies that contributed to what has been observed. In recognising that there are different perspectives to BEE Procurement policies, the study employs qualitative research methodology. A purposeful sampling method was employed and Impala Platinum Holdings Ltd (“Implats”) was utilised as the case study. The study collected data from BEE procurement reports that were public and privately held, as well as from interviews with procurement officers, black-owned suppliers, and representatives from the Chamber of Mines and the Department of Mineral Resources. The study found that PGM mining companies were no longer procuring only nonessential inputs from black-owned suppliers, although the share of procurement value could still be improved. The enabling factors that contributed to the Implats Procurement Spend Pattern were a combination of management focus, changes in procurement policies and practices, supportive government policies and the innovative supplier structures. While the factors that hindered even greater progress were the lack of clarity of the Mining Charter, industry practices that enabled BEE non-compliance, the nature of goods and services procured, the inconsistency of BEE Procurement KPIs, a legacy of engineering practice in design and operation, a lack of entrepreneurial skills, risk-aversion by clients and the unintended consequences of the relations between mining companies and the local communities in the procurement process. It can therefore be said that the supporting and inhibiting factors are across different levels, namely policy, business operations and SMME capability. In practise, these factors will reinforce and counteract each other.
MBA Thesis
B-BBEE, BEE, BEE Procurement, Enterprise Development, Mining Charter, Procurement and Supplier Development