PARLIAMENTARY COMMITTEE HEARS FROM FQM ON LOCAL PROCUREMENT DRIVE
Mining firm hoping new procurement guidelines will lead to greater opportunities
The mining company is also looking to link them to economic opportunities in North-Western Province and beyond, including international market possibilities.
The firm is developing local procurement and contracting guidelines, standards and tools aimed at promoting its local business development policy, while providing support, training, mentoring, workshops and other initiatives to enhance local supplier and contractor skills and capabilities at its Kansanshi mine in Solwezi and Sentinel mine at Kalumbila.
“In order to be sustainable, local procurement and contracting must be conducted in a way that provides economic benefit to the company. However, First Quantum will not compromise on quality, delivery, service, safety, the environment, or any other technical requirements. Sound business principles and good governance will underlie all transactions,” said FQM’s Country Manager General Kingsley Chinkuli.
Speaking when he presented to the Parliamentary Committee on Nation Economy, Trade and Labour Matters on how FQM is supporting MSMEs in the mining sector, and the proportion of local MSMEs supplying to FQM, General Chinkuli said the main principle of FQM’s local business development policy was the systematic and on-going transfer of procurement of goods and services to local suppliers.
As part of its programme of work for the Second Session of the Twelfth National Assembly, the committee resolved to undertake a detailed study on the topic: “The Role of Micro, Small and Medium Enterprises (MSMEs) in National Development of Zambia.”
FQM: driving local procurement
FQM’s flagship Kansanshi mine acquired US$9.172 billion of goods and services in Zambia from 2011 to 2016, of which US$378 million was spent in North-Western Province. This definition includes foreign national companies with Zambian subsidiaries. Sentinel mine procured US$2.062 billion of goods and services in Zambia from 2011 to 2016, of which US$480 million was spent in North Western Province.
“North-Western Province is rich in resources and provides many opportunities for efficiencies to be gained by local production due to the location and high cost of transport. Businesses are encouraged to look for opportunities to produce local goods and generate economies by reducing transport costs. Electricity costs and instability, labour costs, tax-levels, tax instability and challenges obtaining collateral and loans are all barriers that small and medium enterprises face in Zambia. It is a challenging investment environment and efficiencies are key to success,” General Chinkuli added.
FQM: driving local procurement
He said that FQM had spent US$43 million on social investment by aligning the Kansanshi and Trident foundations to improve the quality of life for local communities and businesses.
To encourage the growth of provincial business, the mining firm says its Kansanshi and Sentinel mines will advertise their supply and service contract requirements through the North-Western Chamber of Commerce (NWCC) and Association of Mine Suppliers and Contractors (AMSC) where it considers the supply or service contract is within the capacity of the provincial suppliers and contractors. To streamline the local procurement process, FQM has partnered with the North-Western Chamber of Commerce and Industry, and the Musele Chamber of Commerce, whose members are provided with details of forthcoming contracts. Between 2010 and 2015, Kansanshi circulated more than 4,000 purchase enquiries, forward purchase agreements (FPAs), and service/construction enquiries through the NWCC.