SA communities win big in Kumba deal
South African mining giant Kumba Iron Ore has awarded mining contracts worth more than R1.6-billion to black owned and community-based joint ventures to mine iron ore at its Kolomela mine in the Northern Cape province of South Africa.
The joint venture represents another major advance towards Kumba’s goal of developing sustainable communities and businesses that help transform the South African mining industry.
According to Kumba Iron Ore CEO Themba Mkhwanazi it is the most tangible demonstration yet of Kumba’s commitment to the economic inclusion of local suppliers from surrounding communities.
“This is a major step in showing how South Africa can unlock its growth potential through mining. We’ve always seen mining as a catalyst for broad-based development. This contract goes far beyond philanthropy or corporate social responsibility. This is the business of mining, and it will help ensure host communities become direct participants in, and beneficiaries of, the mining operations that take place in their own back yards,” says Mkhwanazi.
Kumba to provide ongoing support
The joint venture will start mining operations at Kolomela’s Kapstevel South project in Q1 2022, with an initial target of producing between 5-10 million tonnes of ore in the first year. As part of the contract, Kumba will provide ongoing upskilling and support to the joint venture to ensure quality and safety standards are met.
The contract marks the first in the industry where local community suppliers will be used to run mining operations of this scale and magnitude.
The joint venture comprises four 100% black community-owned companies:
Joint venture spokesperson Kabelo Andreas, says that the contract was a ‘massive step for transformation’ in the local mining industry, as the communities would for the first time operate and benefit directly from their local mining operations.
“This is very exciting and big step up for us. We may be small businesses, but we are all steeped in mining and in our communities. Now we will have iron ore under our fingernails and on our balance sheets. We want to be the proof that mining, through local models like this one, can deliver real value that can be shared by all stakeholders – from local businesses and our community.
“We’ve been walking a road of transformation with Kumba for several years, and this contract demonstrates their commitment to getting local communities involved in the decisions that affect their lives,” says Andreas.
The community mining contract marks the summit of Kumba CEO Themba Mkhwanazi’s drive to grow local and black owned business in the communities around Kumba’s mines by developing them as suppliers to its mines. In just five years Kumba has grown its local procurement spend from around R60-million on local procurement in 2016 to around R4-billion a year.
The company now procures goods and services from 309 of community-based suppliers while providing training and mentorship to new companies wanting to join its supplier network.
“This contract underscores our commitment to developing host community suppliers with an additional focus on increasing the number of black-, women-, and youth-owned businesses around our mining operations,” says Mkhwanazi.
“We’re 100% committed to taking a long-term view of development and creating thriving communities in line with our Sustainable Mining vision. When our mines are gone, the communities will remain, and it’s critical that we do everything we can to ensure they are still thriving and sustainable beyond mining.”
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