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Supply chain and procurement
Disclosure on management approach
Sustainable procurement
Exxaro is adapting its supply chain operations to ensure we source, contract, lease, hire and procure goods and services from suppliers that practise sustainable development value-chain principles that minimise harm to ourselves, others, the environment and our planet. This will include implementing warehouse and inventory management practices that minimise waste and excessive consumption or use of our natural resources.
Equally, our supply chain partners are important stakeholders in addressing inefficiencies that might impact negatively on health, hygiene, safety and the environment.
Progress
During 2010 Exxaro developed a sustainable supply-chain philosophy that will be adopted across the group as an initial milestone in building competency in this field. In terms of this philosophy, all employees and other stakeholders making procurement decisions are encouraged to support our supply-chain function in building relationships with suppliers that demonstrate commitment to sustainable business practices including:- Upholding basic human rights and complying to relevant labour legislation
- Integrating sound health, safety and hygiene management practices into all aspects of their businesses
- Implementing effective and compliant environmental management in design, manufacturing and waste management processes
- Commitment to Exxaro’s ethical code of conduct in dealing with internal and external stakeholders
- Supporting and contributing to the economic and social development of communities in which Exxaro operates.
All collaborative efforts with our stakeholders and partners will be carried out in the spirit of support for sustainable business practices, enhancing Exxaro’s level of competence in supply-chain sustainability. Current focus areas are strategic sourcing, supplier management, procurement, logistics and inventory management.
Preferential procurement
Management approach on disclosure
Preferential procurement
The group’s preferential procurement policy tasks the business to capitalise on its purchasing power to ensure that, in business practices, we engage and contract with external suppliers with strong BEE credentials or that are making a tangible effort to transform their business to be BEE compliant. This is an important element of material stewardship.Since the promulgation of the new mining charter in September 2010, we have reviewed our policy and strategy to accommodate multi-national suppliers of capital goods that wish to contribute 0,5% of annual income generated from Exxaro into a special fund for the socio-economic development of local communities.
Progress
Our current policy incorporates BEE targets specified by expenditure on capital goods, operational goods and services. We have demonstrated our commitment to procuring from HDSA companies through steady progression from 16% in 2004 to over 45% in 2009. We exceeded our 2010 target of 47%, recording an actual procurement level of 50% from HDSA companies.Procurement from HDSA suppliers
In 2010, the 50% level achieved represents R3,8 billion spent with HDSA-owned companies, reflecting numerous BEE capital contracts for the Medupi project among others.
Preferential procurement targets
The target for 2011 is 50%, rising incrementally to 56% by 2014. Accurately reflecting spending on suppliers by category as required by the mining charter is important to track our performance against targets and we have configured our systems to report quarterly progress in terms of capital goods, consumable goods and services. Configuring and developing our systems to track multi-national supplier contributions remains an industry-wide challenge.
Publications
Listing particulars Annual report archive News release archiveRelated links
Sustainability
» Sustainable development » Safety, health and environment
» HIV/Aids
» Employment equity
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