Zambia’s largest mining company, First Quantum Minerals (FQM), is forging ahead in its quest to engage more local people in its supply chain to strengthen Zambian-owned businesses and boost the local economy.
The company procured US$1.65B (K36.3 billion) of goods and services from companies registered in Zambia in 2020, representing 85 percent of the total spending by its two mines: Kansanshi in Solwezi and Sentinel in Kalumbila.
Last year’s figures – which include local procurement of fuel, electricity and equipment from local agents – bring to US$4.49B the total spent locally in the last three years, with the proportion disbursed locally growing steadily from 81 percent in 2018.
More than 2,500 locally registered businesses benefited from mine contracts in 2020 alone.
“FQM is committed to supporting local entrepreneurs as they strive to get a foothold in the highly competitive mining value chain,” said FQM Government Affairs Specialist Dr Godwin Beene.
“Our vision is sustainable and responsible local procurement that positively contributes to a complex supply chain and by extension the economic and social development of the communities in which we operate.”
“We have always prioritised local suppliers wherever possible. In instances where the skills, goods, and standards we need are not available locally, we work with local entrepreneurs operating in that sector to develop that capacity. This in turn culminates in them being our preferred suppliers over foreign-owned companies once standards are sufficiently raised.”
“Admittedly there are limits to how far we can build the capacity of local suppliers. No Zambian company currently manufactures heavy-duty mining equipment, which makes buying it locally impractical as the local supplier would only act as a middleman and still end up importing the machinery from the manufacturer and sell it to us at a higher price – which is not sustainable. Our capacity building initiative is therefore focused on services that Zambians can provide without raising our operational costs too much.”
The goal of FQM’s pro-Zambian approach is to build capacity and stimulate sustainable growth for local businesses around its Kansanshi Mine in Solwezi and Sentinel Mine in Kalumbila, and the country at large.
First Quantum’s commitment to operationalise its local procurement policy is aimed at maximising the mine’s long-term business sustainability goals along with creating synergy with other sector players.
Studies on procurement policies in the extractive sector have shown that effective local procurement practices can contribute to job creation, skills development, and improve efficiency in the supply chain by lowering costs in logistics, while also facilitating secure access to critical goods and services.