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Economic transformation and empowerment
Posted by Daniel Makhura on 28 August 2017 5:10 AM SAST
More information about the above
Harmony Gold is required to achieve a certain level of procurement spending with black-owned entities in order to encourage the economic empowerment and development of such suppliers.
Harmony’s commitment to economic transformation and empowerment both in South Africa and Papua New Guinea is evidenced by:
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Equity ownership in the company by historically disadvantaged South African (HDSA) interests. Harmony has achieved compliance with the Mining Charter through partnerships and the sale to HDSA companies of interests in the company and the underlying operations. At the end of June 2010, Harmony estimates that around 36% of its production was attributable to HDSA interests. Harmony’s HDSA ownership comprises shareholding by African Rainbow Minerals (ARM) as a result of a series of transactions including Freegold - a Harmony/ARM merger, the ARM Empowerment Trust; and other transactions, measured in terms of the “continuing consequences” provision of the Mining Charter in which previous transactions are included in calculating HDSA ownership credits in terms of market share as measured by attributable units of production. These include the Khuma Bathong transaction, the Simane transaction, the African Vanguard Resources (AVR) transaction and the sale of Orkney assets to Pamodzi Gold.
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Empowerment and transformation of the procurement base in South Africa, through the development of small, medium and micro enterprises (SMMEs) that are broad-based black economically empowered (BBBEE), and based in the provinces of operation as well as through doing business with large BBBEE companies. Harmony’s procurement processes and expenditure are governed by a group strategy and policy. BBBEE companies, and particularly local BBBEE companies, receive preference in the awarding of contracts. (The discussion below gives further details).
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Contracts awarded by Morobe Mining Joint Ventures (MMJV) to the landowner company (NKW Holdings Limited) owned by three landowner groups - Nauti, Kwembu and Winima - for catering, fuel haulage, general freight, plant hire, security, labour hire and bus services. MMJV is complying with the Memorandum of Agreement (MOA) on the Hidden Valley Project and will continue to offer business development opportunities to landowners as the mine enters its production stage, and more opportunities become available.
Implementing affirmative procurement in South Africa
Harmony is committed to the transformation of its procurement practices and performance. Harmony’s procurement policy promotes expenditure with companies recognised as BBBEE entities and local suppliers. The calculation for Harmony’s BBBEE/HDSA spend has been done using the Department of Trade and Industry (DTI) code as a guideline and the targets in Harmony’s Social and Labour Plans (SLPs) have been set in accordance with the company’s expenditure recognition as described in the DTI code. This practice will be amended in future to adhere to the requirement of the new Mining Charter that requires BEE figures determined by ownership alone, based on the definition as stipulated in the Mining Charter of September 2010 that reads as follows: “BEE entity” means an entity of which a minimum of 25% + 1 vote of share capital is directly owned by HDSA as measured in accordance with flow through principle”.
