Other parts of this series:
- South Africa’s mining sector – charting the way on local content targets in 2021
- South Africa’s mining sector – 70 percent by 2023? The ‘why’ of local content targets
- South Africa’s mining sector – 35 percent by 2021? The local content issue.
- The local content targets in South Africa’s mining sector – and why industry is struggling
- A framework to meet local content targets in South Africa’s mining sector – Accenture case study
Accenture’s Local Content Framework can accelerate reporting, compliance
The South African Department of Mineral Resources and Energy (DMRE) published the third version of its Mining Charter in 2018. High local content procurement targets are a key component. It’s one of the strategies the Mining Charter III employs to drive Broad-Based Black Economic Empowerment (B-BBEE) transformation in the industry. But can mining rights holders realistically—within five years—progress toward spending 70 percent of their mining goods budget on locally manufactured goods from BEE-compliant and historically disadvantaged persons (HDP)-, youth- and women-owned businesses?
It’s a tough ask for a number of reasons, not least because industry stakeholders have not1 developed a standardised product identification system or a verification process for local content. The task is onerous and the potential impact of compliance failure is significant. For mining rights holders, 2021 will be their third year of reporting this element.
From the work we have been doing over the past two years in terms of supporting South African mining rights holders on their local content procurement journeys, we have acquired a number of insights on key challenges, and best practices to effectively address them.
As some of our mining clients enter year three of the five-year transition period—the year in which targets ramp to 35 percent—it’s clear that unless interventions are put in place, realising the composite target as well as those for supplier ownership and local content is unlikely.
To protect future business, strengthen their value chain, achieve sustainability and empower the communities around them, mining rights holders need to respond to the call for local industry development and industrialisation—increasing manufacturing capability in the country for mining goods.
It will take a combination of technology, automation, engagement with suppliers, and a strategy that aligns current and future business needs with Mining Charter procurement targets.
Digital supply chains, intelligent operations and digital supplier development platforms are themes that are gathering traction in the mining supply chain. They provide a great foundation to address this challenge with speed and agility. These are elements that Accenture South Africa has incorporated in the Local Content Framework that we have developed for our mining clients.
A framework to achieve local content targets
Our Local Content Framework launches with a local content baselining journey to identify underlying challenges and opportunities linked to local content within a mining rights holder’s supplier base. The next step is to catalyse transformational change with a localisation strategy that includes supplier engagement and development, and put the intelligent data hub at the core of our Local Content Framework solution to work. The hub provides tracking and B-BBEE reporting. It also integrates with supplier development platforms and intelligent operations to provide realtime insights on opportunities to improve local content. This intelligent solution creates a solid foundation for reporting and can accelerate reporting progress and compliance.
For mining rights holders, the time to get started is now.
Wait and see approaches based on continued ambiguity around some of the Mining Charter implementation principles and mechanisms are not recommended—they will leave mining houses on the back foot from a reporting horizon perspective. Intelligent solutions such as our Local Content Framework can position mining houses well to meet regulatory requirements and achieve related benefits, such as improved competitiveness.
Join me over the next few weeks as I, together with my team, drill down into the issues confronting South Africa’s mining sector in terms of achieving the local content targets prescribed by the 2018 Mining Charter, and the solutions emerging to drive progress.
In the meantime, for more on Accenture’s mining capabilities and offerings, click through to Leading with digital in South Africa Mining, our Applied Intelligence Studio in South Africa for Mining and our Metals & Mining newsroom for the latest releases.
Until next time
Managing Director, Accenture Africa Supply Chain and Operations
- Minerals Council Facts and Figures Pocketbook 2020, P70, https://www.mineralscouncil.org.za/industry-news/publications/facts-and-figures