Procurement performance

South Deep Gold Mine has made significant progress in increasing the participation of HDSA suppliers in its supply chain and continues to identify opportunities for procurement in terms of capital goods, services and consumables. The Mine is committed to leveraging procurement spend and building a legacy of sustainable economic activity in the communities impacted by its activities. The total procurement spend in 2020 was R1.9 billion of which R1.7 billion was spent on BEE compliant entities.

South Deep is also committed to the economic empowerment of Historically Disadvantaged Persons (HDP) owned and controlled companies and building a legacy of sustainable economic activities within our host communities. This commitment is evident in our total procurement spend in which 88% was spent on BEE compliant companies in the year 2020.

Preferential procurement performance against annual targets

Procurement element20182018201920192020202020212022
TargetActualTargetActualTargetActualTargetTarget
Capital goods (40%) 50% 75% 53% 85% 55% 81% 60% 65%
Services (70%) 70% 81% 72% 88% 75% 89% 77% 80%
Consumable Goods (50%) 55% 91% 57% 92% 60% 92% 63% 65%
The targets above are exclusive of non-discretionary procurement expenditure

Spend applicable to the first quarter of the current year

 Excluded spend1NDS2 spendMeasurable spend3Host spendTotal
Goods R704 053 R10 227 384 R341 107 587 R30 658 422 (9%) R352 039 023
Services R67 440 925 R148 987 223 R309 831 669 R139 741 832 (45%) R526 259 818
Total R68 144 978 R159 214 607 R650 939 256 R170 400 254 (26%) R878 298 841

1 Excluded Spend is spend which is excluded from the calculation of procurement spend, as well the subsequent segregation between discretionary (measured) and non-discretionary spend. Examples include donations, property costs, property rentals, payroll costs, closure costs and third-party payments.

2 Non-discretionary procurement expenditure means expenditure that cannot be influenced by a mining company, such as procurement from the public sector and public. Procuring services from entities that are the only entity rendering those services, thus making flexibility and choice absolute and procurement spend necessitated by statute. Examples include procurement from rail, utilities (electricity, water, rates and taxes) and lately fuel according to MCIII.

3 Measurable Spend is all discretionary spend with BEE and non-BEE enterprises for Mining Goods and Services.

Progressive host community spend (R)

Progressive host community spend (R) [graph]

Progressive host community spend (%)

Progressive host community spend (%) [graph]

1 Host: Rand West Local Municipality, which includes Westonaria and Randfontein; and Poortje, which falls within City of Johannesburg.
2 Regional Communities fall into the broader West Rand District Municipality which are those not already included in the above host description. This includes Carletonville, Fochville and Krugersdorp.
3 National suppliers include the rest of Gauteng Province and South Africa in general.

Procurement and Enterprise and Supplier Development

The procurement strategy expresses the company’s commitment to contributing to the economic development in South Africa by maximising procurement in host communities, regionally and nationally from historically disadvantaged persons especially youth and women owned and controlled companies.

In 2020, 24% of our procurement spend was on host community companies and this achievement is an indication of the company’s commitment to creating procurement opportunities for our host communities and promoting economic transformation through the development of host community businesses. South Deep continues to implement strategies that will ensure the progress made over the years continues as the business evolves.

Criteria for Selecting Host Companies

Qualification ElementsOption One: selection criteria for qualification as a Local SupplierOption Two: selection criteria for qualification as a Local Supplier
Business is in Rand West City Local Municipality (Poortjie included) Yes Not located in Rand West City Local Municipality or Poortjie but must comply with both criteria listed below
Shareholder(s) live in Rand West City Local Municipality (Poortjie included) Yes, and minimum of 25% plus 1 vote Yes, and minimum of 25% plus 1 vote
Employees of the entity are residents of Rand West City Local Municipality (Poortjie included) Yes, with a minimum of 25% of total labour being from Rand West City Local Municipality (Poortjie included) Yes, with a minimum of 50% of total labour being from Rand West City Local Municipality (Poortjie included)

Enterprise Development Targets

Enterprise DevelopmentC2018C201920202020C2021C2022
ActualActualTargetActualTargetTarget
Number of vendors targeted yearly, that meets the selection criteria 3 2 2 2 2 1
Number of new entrants 1 5 1 22 2 2
SMME training 5 13 5 14 5 5
(Number of companies trained)