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Procurement Practices

Paladin positively contributes to its communities by creating opportunities for local businesses to provide goods and/or services to Paladin’s mines. Paladin recognises local suppliers’ rights to tender for contracts and is committed to building strong relationships with the local providers.

The supply chaiN [65] for mining and processing operations, such as those run by Paladin, is quite extensive and includes both direct and indirect suppliers [66] to the mines. There are numerous suppliers for LHM and KM including consultants, contractors and sub-contractors, distributors of many materials required for mining and processing, manufacturers of various goods, primary producers for food supplies, and transport companies for materials and personnel.

 

APPROACH AND PERFORMANCE

While Paladin aims to favour local suppliers for the provision of goods and services, this is subject to the supplier’s capacity to deliver to Paladin’s specifications and on commercially acceptable terms and conditions. At LHM, local procurement is managed through a purchasing procedure while KM applies a combination of a purchasing procedure and a Tender Committee which reviews and evaluates tender submissions for locally grown and produced food.

Paladin’s expenditure on locally or regionally based suppliers at LHM and KM for this reporting period and the previous is presented in Table 30. Generally, there are greater opportunities in Namibia to source goods and services required for the LHM operation locally than opportunities in Malawi for KM. This is evident from the breakdown in overall expenditure for both sites as shown in Table 30.

At KM, the majority of the procurement expenditure is international due to the shortage of foreign exchange in Malawi limiting the local suppliers’ ability to maintain price competitiveness and consistency of supply compared to international suppliers [67]. Due to KM being on care and maintenance, the need for food supplies has proportionately decreased with the significant reduction in persons on site. This together with significantly less need for reagents and other materials resulted in a significant decrease in procurement expenditure for KM.

LHM’s overall expenditure was lower than the previous year due to successful process changes resulting in fewer reagents required, a focus on reduction in operational cost and the depreciation in the Namibian dollar.

 

Table 30: Expenditure on Goods Materials and Services (US$)

 

LHM

KM

2015/2016

2014/2015

2015/2016

2014/2015

Local & Regional[68]

82,758,529

121,613,289 284,453 386,607

National

27,331,535

34,036,872 3,008,475 5,405,060

International

7,212,127 12,280,294 3,085,729 6,175,327

Total

 

167,930,455

 

11,966,993


[65] As per the herein applied GRI G4 Guidelines, a supply chain is defined as the sequence of activities or parties that provide products or services to an organisation.

[66] As per the herein applied GRI G4 Guidelines, suppliers are defined as an organisation or person that provides a product or service used in the supply chain of an organisation. 

[67] PAL utilises its own foreign currency generated through uranium sales proceeds, and loans from Paladin, to pay for its requirements.

[68] Local & Regional for KM is defined as Kayelekera Village, Karonga Town and the surrounding villages in the Northern region. Local & Regional for LHM is defined as the Erongo Region which includes Swakopmund and Walvis Bay.

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