[PDF] Community Development Toolkit - CommDev

CASE STUDYAssisting growth and development of local suppliers through collaboration andcapacity-building programsBHP Billiton, MozambiqueMANAGEMENT TOOLSSummaryOne of the most significant contributions that a large mining company can make to societyis an economic one. By investing in the local private sector, a company provides the localcommunity (including employees who work for local businesses) a reason to value themine’s presence, enhancing its social licence to operate.Context and challengeLocated in Maputo in southern Mozambique, BHP Billiton’s Mozal aluminium operationwas the first major development in the country in the past 50 years and it quickly accountedfor more than 45% of imports and 7% of gross domestic product (2002 figures). In 2007,aluminium exports contributed 61.4% of the total exports value and in 2010, Mozal’saluminium ingots still accounted for over half of the export earnings in Mozambique.To date, Mozal continues to rank first place on the top 100 companies in the country(KPMG 2010 Top 100 Companies in Mozambique).A 17-year civil war had devastated Mozambique and its physical and economic infrastructure.There were few local businesses that could provide the new smelter with essential goodsand services. Development of a local supply chain was therefore imperative. Commencingwith a commitment to award as much work as possible to local suppliers, the focus ofdevelopment support programs is to help small and medium businesses improve theirskills and capacity, with a view to building a local base of strong, competitive andsustainable supplier companies.ResponseInitially, a program was developed to educate and train the newly formed small andmedium-scale enterprises (SMEs) on an international-standard tendering package,allowing them to compete for business against foreign companies. Work packages wereexclusively allocated to local companies. This was undertaken without compromising theprinciples of compliance to specifications, timely delivery or safety.The materials and services identified for procurement from local companies includedstationery, transport labour, vehicle rental, signage, labour rate agreements, minor civilwork, equipment surveys, manufacturing, small tool repairs, lifting services, hardwareand software services, vehicle service and maintenance, laboratory consumables andhand tools.Services that could be undertaken with low risk to the operation were selected toparticipate in the program in the initial stages; then the range was expanded as localcapabilities developed.In parallel, the company established the “MozLink” program and built an SME DevelopmentCentre. Through the program, Mozal builds SME capacity, shortens the supply chain,minimizes cross-border complexities and reduces lead times, which in turn leads to lowerstock levels and cost savings for the company. The MozLink program aims to createstronger and more competitive SMEs, transfer knowledge and capacity, and assistMozambican companies to grow and develop into strong organizations that can competein both local and international markets.176 Community Development Toolkit➜