CHAMBER OF MINES

BUSINESS DEVELOPMENT

FORUM (COMBDF)

COMBDF STRATEGY DEVELOPMENT

PROGRESS REPORT11 May 2012

JOSEPH RAMOTSHABI

INTRODUCTION

COMBDF embarked on a strategy review process during 2011 culminating in a strategy formulation workshop held at the BCM boardroom in Gaborone on 27th – 28th October 2011. The workshop delegates comprised mainly of Supply Chain Managers from the member Mining Companies as they are the main drivers for Procurement & Logistics Business Development at the mining operations.

The workshop was facilitated by Innolead Consulting.

TECHNICAL TEAM

Joe Ramotshabi Business Development Manager – Debswana (Henceforth referred to as ‘Consultant’)

Ronnie Yane Head of Department -Material Management – Tati Nickel

Miriam Raborokgwe Materials Manager - BotAshBasimane Tlhaloganyang Warehouse & Logistics Superintendent - BCLSujeet Parbat Procurement Manager – African CopperShingani Bobeng Supply Chain Manager - BCLKelvin Mwewa Materials Manager – Debswana JwanengIgnatius Nfana Materials Manager – Debswana Orapa & Letlhakane

France Mashinyane Business Development Manager- BCL

BACKGROUND OF THE COMBDF

Significant amount of money spent by the mining industry on procuring goods and services from foreign marketsThe mining Sector dominate the country’s GDPThese funds could be used to enhance the development and diversification of the local economy

Attract and grow FDI through partnering with citizen companies

This initiative has a great cost saving potential for the mining houses through discounted prices for the goods and services

The COMBDF keen to work with MTI, BEDIA, LEA, BOBS, BDC and so forth to achieve full potential of this strategy

STATEMENT OF NEEDEfficiency and cost savings for the participating mining houses

Enhanced reputation & public relations

Availability of local strategic suppliers

Meaningful contribution to Botswana’s economic development

BENEFIT S TO MINING HOUSES:

BENEFIT S TO THE NATION:Economic Diversification

Citizen Economic Empowerment

Job creation

Beneficiation

STRATEGY DEVELOPMENT INITIATIVE

The primary purpose of the COMBDF strategy development process is to formulate a comprehensive 5 year strategic plan that will guide the COMBDF and its activities with clear measurable targets, and also develop the COMBDF Strategy Map and Corporate Scorecard to identify Key Performance Areas (KPAs) and strategy performance measures.

KEY STRATEGY HIGH LIGHTS

Distinctive Competencies

1. COMBDF has unique mining supply chain & procurement skills which are fundamental to its strategic endeavors

2. The Forum has an understanding of the mining market dynamics (e.g., pricing, supply lists) therefore can leverage this knowledge

3. COMBDF is responsible for purchasing in the mining houses therefore can acquire support and influence on procurement in the mining houses

4. COMBDF has experience & knowledge of business development in Botswana, e.g., through Debswana PEO

5. The Forum has excellent ethics in the mining industry in terms of procurement (e.g., good relationships with suppliers) which enables sustainable relationships with various stakeholders.

6. COMBDF has experience and knowledge on diversification initiatives, e.g., Debswana Masedi farms, BCL orchards, etc.)

The factors that would make COMBDF come to be a value-adding entity, not merely for the services they deliver are as follows:

Competitive Advantage

1. The Forum has established informal strategic linkages with key players in economic diversification and development which will provide the background for COMBDF ‘s other strategic endeavors

2. The mining houses have formidable purchasing power collectively 3. There are standardized/similar processes (e.g., equipment, commodities,

skills) which are based on mining industry best practice 4. There is a reputable and conflict-free mining industry 5. There is availability of mine products which lends itself to further

opportunities for diversification and beneficiation6. The presence of mine related funding institutions ( e.g., PEO) for potential

business development7. There are mature, proven and well-funded CSI programs which improves

its position in the social community.

The value proposition that the COMBDF offers to its customers and stakeholders

Major ConcernsCOMBDF defined areas and issues that would raise concerns with regards to achieving its mandate below:1. Lack of supportive government legislation for effective implementation therefore

absence of a legal enforcement system2. The legacy supplier relationships may affect decision making around procurement3. Possible inadequate readiness and capability of targeted suppliers in terms of

quality, standards and/or other factors4. There is potential reduced readiness to embrace the developmental approach of

local goods and services by the mines due to already established relationships with foreign suppliers

5. The lack of preferential processes/standards which hampers fulfilling of the COMBDF mandate

6. The lack of collaborative efforts from the mining houses, e.g., strategic sourcing

7. Cost reduction initiatives in the mining sector may not be readily realized8. Lack of commercial/enterprise appreciation by the procuring entities (PEs)9. The BCM full brand is not known10. The COMBDF mandate is not fully embraced by the mining houses

Structural Factors that support COMBDF

1. The existence of a constituted BCM structure therefore generating an organized background for the COMBDF

2. The mining houses share problems, a common purpose and desire and therefore a mutual understanding and operational ground

3. The forum members collectively possess vast experience

4. Botswana has a stable economic and political climate; therefore there are no unpredicted occurrences that may hinder the COMBDF

5. The COMBDF structure provides for adequate representation of the mining houses

Structures existent in COMBDF that support its mandate

Structural Factors that hinder COMBDF

1. There is a culture of dependency by local entrepreneurs, making entrepreneurial development more challenging

2. Location of Procurement Entities (PEs) outside Botswana3. Mine policies that are not harmonized/standardized therefore

no alignment4. Insufficient legislation around Citizen Economic Empowerment

(CEE) and local business protection5 Lack of full-time staff for the COMBDF6. Some current procurement methodologies (e.g., EPCM, labor

broking) may hinder COMBDF from satisfying its mandate7. The COMBDF structure is not well recognized which may result

in lack of stakeholder buy-in

Existent Structures that may impede on COMBDF’s success:

•Have control and authority over the organization, e.g., Governmental legislators

•They enable the organization to have resources and autonomy to operate

Enabling linkages

•Have common interest with the organization, share goals/values/problems, e.g. Competitors

Normative linkages

•Divided into input functions (Provide labor and resources to create products/services, e.g. employees) and output functions (consume products and services, e.g. community)

Functional linkages

•Stakeholders who do not have frequent interaction with the organization

•Temporary relationship•Reactive to organizational actions and harder to

predict•Active in times of crisis ( the Watchdogs, e.g. media)

Diffused linkages

Stakeholder & Customer AnalysisLinkages that COMBDF has with its stakeholders:

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Stakeholder Map

COMBDF

Enabling linkages

Functional linkages

Normative linkages

Diffused linkages

(Watchdogs)(Similar)

NEEDS/REQUIREMENTS

NEEDS/REQUIREMENTS

NEEDS/REQUIREMENTS

NEEDS/REQUIREMENTS

STAKEHOLDER

BCM

BCM Members

DOP

STAKEHOLDER

COMBDF Members

BCM staff

Input

Output

STAKEHOLDER

Enterprises (local, FDI, citizen-owned)

Mining communitySTAKEHOLDER

BOBSMediaBURSDCEC

• Adequate/sufficient funding

• Active support from mines (those that are represented and those that are not)

• Formal structure• Operational guidelines

and policies for the forum

• Business support• Entrepreneurial

development processes (Tshipidi)

• Market access• Transparency &

consistency• Information on

contracts pipeline• Predictability for

business continuity• Preferential

legislation/reservation policies

• Collaborative/common approach

• Information sharing• Support of outreach

programs• Integrated business

development initiatives

STAKEHOLDER

MTI-EDDBEDIALEACEDA NDBBOBSBEMABOCCIMPEONEEDS/REQUIREMENTS

• Compliance (e.g., corporate governance)

• Information

• Transparency

• Organization driven by best practices/benchmarking

• Total cost of ownership• Improved efficiency of operations• Common approach by mining

companies• Meaningful contribution to

Botswana’s economic development• Improved reputational value• Harmonized policies and guidelines• Legal compliance

Stakeholder Emerging Requirements (Trends, patterns, key driving forces in the environment…)

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1. Increase in the use of ICT being central to business would make COMBDF capacity building to be along these aspects

2. Increased outsourcing of mining activities3. Opportunities through growth in number of mining houses4. Inadequate funds for mining supplies (pulling them out of the

market)5. Increased expectation of beneficiation from the general public

CRITICAL SUCCESS FACTORS Clear policy and procedures for engaging stakeholders

COMBDF to ensure that that the strategy implementation is done effectively and efficiently with the required resourcing by ensuring availability of funds and clear budget

There should be clear role clarity within the Forum

Clear alignment and buy-in and commitment by all member mining houses

The strategy to deliver ‘quick wins’ and provide visible and tangible results in the short to medium term.

Enhanced overall BCM brand perception Availability and accessibility of relevant information from

participating COMBDF members Effective stakeholder engagement and communication of

progress throughout the strategy implementation process

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COMBDF VISION & MISSION

COMBDF Vision Statement

Creative tension

Current Reality

To be the leader in creating and nurturing competitive enterprises in the mining and

related industries

The Mission Statement below defines and communicates the “mission of intent”. It describes the core purpose, the goal and approach through which COMBDF will deliver towards the desired vision:

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“To facilitate local entrepreneurial development in the mining and related industries through leveraging the mining purchasing power in the best interests of our Members and stakeholders ”

COMBDF Mission Statement

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STRATEGY MAP

Financial & Resource

Customer & Impact Perspective

Procurement from local enterprises

-% increase in spend on citizen supplier

People

Foreign Direct Investment (FDI)-Number of foreign companies starting up

-% increase in foreign spend on local investment

Competitive enterprises-% Growth in Export Output

-% Reduction in Import bill for mining companies

Staff capacity/competency-%staff fit to competency profile

-%staff fill for the BCM office-% of BCM staff represented in Forum

Member cost savings-%savings of total procurement budget across

members due to Forum initiatives

Internal Process

VISION: To be the leader in creating and nurturing competitive enterprises in the mining and related industries

Promotion and marketing-% increase in number of newly enrolled citizen/local businesses

-Number of prioritized businesses developed and supplying the mining and related industries

Improve strategic Partnerships & Alliances

-Number of partnerships-Pula value of contracts as a percentage of citizen spend

Build clusters/linkages-Number of clusters created

Adequate funding-% Compliance to budget

Culture of performance and results-% quorum for meetings

-% achievement of performance against targets

Enterprise capacity building-% of enterprises enrolled that are ISO Certified or similar

-%of enrolled suppliers with funding need assisted to gain access to funding

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STRATEGY PERFORMANCE MEASURES

COMBDF L0 CORPORATE SCORECARD

CHARTERS FOR PARTICIPATING MINES

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COMBDF L0 CORPORATE SCORECARD

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KPA PORTF OL IO OF P ROJE CT S KPA1: COMPE TI TIVE ENTE RPR ISE S

1. Analysis of value chain cost drivers 2. Develop an action plan for the identified enterprises to

become quick wins KPA2: FOREI GN D IRECT INVES TME NT (FDI)

1. Develop a specific FDI strategy for the mining sector benchmarking with other organizations

KPA3: PROMOTI ON AND MA RKE TI NG

1. Develop Forum promotion and communication strategy at the mines

2. Develop prioritization criteria 3. Define the support framework for prioritized companies

KPA4: PROCU REMENT FR OM LOCA L ENTE RPR ISE S

1. Develop central supplier database and common measurement criteria

2. Develop harmonized supplier classification system 3. Develop common blacklisting methodology/standards

KPA5: ENTE RP RISE CA PA CITY BUI LDING

1. Establish MOUs with BOBS or similar

KPA6: IMP ROVE S TRATE GI C PARTNE RS HI PS & ALLIA NCE S

1. Develop prioritization framework for strategic partners required

2. Identify potential suppliers of similar products to build economies of scale for the enterprises to be competitive

KPA7: BUI LD CLU STERS/LINKAGES

1. Workshop to motivate linkages

KPA8: CUL TU RE O F PE RFO RMA NC E AND RE SU LTS

1. Develop and implement charters for members participation in the Forum

2. Develop COMBDF member attendance scorecard

KPA9: ADEQU ATE FUNDING

1. To develop COMBDF budget aligned to strategic plan requirements

KPA10: MEMBE R COST SAVI NGS

1. Develop common measure for savings determination and calculation

2. Develop measures to determine the savings accrued to members

STRATEGY PROJECTS PORTFOLIO

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REQUIRED SUPPORT FOR THE PROJECT

Meeting of Senior Management in member mines

Access to key information from operations

Input from members during the road show

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WHAT HAPPENS NEXT?

STAKEHOLDER ENGAGEMENTParticipating MinesOther important key stakeholders Finalization of COMBDF Strategic Plan DocumentImplementation plan with a comprehensive financial plan (budget)