Advancing Together With Barrick Gold

Mining Preparing local suppliers for success in rural Zambia

The arrival of modern mining in Zambia's North-Western province has opened up a plethora of new business opportunities, but without the proper training, skills and mentoring, those opportunities are often out of reach for the people who live closest to the mines. Most local residents, including those in communities near Barrick's Lumwana copper mine, eke out a living through subsistence farming or by selling charcoal. Some entrepreneurs run kiosks in the commercial market adjacent to the mine, but few have managed to become direct suppliers to the mine itself. That, however, is beginning to change.

"One of our main sustainability goals at Lumwana is to increase local procurement," says Lubilo Mate, a Communications and Systems Officer at Lumwana. "There are many entrepreneurs here, but they lack capacity and experience working with a global mining company. Barrick's presence can serve as a training ground and expose local entrepreneurs to international business standards."

In 2011, not long after Barrick took control of Lumwana, the mine's community relations and supply chain departments began developing a program to remove barriers preventing local entrepreneurs from benefiting directly from the mine. This program is now known as the Local Contractor Development (LCD) program.

 

Mind-set changes

The program trains local contractors in numerous practices and standards such as safety and health, human rights and the environment. Participants, many of whom come from the Lumwana Community Business Association (LCBA), also learn how to submit tender offers, maintain records electronically, obtain trade certifications, and procure equipment, tools and clothing that meet Barrick's standards. Outside experts are brought in from a variety of organizations to provide training in various business management processes. Plans are in the advanced stages to arrange financing options for local entrepreneurs who need capital to start a contracting company.

"The biggest challenge is to change mindsets," Mate says. "Most local contractors don't have a mining background and never dreamed they could obtain work with an international company like Barrick."

When Lumwana first opened in 2008, even basic activities such as mowing the lawn or clearing brush were performed by regional or national contractors. As local entrepreneurs began to upgrade their capabilities through the LCD program, they began winning increasingly larger and more complex contracts from the mine.

 

Risk-takers and money-makers

Saineti Lushipi is exemplary of that capacity building. A long-time farmer who lives near the Lumwana mine, Lushipi entered the LCD program in 2011 with the hope of starting a contracting business and providing a better life for his family. The father of six sold his chickens and goats in the neighboring Democratic Republic of Congo that year and used the funds to purchase equipment to clear brush around the perimeter of Lumwana, his first-ever contracting job.

He continued to receive training and mentoring in business management through the program, and his company, Soweco General Dealers Ltd., later won the contract to provide recycling services at the Lumwana mine. As his knowledge and confidence grew, so did the possibilities. He won contracts to build dozens of homes around the nearby Kalumbila mine, owned by First Quantum Minerals. His company now has 75 employees and Lushipi has purchased new equipment, including hand drills, grinders and a small truck.

He hopes to partner with other contractors to win business building infrastructure for mines, along with drilling and excavating work.

"The Lumwana LCD team engaged us and worked hand in hand with us to give us knowledge and we are thankful," Lushipi says.

Lushipi's story is mirrored by Enock Kapalu's. Kapalu worked for the Zambian Ministry of Health in Copperbelt province as an infrastructure development officer for 14 years before opting for early retirement in 2011. He relocated to North Western province, where he is originally from, and moved into the Mukumbi area of Solwezi district. Once there, he formed a construction company with several local colleagues.

After taking on a Barrick-sponsored construction job for one of the local community chiefs, Kapalu's company was encouraged to bid for contracts at Lumwana by the mine's sustainability department. Kapalu was mentored and taught through the LCD program on every step of the contract life cycle. He now employs two carpenters and five general workers who perform general contract work at the mine, as well as another 15 workers constructing teacher housing for local schools on another Barrick Lumwana contract.

Like Lushipi, Kapalu plans to expand his business and purchase earth-moving machinery and other mining equipment. He has already procured a six-ton truck that he uses for his day-to-day business operations.

"Without Barrick Lumwana in this part of the country, it would be difficult to survive," Kapalu says.

Lushipi and Kapalu's stories would not have been possible without taking calculated business risks, something the LCD program tries to impart to all of its participating local contractors. After all, it is the local contractors who need to take out loans to make the up-front investment in equipment and employees, and there is no guarantee that they will win contract work with the mine.

"Local contractors have asked, ‘Where's the purchase order before I go and invest in this equipment, where's the contract?'," says Justice Zinka, a Local Supplier and Business Development Specialist at the Lumwana mine. "We needed to teach them how to make themselves stand apart from other businesses before the purchase order gets to them. It's a mind-set change."

 

Building local support

Logan Shemena, an LCBA Executive Committee Member, community leader and founder of his own contracting company, Sweet Nostalgia Ltd., has embraced patience for business and focuses on other business prospects when Lumwana doesn't have any work available. He currently has a contract to manage solid waste in Lumwana town, a community of approximately 8,500 that houses Lumwana employees and their families. Shemena says there has been a dramatic change in the attitude, ability and methods of local contractors, noting that they now work collaboratively to register companies and employ laborers from a database of trained local workers.

"When the Lumwana mine first arrived, the community had minimal skills and financial capacity," Shemena says. "More than 8,000 people were employed during the mine's construction phase so they acquired skills and now we have numerous boilermakers, mechanical fitters, tire fitters and electricians to provide a springboard to start up local contracting."

As a member of the LCBA, Shemena has played an active and crucial role in the development of local contractors such as hosting business seminars to continue developing their abilities.

"As an individual businessman and an LCBA member, I have helped to create and nurture this local contractor development," Shemena says. "Local entrepreneurs are no longer passive beneficiaries. Through the LCD program, contractors are steadily growing to become active partners in the commercial business and development of the Lumwana region and the country."

 

Our partners

Even after being trained through Lumwana's LCD program, local contractors require financing, business support, coaching and mentoring. The business experts who typically provide this training travel nearly 700 kilometers from Lusaka, the capital of Zambia. They cannot afford to set up in the area as infrastructure doesn't exist to support them. This is why Barrick has partnered with the following organizations to develop the nascent and latent talent near Lumwana:

  • The Lumwana Local Business Association (LCBA) provides ongoing mentoring and business seminars for its members while representing their interests.
  • GroFin Zambia, a financial services company, has signed a memorandum of understanding with Barrick Lumwana to provide independent-business financing to LCD contractors. The size of these loans or equity investments ranges from $50,000 to $1.5 million and is used by contractors to purchase equipment and hire employees.
  • The South African Innovation Service is an organization that is helping to develop a pipeline of local entrepreneurs. As Justice Zinka, Local Supplier and Business Development Specialist at the Lumwana mine, put it, "We don't want to get a good tool in place, such as the LCD program, and have nobody to use it."
  • HEXA, a team of supply chain development experts that has extensive experience in Africa, helps local entrepreneurs take advantage of the opportunities and address the challenges in and around the mine site.
  • The Zambia Chapter of the Business in Development Facility, sponsored by the Swedish Embassy in Zambia, has pledged $250,000 as seed funding for the Lumwana Business Incubator. The money will be granted directly to the LCBA.