Rössing Product Stewardship

Product Stewardship

PRODUCT STEWARDSHIP

Procurement

Our payments for goods and services amounted to N$2.3 billion in 2008, of which N$1.45 billion was paid to our Namibian suppliers. This represents 62 per cent spent in Namibia, 32 per cent in South Africa and 6 per cent with suppliers in the rest of the world.

In line with our commitment to the Erongo Region, we have spent nearly half of our Namibian expenditure in the Region - just more than N$700 million. Eighty per cent (N$563 million) of the spent in the Erongo Region was with our suppliers in Swakopmund, 19 per cent (N$131 million) in Walvis Bay and 1 per cent (N$8.7 million) in Arandis.

The global financial crisis has had a drastic impact on the sourcing of our major consumables. Some of our critical suppliers closed operations.

Procurement of sulphuric acid remains a critical cost item, and strategic control and management of this commodity remains a priority for us. Supply has been secured for 2009 through great teamwork within Rio Tinto, with reduced prices being agreed upon through skilful negotiation to remain cost-effective.

The price for manganese oxide was not increased in 2008, and the unit price and road transport cost of iron oxide were also successfully negotiated to remain cost-effective.

A constraint experienced in 2008 was the supply of iron oxide, since our preferred supplier collapsed during the fourth quarter of the year and did not recover to full production. However, the sourcing team managed to find a suitable replacement within a week.

Other success stories within the Procurement Department during 2008 included the following:

implementation of a procurement delivery service to all our end users on the mine site to improve efficiency;
the signing off and implementation of our Procurement Preferential Policy;
the Namibianisation of safety consumables and clothing; and
the implementation of 44 improvements in terms of HSE protection measures.

We also made a major contribution to the local community by sourcing Rio Tinto-branded safety clothes from a historically disadvantaged Namibian supplier, Namib Clothing, which is 35% owned by its employees. Rössing’s substantial order and its ongoing demand for supplies generate jobs, revenue and other economic spin-offs in the Erongo Region.

The main focus and challenge for 2009 in the current economic environment is to achieve our cost saving target of N$40 million for the Rio Tinto Group. We can achieve this by partnering with all our suppliers and other stakeholders during these challenging times.

The sourcing strategy and implementation for iron oxide and all major consumables will also be one of our focuses, especially to mitigate possible risks in respect of nondelivery.

Sourcing our safety clothes from a local supplier generates employment, revenue and other economic
spin-offs.

One of our haul truck mechanics tightens the bolts on the wheel of one of the newest Komatsu haul trucks.