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Supply Chain Standard

Inclusive Procurement

v.1.0 Final
Document Number: STD.SA.SUP.003
Document Owner: Group Head of Supply Chain
Valid from: 01/11/2020
Valid to: 31/12/2022
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Contents

1 PURPOSE.................................................................................................................................... 3
1.1 OBJECTIVE................................................................................................................................... 3
1.2 RISKS ......................................................................................................................................... 4
2 APPLICABILITY............................................................................................................................ 4
3 PROCUREMENT .......................................................................................................................... 5
3.1 CATEGORY PLANNING.................................................................................................................... 5
3.2 SOURCING................................................................................................................................... 5
3.3 CONTRACT LIFECYCLE MANAGEMENT.............................................................................................. 11
3.4 PURCHASING ............................................................................................................................. 12
4 SUPPLIER LIFECYCLE MANAGEMENT ........................................................................................ 12
4.1 SUPPLIER ONBOARDING............................................................................................................... 12
4.2 SUPPLIER RELATIONSHIP MANAGEMENT ......................................................................................... 12
4.3 SUPPLIER PERFORMANCE MANAGEMENT ........................................................................................ 13
4.4 SUPPLIER DEVELOPMENT ............................................................................................................. 13
5 ACCOUNTABILITIES AND RESPONSIBILITIES.............................................................................. 14
5.1 GROUP HEAD OF SUPPLY CHAIN:................................................................................................... 14
5.2 SUPPLY CHAIN LEADERSHIP TEAM (SCLT) AND IP STEERING COMMITTEE:............................................. 15
5.3 INCLUSIVE PROCUREMENT PRINCIPAL/LEAD:.................................................................................... 15
5.4 GLOBAL AND BU CATEGORY TEAMS............................................................................................... 15
5.5 GLOBAL SYSTEMS ENABLEMENT TEAM (UPSTREAM) ......................................................................... 15
5.6 REGIONAL/BUSINESS UNIT SUPPLY CHAIN REPRESENTATIVE (AS NOMINATED BY THE RESPECTIVE HOSCS) ... 15
5.7 ZIMELE ..................................................................................................................................... 16
6 IMPLEMENTATION AND MANAGEMENT .................................................................................. 16
7 PERFORMANCE MONITORING AND REPORTING ...................................................................... 16
7.1 MEASURES AND REPORTING ......................................................................................................... 16
7.2 REVIEW .................................................................................................................................... 16
7.3 CONTRAVENTION OF THIS STANDARD.............................................................................................. 17
8 FURTHER INFORMATION.......................................................................................................... 17
8.1 RELATED DOCUMENTS................................................................................................................. 17
8.2 RELATED DOCUMENTS................................................................................................................. 18
8.3 ABBREVIATIONS.......................................................................................................................... 18
8.4 APPENDICES .............................................................................................................................. 19
8.5 GLOSSARY ................................................................................................................................. 19
9 REVISION HISTORY ................................................................................................................... 25
9.1 DOCUMENT GOVERNANCE ........................................................................................................... 25
9.2 DOCUMENT CONTROL ................................................................................................................. 25
9.3 AMENDMENTS ........................................................................................................................... 25
9.4 VERSION CONTROL ..................................................................................................................... 25

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1 Purpose
1.1 Objective
The purpose of this Standard is to define the minimum performance requirements for a
consistent and effective approach towards Inclusive Procurement (IP) across the Anglo in
American (AA) Group within South Africa, support of the Anglo American Inclusive
Procurement (IP) Policy.

The objective of this Standard is to equip employees/contractors of AA with information and

processes that will enable them to support the IP vision, which is to create a more inclusive
and effective supply chain that generates shared and sustainable prosperity in the
communities surrounding AA operations. This Standard is aimed at creating a considerable
internal and external commitment to AA IP objectives and requirements as well as
maintaining accountability through consequence management for deviation.

This standard supports interpretation and implementation of statutory and reporting

requirements relating to IP, with a focus on South Africa. These differ from country to country
and employees/contractors of AA must ensure that they are well informed with regards to
these requirements if they work in a country with such requirements.

Table 1 below provides a succinct reference to the AA operating countries with statutory and
reporting requirements: -
Region Country Inclusive Procurement Goals
Australia Australia Local/in-country based supplier Participation – In
accordance with applicable legislation and policy
(Queensland procurement policy).

North America Canada Local/in-country based supplier Participation – First

Nations procurement.

Southern Africa South Africa Host Community Participation – Establishment of Host

Community based businesses, Host Community
Procurement (including sub-contracting, unbundling, joint
ventures and other vehicles to achieve contract specific
objectives). This is applicable to both goods and services.
Corporate Social Investment – In accordance with

legislation and as agreed.

Skills Development and transfer – In accordance with

the Anglo Social Way and contract IP requirements

Employment – In accordance with the Anglo Social Way

Ownership – Ownership transformation in terms of

applicable legislation and/or regulation. This could also

include joint ventures and/or partnerships with persons
from previously disadvantaged groups.

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Local Content – Partnering with Anglo American in

promoting local manufacture as well as co-operating
with Anglo American's requirements around certification
and reporting of local content, in accordance with
applicable legislation and regulation.

South America Chile, Peru and Host Community/in-country based supplier

Brazil Participation – Job Creation, Skills Development,
establishment of Host Community based businesses,
Host Community Procurement (including sub-
contracting). This is applicable to both goods and
services.

Table 1: Summary of Inclusive Procurement requirements per country

1.2 Risks
Risk management reviews have identified various areas where potential harm can be caused
via various factors, such as political unrest that could impact our mining operations and
productivity from unsettled host communities. This Standard seeks to support regional
standardisation and drive consistency with regards to Inclusive Procurement and specifically
to provide the necessary guidance in managing the most prevalent business risks related to
Inclusive Procurement:
• Legal license to operate: Loss of mining licenses due to non-compliance with legislative
requirements.
• Mine closure and loss in production: Mining operations closing or shutting down due to
threats and disruptions from host communities. This refers to the loss of social license to
operate. Procurement related matters are often used as a mechanism to impose undue
influence on others, which could lead to reputational damage.
• Mine safety and security at risk: The mines’ workers’ safety and security are at risk due
to dissatisfaction of host communities.
• Balancing sustainability and profitability: The need for procurement practices that
generates shared and sustainable prosperity in the communities surrounding our
operations are sometimes directly opposed to our Operating Model and requires careful
consideration to maintain a balance between operations and not to create expectations
with the community.

2 Applicability
This Standard applies to all Anglo American entities in South Africa and the De Beers Group,
including all of its Business Units, Group Functions and controlled subsidiaries, regardless of
region or operation (collectively, “the Group”). The Policy does not apply to joint ventures and
subsidiaries of the Group which are not controlled by the Group, nor does this Policy apply to
employee owned entities and funds administered by Group employees or contractors, such
as pension/provident funds and the like.
This Policy applies to all employees and directors, as well as contractors, consultants and
external advisers (and their personnel) when they are acting on behalf of the Group. Any non-
SA based employees, contractors and/or consultants doing work for SA Based operations
also need to adhere to this policy.It is the responsibility of all employees to annually disclose
any conflict of interest (actual or perceived) to their line manager in relation to a new or
existing supplier in accordance with the relevant policies and procedures.
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Exemptions to this Standard are not permitted unless written approval has been provided by
the Inclusive Procurement Steering Committee. Refer to Section 8.3 (Contravention of this
Standard) below as well as the related Framework Governance Document for the exemption
request process.

3 Procurement
The following sections articulate the key principles, which needs to be adhered to by the
relevant personnel, to ensure alignment to AA’s IP objectives and requirements.

3.1 Category Planning

3.1.1 Inclusive Procurement Framework
A framework has been agreed for the purposes of improving category planning as it
relates to improved accessibility to host community suppliers via increased visibility of
procurement opportunities and the accompanying supplier development initiative.
Appropriate levers are to be identified for the purposes of segmenting all categories
and developing detailed Inclusive Procurement plans for each mining operation
and/or plant (as may be applicable) across the BU’s in South Africa.
The information and plans generated for each category by the category and/or sourcing
teams shall be maintained in an IP Framework document which will also be used for
tracking and monitoring progress. It is the responsibility of BU based sourcing and IP
teams, together with the relevant category specialists, to adhere to this framework and
contribute or update as required. An annual frontloading processes – by which the pipeline
of upcoming IP opportunities will be identified - will be followed to further define the level
of detail with regards to upcoming opportunities. It is the responsibility of the BU based
sourcing and IP teams to socialise and agree this plan with operational staff and end-
users, with due consideration of commercial, financial, risk, safety and other relevant
factors. Safety and Sustainable Development (S&SD) as well as technical teams shall
contribute to the matching of opportunities with the relevant requirements
Prior to commencing a sourcing event, a sourcing strategy, as per the template
contained in Contractor Performance Management Procedure 1
[PROD.GLB.SUP.004a] shall be presented for approval. Sourcing activities not
adhering to the IP Framework requirements will need to follow the prescribed
exception process. For sourcing events not falling under the scope of the Contractor
Performance Management Policy the template contained Appendix 1A – IP Sourcing
Strategy is to be completed and approved by the relevant BU HoSC.
Refer to Appendix 1 – Standard IP requirements for strategic consideration and
tender inclusion and Appendix 1A – IP Sourcing Strategy

3.2 Sourcing
3.2.1 Developing IP Sourcing Plans
The development of IP Sourcing Plans by the relevant soucing and/or category team
members, supported by IP team will be informed by procurement opportunities
available and based on the latest version of the relevant contract registers. Some key
tactics/approaches will include:-
• Set-asides/Ring-fencing: Specific products and/or services reserved for a
specific category of suppliers (e.g. host community), generally where there is a
good fit for host community procurement and there is capacity to deliver on the
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scope. Where possible, such sourcing events are to be preceded by an RFI

(Request for Information) process to ensure that suppliers matching the
requirement are invited to the sourcing event

• Unbundling: Dividing larger contracts into smaller scopes of work which can be
delivered by smaller business entities.

• No-Price Tendering: Where low value, low complexity packages are set-aside
for host community suppliers and no-price tendering may be employed to
increase accessibility for entry level suppliers. This involves an upfront
benchmarking process to establish market related pricing for a set piece of work.
Interested suppliers are then invited to tender based on other considerations
such as skill, experience etc. against a fixed/given price.

• Sub-contracting: A portion of the contract is given as a sub-contract to the host

community supplier from the awarded supplier contracting with AA.
• Sub-contracting is one of the important strategies that can be used for IP.
This strategy encourages for work to be assigned to host community
suppliers. Contract owners must ensure that this strategy is followed by the
main contracting party and that all requirements are fulfilled in terms of
ensuring that the host community supplier is receiving work packages and
payments.
• The Company Representative must ensure that they obtain sub-contracting
spend information from the main supplier to ensure compliance to the
strategy for IP.
• Where required due diligence must be conducted on both the main supplier
and host community supplier to verify that partnership agreements are being
fulfilled. Such due diligence may be outsourced.

• Joint-Ventures: A Joint Venture (JV) is a business arrangement in which two or

more parties agree to pool their resources for the purpose of accomplishing a
specific task. This task can be a new project or any other business activity. In a
JV, each of the participants is responsible for profits, losses and costs associated
with it. However, the JV is its own entity, separate and apart from the
participants' other business interests. It is an agreement between parties for a
particular purpose and usually a defined timeframe.
AA and its Business Units must give preference to trading with incorporated JV
entities over unincorporated JV’s. Incorporated JVs are subject to the Companies
Act and, as such, provide greater levels of governance confidence. Where
unincorporated JVs are used, prior approval from the relevant Business Unit
Head of Supply Chain is required, with due consideration of the risks involved.

• The documentation of the registered JV shall be made available on signing of the

contract between AA and the JV structure.
• The JV should inform AA of any changes to the JV structure within seven working
days to ensure the basis of the agreement is upheld.
• Representation of the JV during interactions with AA should be in accordance to
the demographic make-up of the JV structure to affirm active participation by all
member structures of the JV
• There should be clarity of the niche expertise that each party brings to the JV to
necessitate the partnering
• The signed documents reflecting the promulgated JV structure should be made
available to AA, after contract award at the time of signing the contract.

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Refer to Supply Chain Guideline for Ownership and Locality Assessment

[GUID.SA.SUP.003]

• Supplier Partnering: AA may facilitate collaboration between multiple supplying

parties but may not force any supplier(s) to enter into a specific partnership.
• AA may specify during a sourcing event that partnering is a requirement for
selected scopes of work.
• Where there is mutual agreement to establish any such partnership, a due
diligence must be conducted by AA Group Legal to mitigate any potential
risk or harm. Also refer to Supply Chain Guideline for Ownership and
Locality Assessment [GUID.SA.SUP.003]

o To drive the inclusive procurement mandates and intended outcomes, it

will be expected of the entities bidding as partnerships (and with black
partners) to clearly outline the empowerment milestones. In addition,
critical engagements with such entities should be fully represented by the
management structure that reflects the ownership in the partnership.
o To catalyse the impact of the inclusive procurement strategy, it is
expected of the entities with black partnerships to demonstrate active
management and control in the day-to-day operational activities of the
business. This would entail enhancement of governance processes to
submit minutes of critical, quarterly and annual general meetings that
would demonstrate voting rights and decision-making by the black
partners in the entity aligned to their shareholding.

• When using procurement strategies for set-asides, unbundling scope of work,

sub-contracting or joint ventures, competitive pricing must be considered to
ensure a standard approach is taken which is similar to all other contracts.

3.2.2 Supplier selection and qualification

3.2.2.1 Host Communities (HC)
• AA acknowledges the role it should play in supporting HC to support them to
thrive and become sustainable businesses.
• HC suppliers are from the communities surrounding our mining operations
that provide goods and or services to our organisation (refer to Section 9.4
(Glossary) of this standard).
• Procurement teams are required to source from HC suppliers in the first
instance to allow opportunity for exposure and growth of entrepreneurs and
industrialists. For the avoidance of doubt, AA has a clear preference for Goods
and/or Services which can be sourced competitively from HC suppliers

3.2.3 Business entities and other structures

3.2.3.1 Trusts
AA will engage with trusts during sourcing events if due process is followed
and the requirements set out in Supply Chain Guideline for Ownership and
Locality Assessment [GUID.SA.SUP.003] are adhered to.

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3.2.3.2 Community Trusts

AA does not engage in business with community trusts as a norm. Any
deviation needs to follow an exception process set out in in Section 7
(Implementation and Management) of this standard, including declarations
of interest.

3.2.3.3 Community Leaders & Public Officials

• AA has a committed approach to full compliance with local and international
laws including best practice in all its activities, especially in respect to its
approach to ethical business conduct. International anti-corruption and
bribery laws specifically prohibit Public Officials (including Traditional
Leaders) from receiving funds directly or indirectly from companies such as
AA or any of the business units.
• AA has a strict Business Integrity policy that strictly prohibits the Company
from contracting with Public Officials, either directly in their personal
capacity or with their immediate Families or Close Relatives or entering into
any form of arrangement (whether formal or informal) from which such
individuals could gain (or even create a perception of gaining) a direct or
indirect financial benefit.
• Contracting includes any formally executed contact, purchase order, service
level agreement or similar, and any informal instruction (i.e. written or
verbal) to carry out services to the benefit of AA, for which financial
compensation is expected.

3.2.3.4 Traditional Leaders

• Public Officials, and their immediate family and close relatives, are expressly
prohibited from participating in or benefitting from the outcomes of any sourcing
process (formal or informal) in any manner whatsoever. This would include:
participating in the development of the tender strategy, scope of work and/or
specifications; identification of prospective tenderers; or in the adjudication of
tender submissions received and the final supplier selection.
• Note that this provision applies equally to all formal enquiry processes (RFI,
RFP, RFQ), informal enquiry processes such as a call for quotes or budget
estimates, and Single Source procurement activities.
• To ensure awareness of potential conflicts under this clause is managed
effectively, tender documents should include a declaration section where
this is explicitly questioned.
• No preference, apart from that set out in the Inclusive Procurement Policy,
shall be afforded to any companies or individuals that enjoy the support of
any Public Officials when determining the successful company following a
formal tender process.

3.2.4 Tender Processes

All tender processes shall be subject to the relevant Supply Chain Policies and
Standards, this document only sets out any obligations stemming specifically
from Inclusive Procurement requirements.
3.2.4.1 Tender Requirements
If identified such in the sourcing and contracting strategy, the invitation to a sourcing
event will be limited to only identified groups such as HCs. Any deviation

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shall follow the exception process set out in Section 7 (Implementation and
Management) of this Standard.
All other tenders shall be based on a pre-approved IP strategy (in the approved
format) by the Anglo American Contracts and Commercial Committee and
deviations may only be approved by this committee
Tender adjudication shall be based on a pre-agreed, weighted evaluation matrix
which shall allow at least 10% of the total score for IP and shall form of the
commercial adjudication. It is preferred that 30% of the scoring is based on IP
requirements. Where otherwise agreed, compliance with IP requirements for ring-
fenced opportunities may be included as part of the initial stage of adjudication and
non-compliance may disqualify the bidder from the remainder of the process.
Unless agreed otherwise, sourcing processes for opportunities ringfenced for
Host Community participation shall apply a 12 month cool-off period for ex-
employees. The intent of this provision is to promote fair and equitable
participation. Such provision shall apply only to employees who leave the AA
employ of free will and who become owners, directors or shareholders of Host
Community based businesses.

3.2.4.2 Tender Feedback

• Where tenders included SMME’s and specifically HC suppliers a feedback
process need to follow conclusion of the tender process for developmental
reasons. Such feedback may be system based (via Ariba) or via e-mail and
need to be provided by the sourcing team. Feedback must be specific
enough to allow the supplier to improve without breaching any ethics or
confidentiality (e.g. It is permitted to say a company “was not competitive”
and even highlight specific area of the tender where pricing was not
acceptable, but not permitted to say, "you were 7.3% more expensive").
• Where the HC supplier in question is a Supplier Development beneficiary
with Zimele, feedback needs to also be supplied to Zimele for
developmental purposes via the IP representative.

3.2.4.3 Post Tender Submission / Negotiations

In the following circumstances, the relevant BU HoSC may approve negotiations
with the Exempted Micro Enterprise (EME) supplier(s) with the view of making
their offers more competitive:
• If the supplier has submitted their pricing detail (thus does not apply to
unpriced tenders), AA, via the sourcing team supported by the IP team, will
work with the supplier to ensure their submission is complete. This means
that guidance can be provided around all the elements which should be
included but not on actual pricing. This guidance may not be provided be
persons who form part of the tender opening or adjudication process.
• If the submitted tender response by the supplier qualifies for acceptance but
there is a minor deviation from specification which can be corrected at little
or no additional cost, then recommendations must be made to the BU HoSC
for acceptance and all particulars of the negotiations with the BEE supplier
must be stated.
• If the only reason for not being the lowest priced tender is that the supplier
does not have the benefit of historic dealings with AA, such as the price of
safety related fitments to vehicles which caused the tender to be higher,

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recommendations must be made to the BU HoSC for acceptance and all

particulars of the negotiations with the BEE supplier must be stated.
• During negotiation targets and timelines need to be agreed for the various
host community components and such targets and timelines are to be
included in the contract IP Plan.
• Contracts to make provision for IP specific clauses (with remedies for
breach) as well as KPIs to track progress.

3.2.5 General Sourcing related standards

3.2.5.1 Anti-Fronting
• AA is opposed to any form of Fronting.
• AA will not be associated with companies or persons found to be Fronting.
• Where fronting related activities are identified in AA’s supply chain, AA will
follow the spirit and intent of the law to address it.
• AA will empower its employees to identify and deal with fronting related
matters.
• Suppliers who engage in fronting related activities will not be allowed to do
business with AA. This means that they will be blocked as a vendor and no
form of procurement will take place in future.

Refer to Supply Chain Guideline for Ownership and Locality Assessment

[GUID.SA.SUP.003] for more guidance in this regard

3.2.5.2 Price Premiums and Developmental Contributions

• Payment of premiums should not be the only mechanism considered to
achieve transformation as there are several other mechanisms, as set out
below, which may be used to improve inclusivity.
• Where bidding processes are ringfenced for Host Community/SMME
suppliers, price benchmarking should confirm whether pricing is indeed
market related.
• Where a host community supplier cannot provide a competitive bid only due
to inability to secure competitive downstream pricing (e.g. sub-suppliers),
AA may intervene and assist such company with supplier negotiations. This
intervention is subject to individual approval from the BU HoSC and is only
allowed when no conflicts of interest exist (e.g. sub-supplier also provided
prices for other bidders in the same process).
• Provision will be made for certain allowable tolerances (in any event no more
than 10%) to enable small enterprises to develop their own competitiveness.
This is subject to approval by BU HoSC and Anglo American Contracts and
Commercial Committee as it could result in setting an unwanted precedent.
• If there is a business case for a limited period premium, a detailed proposal
must be submitted through the exception process, as set out in Section 7
(Implementation and Management) of this Standard, as well as a
developmental plan to reduce the cost over this period.
• In relation to development contributions, a provision is made to waive the
requirements related to performance securities (bank guarantees) and
retention securities (bonds or withholding of payments) – with due
consideration of the relevant risk factors. This shall apply only to contracts

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with a value of less than R2m. For contracts of a higher value approval from
the relevant BU HoSC is required

3.2.5.3 Supplier BEE Deals

• AA will prioritise engagement with transformed companies and those in the
process of transformation during the procurement process.
• AA will engage suppliers on their BEE status and transformation plans. AA
and respective business units may provide guidance but will not prescribe
with whom or how a company should structure its BEE deal. It is the
supplier's responsibility to comply with legal requirements (reporting of BEE
transactions over R100m).

Suppliers should be referred to authorised BEE verification agencies for

guidance on/scrutiny of such deals. Under no circumstances shall AA
employees conduct this task. Refer to Supply Chain Guideline for Ownership
and Locality Assessment [GUID.SA.SUP.003] for more guidance in this regard

3.3 Contract Lifecycle management

3.3.1 Contract Duration
• AA will not enter into any "Evergreen" contracts
• Contracts with a duration of more than 3 years may be acceptable to support
longer term, development focussed partnerships between larger companies and
SMME’s to support the Inclusive Procurement Strategy as well as for the
purposes of Supplier Development.
• The following types of agreements may be considered for 5-year agreements.
This list is not exhaustive and other agreements may be added based on a case
specific motivation and approval by the Anglo American Commercial and
Contracts Committee:
1) Core mining activities for which an extended period of skill transfer and
development is required
2) Contracts requiring significant upfront capital investment in the form of debt
financing from a financial institute or equity financing from investors or
venture capitalists
3) Contracts related specifically to establishing local manufacturing capability
(industrialist activities) and import replacement

3.3.2 Local Job Creation/Support

• AA encourages and is supportive of businesses that positively contribute to local
job creation.
• AA may set minimum thresholds of host community persons to be employed in
certain sourcing events or contracts to meet the requirements of the Contractor
Social Management Strategy (e.g. 90% of wage/labour bill to be paid to host
communities).

3.3.3 Skills Development and Transfer

• AA will encourage meaningful skills development and transfer within its supply
chain (including OEMS, suppliers, contractors and other partners). This can
include internal and external capacity building and contracts should be structured
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to facilitate the transfer of skills. Where such requirements are included in

contracts the contract management team, supported by the IP team and S&SD
teams where relevant, shall be responsible for managing and tracking
performance against contractual requirements.
• AA may set minimum thresholds/requirements for skills development/transfer in
certain sourcing events or contracts to meet the requirements of the Contractor
Social Management strategy and IP related requirements.
• Contracts identified as Socially Material under the Anglo Social Way shall contain
a comprehensive skills transfer plan for identified host community labour as part
of the Contractor Social Management Plan

3.4 Purchasing
3.4.1 Payment Terms
• The standard trading payment term for AA globally is 60 days from month end,
however EME and Qualifying Smaller Enterprise (QSE) suppliers may have
preferential terms depending on the type of contract and negotiation.
• To support the development of EME suppliers, AA will provide shorter payment
term for for Black Owned suppliers, up to 14 days from statement/invoice date.
• All EME suppliers will be verified to check the size of entity and other
documentation to warrant a shorter payment term.
• In cases where larger suppliers are required by AA to provide preferential
payment terms to their EME sub-contractors, AA may approve prompt payments
to the large suppliers to facilitate the process. These prompt payments shall only
be for the purpose of expediting payment to EMEs and should thus be
accompanied by documentary proof, such as an invoice from the EME. This
concession shall not alter the large supplier’s payment terms

4 Supplier Lifecycle Management

4.1 Supplier Onboarding
4.1.1 Supplier Onboarding
• Certain onboarding requirements, post tender, are perceived as severe barriers
to entry for smaller new entrants. In the interest of providing improved access to
smaller suppliers, BU’s need to make resources available to assist such
suppliers with for example the completion of contractor’s packs.
• Refer to the Supplier Master Management Standard [STD.GLB.SUP.001] for
further detail.

4.2 Supplier Relationship Management

4.2.1 Partnerships (for SD as well as other initiatives such as CSI)
• AA will prioritise and develop value-based partnerships with a wide range of
strategic partners including large suppliers and OEMs, government and its
agencies, public international organisations and other mining industry players to
leverage resources and ensure efficient implementation of Supplier Development
(SD) and other programmes.
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• Partnership initiatives with large OEMs should be managed by the relevant

Group Supply Chain representative to ensure consistency across the business
and maximum benefit for all involved.
• The identification, selection and engagement of stakeholders will be guided by
Supply Chain Guideline for Selection and Development of Partnerships
[GUID.SA.SUP.004].

4.3 Supplier Performance Management

4.3.1 Supplier Scorecards
• All AA suppliers must comply with the IP requirements agreed contractually and
report accordingly at agreed intervals.

4.4 Supplier Development

AA’s Supplier Development (SD) programme should ensure that consistent and appropriate
metrics/controls are in place to measure supplier’s activities and performance to ensure
achievement of AA’s IP objectives. AA is supported by Anglo Zimele in all SD activities,
unless decided otherwise by the relevant BU
4.4.1 Supplier Development Model and Process
AA’s Supplier Development (SD) programme is meant to prioritise and drive
increased HC spend. The following steps and/or principles will guide the
implementation of SD programmes:-
• Before implementing any SD programme, each BU will need to ensure that an
assessment of prospective procurement demand has been completed. Based on
said demand profile suppliers must be recruited into the SD programme, in
accordance with the core activities/offering. HC suppliers should not only be
developed with business/technical skills but be allowed acces to opportunities
post development.
• SC may preference suppliers from the SD programme as part of the sourcing
strategy
• In addition, at least quarterly, BU’s should proactively review the status of
contracts to isolate those expiring and where the need for procurement would
arise. With each opportunity BU’s should then look at the potential of procuring
from HC suppliers taking risk and other associated factors into account. This is to
assist with managing suppliers’ expectations by linking SD candidates with an
identified procurement opportunity.
• Each BU is expected to conduct a thorough analysis of suppliers within their
host communities to determine what is available in terms of quantity, type of
sectors and general capacity, etc, and their suitability for identified
procurement opportunities. Such activity is to be undertaken by Zimele or
the relevant Supplier Development parter of the BU.
• Each BU is to ensure that Zimele beneficiaries are included in sourcing
activities where possible
• The criteria for determining suitability is referenced in Supply Chain Guideline for
Selection of Beneficiaries of Supplier Development [GUID.SA.SUP.002].

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4.4.2 Supplier Development Scope and Approach

• In addition to the criteria set out in the above section, AA will utilise a pre-
determined criterion as the basis for selecting goods and or services to allocate
opportunities to HC suppliers. A key starting point for establishing the business
case for host community and/or SA is based on understanding two issues – a
goods/service’s suitability for local manufacture/procurement and the capability
of the local market.
• For categories deemed a good fit for HC procurement and where there is HC and
capability, the identified opportunities must be set-aside for HC/ZOI suppliers and
targeted initiatives enabled to boost their competitiveness and growth.
• For categories that are a good fit for HC procurement but where suppliers are
considered to have limited capability, capacity building should be prioritised
through participation in AA’s SD programme.
• For categories that are less suitable for HC procurement and where there is little or
no HC capability, capacity should be examined or unbundling of current contract
scopes to smaller work packages to ensure a good fit for IP or could benefit from
associated skills transfer or technical training / mentoring (unbundling).

4.4.3 Internal Capacity Building related to Supplier Development

• As a minimum, efforts should be made to ensure the development of the capacity
of all staff concerned with implementing SD programmes.
• Cross-BU / Operational knowledge and best practice sharing should be part of
the internal capacity building process.

4.4.4 Funding
• AA will pro-actively engage strategic partners to leverage resources (e.g.
funding, human capital, etc.) based on the SD programme requirements.
• This may include funding through the ABSA/Zimele partnership but also other
external funding.

4.4.5 Zimele Alignment

• As far as possible, all Enterprise and Supplier Development (ESD) activities
across all BU’s should be aligned with the Zimele ESD strategy.
• AA’s approach ensures the differentiation of Enterprise Development (ED)
from Supplier Development (SD). ED focuses on support given to
enterprises/opportunities that are non-mining linked while SD is focussed on
developing our supplier base.
• BU specific strategies that do not align with the Zimele strategy should be
approved via the exemption process as set out in Section 7 (Implementation and
Management) of this Standard.

5 Accountabilities and Responsibilities

For the Inclusive Procurement Standard to be implemented and managed effectively, the
following key accountabilities apply:-

5.1 Group Head of Supply Chain:

• Approve this Standard and any future

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• Approve exemption requests in relation to this Standard in its entirety or to a subsection

(following the SME and SCLT reviews), as part of IP Steering Committee.

5.2 Supply Chain Leadership Team (SCLT) and IP Steering Committee:

• Act as the Standard Owner/Sponsor (as per nominations) to ensure the development of
any new or revised Standard.
• Review and endorse this Standard and any amendment/exemption requests, as part of IP
Steering Committee.
• Implement this Standard within their respective teams (as applicable).
• Ensure compliance among their respective teams and that all the required process and
procedural documents are in in place to support the embedding of this Standard’s
performance requirements.
• Meeting frequency for the IP Steering Committee shall be monthly

5.3 Inclusive Procurement Principal/Lead:

• Act as the subject thought leader in relation to this Standard’s focus area.
• Review the Standard and communicate any changes to the relevant stakeholders.
• Review any request for full or partial exemption from a Standard.
• Provide process training (or equivalent) to the relevant regional Supply Chain teams
(utilising the ‘Train the Trainer’ approach) to ensure a comprehensive understanding of the
Standard.

5.4 Global and BU Category Teams

• Ensure that this Standard is applied to every BU as well as category strategies.

5.5 Global Systems Enablement Team (Upstream)

• Provide system support and guidance on the required systems to the relevant users.
• Provide the relevant users with the required systems training (utilising the ‘Train the
Trainer’ approach where feasible) to support the embedding of the Standard and its
associated processes.

5.6 Regional/Business Unit Supply Chain Representative (as nominated

by the respective HoSCs)
• Inform the relevant operational Supply Chain teams (and other internal stakeholders) of
the existence of the Standard (or any revisions).
• Develop a procedural document to support the implementation of this Standard and
communicate this to the relevant internal stakeholders.
• Provide training (process and system) to the relevant internal stakeholders (and external,
if applicable).
• Manage any communication or change activities with internal (as well as external, if
applicable) stakeholders.

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5.7 Zimele
• Implementation partners for Supplier and Enterprise Development as described in this
document.
• Zimele is focused on building sustainable livelihoods in our host communities and on
strengthening relationships to create synergies within Anglo American and with broader
mining industry partners.
• Zimele is playing its part to create jobs and grow small businesses. The Zimele hubs
focus on supporting SMME’s and the youth through up-front mentorship, followed by
funding opportunities.

6 Implementation and Management

All SA BU Supply Chain procurement teams must adhere to this Standard. Should there be
any deviation to the standard or policy, IP Steering Committee must grant approval prior to
such deviation taking place. Any requests for exemptions or proposed changes to this
Standard must be logged for review and approval by the IP Steering Committee.

7 Performance Monitoring and Reporting

7.1 Measures and Reporting
Anglo American Supply Chain (AASC) provides input into several AA reports on external
spend, such as compliance to Mining Charter targets, the AA BBBEE rating and the AA
Sustainability Report. Measures and targets are also put in place to measure the efficiency
and effectiveness of the business in relation to the incorporation of the IP objectives in our
ways of working. As an outcome of the process of improvement of this area, reporting will
become entirely system based and automated. A mechanism to track progress against our
objectives is critical to ensure we progress on our implementation plans, and that corrective
action, where needed, can be implemented timeously.
Centralised, automated reporting for Inclusive Procurement will rely on the following data
sources:
• All Supplier related data shall reside in MDM (Master Data Management system)
• All transactional data shall reside in BU ERPs

Supplier data and spend data needs to be available in a timeous manner and to an
appropriate level of granularity to support the required reporting (typically on a spend per
supplier, per asset basis). Refer to Supply Chain Guideline for IP Reporting
[GUID.SA.SUP.001] for more details in this regard. This document shall also specifically
address reporting against the Mining Charter and other regulation/legislation as may apply.
Refer to Appendix 2 – AA Mining Charter Implementation guidelines

7.2 Review
This Standard shall be reviewed every two years, and more frequently if necessary, by the
Group Head of Supply Chain or an authorised delegate to reflect the Company’s latest best
practice governance requirements.
Audits of this Standard to ensure adoption and compliance by the applicable team(s) will be
undertaken by the Global Performance Improvement Manager (in association with ABAS) as
required. Any resulting audit findings must be quickly addressed and dealt with by the
stipulated deadline by the identified responsible person.

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7.3 Contravention of this Standard

Any contravention of this Standard is considered a serious matter and will result in
disciplinary action being undertaken.
If employees believe that their own actions have, or may have contravened the Standard,
they should advise their line manager at the earliest opportunity.
If employees suspect that a contravention of the Standard has been committed by another
individual, they should promptly and confidentially report this via their line manager or Anglo
Your Voice. Please report your concerns using YourVoice website -
www.yourvoice.angloamerican.com or www.yourvoice.debeersgroup.com. Do not confront
the individual concerned.
The Inclusive Procurement Standard supports the policy and processes that is applicable to
all BU’s based in South Africa. Non-compliance to the policy, standard and supporting
documents and processes may result in potential risks being realised at operations, which
may put employees and contractors at great risk. In such case, the relevant BU will follow the
relevant processes to address non-compliance to the policy and standard.

7.3.1 YourVoice
YourVoice is Anglo American’s and De
Beers Group’s confidential reporting service.
AA guarantee anonymity, confidentiality and non-retaliation for reports made in good
faith. This YourVoice channel is open to our employees, contractors, suppliers and
all our stakeholders.
Anglo American’s YourVoice
For further information about YourVoice visit: www.yourvoice.angloamerican.com or
www.yourvoice.debeersgroup.com or contact YourVoice at one of the following
hotline numbers:
• Australia: 1300 894 021
• Botswana: 00269 800 7861 035
• Brazil: 0800 892 0491
• Canada: 1 855 303 7713
• China: 400 120 0372
• Peru: +51 1 7009765
• Singapore: 800 492 2387
• South Africa: +27 87 232 5426
• UK: 0800 068 8792
For full contact details for all countries, please visit the website.

8 Further Information
8.1 Related Documents
The Inclusive Procurement Portal on Eureka is an up to date source of all IP related information.
Click on https://angloamerican.sharepoint.com/sites/esc-020/inclusive-procurement/ .

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8.2 Related Documents

The below list details all the related documents which must be reviewed and adhered to in
conjunction with this Standard:-

Document Number Previous Number Title

POL.SA.SUP.003 New Document Inclusive Procurement Policy
STD.GLB.SUP.001 New Document Supplier Master Data Management
Standard
3564138 New Document (Oct 2016) Code of Conduct
New Document (May 2014) Business Integrity Policy
TBC Contractor Social Management
Standard
NO REF MPRDA - Mineral and Petroleum
Resources Development Act no 28 of
2002, or as amended
NO REF Mining Charter (DMR) – Broad Based
Black Socio-Economic Empowerment
Charter for the South African Mining
Industry
NO REF BBBEE Act – Broad Based Black
Economic Empowerment Act no 53 of
2007, or as amended
NO REF BBBEE (DTI Codes) - DTI Codes of
Good Practice
STD.GLB.SUP.012 Anglo American Responsible Sourcing
standard
GUID.SA.SUP.001 Pending release Supply Chain Guideline for IP Reporting
GUID.SA.SUP.002 Pending release Supply Chain Guideline for Selection of
Beneficiaries for Supplier Development
Programmes
GUID.SA.SUP.003 New Document Supply Chain Guideline for Ownership
and Locality Assesment
GUID.SA.SUP.004 Pending release Supply Chain Guideline for Selection
and Development of Partnerships

8.3 Abbreviations
The below list details all the abbreviations used within this Standard:-
Abbreviation Detail
AA Anglo American
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Abbreviation Detail
AASC Anglo American Supply Chain
BEE Black Economic Empowerment (Often referred to in context of Mining Charter)
BBBEE Broad Based Black Economic Empowerment
BU Business Unit
EME Exempted Micro Enterprise
ERP Enterprise Resource Planning
ESD Enterprise and Supplier Development
FTE Full time Employee Equivalent
HC Host Community
HoSC Head of Supply Chain
IP Inclusive Procurement
KPI Key Performance Indicator
MPRDA Mineral and Petroleum Resources Development Act
OEM Original Equipment Manufacturer
RFI Request for Information
RFP Request for Proposal
RFQ Request for Quotation
QSE Qualifying Smaller Enterprise
SCLT Supply Chain Leadership Team
ZOI Zone of Influence
8.4 Appendices

Appendix No. Description

1 Standard Inclusive Procurement requirements

2 Mining Charter Implementation Guidelines

8.5 Glossary
The below glossary details all the terms and definitions used within this Standard:-

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Term Definition
“Anglo American”,the In this document, and any related procedures or standards, references to
“Anglo American Group”, “Anglo American”, the “Anglo American Group”, the “Group”, “we”, “us”, and
the “Group”, “we”, “us”, and “our” are to refer to either Anglo American plc and its subsidiaries and/or
“our” those who work for them generally, or where it is not necessary to refer to
a particular entity, entities or persons. The use of those generic terms is for
convenience only, and is in no way indicative of how the Anglo American
Group or any entity within it is structured, managed or controlled. Anglo
American subsidiaries, and their management, are responsible for their
own day-to-day operations, including but not limited to securing and
maintaining all relevant licences and permits, operational adaptation and
implementation of Group policies, management, training and any
applicable local grievance mechanisms. Anglo American produces group-
wide policies and procedures to ensure best uniform practices and
standardisation across the Anglo American Group but is not responsible for
the day to day implementation of such policies. Such policies and
procedures constitute prescribed minimum standards only. Group
operating subsidiaries are responsible for adapting those policies and
procedures to reflect local conditions where appropriate, and for
implementation, oversight and monitoring within their specific businesses.
BEE Compliant Suppliers/ A company with a minimum B-BBEE level 4 status in terms of the BBBEE
BEE Entities Codes of Good Practice and minimum 25% + 1 Vote by Historically
Disadvantaged Persons.
Black Owned Juristic person having shareholding or similar interest that is controlled by
Black Person/s and in which such Black Person/s enjoy/s a right to
economic interest that is at least 50%+1 of the total shareholding.
Black Persons Is a generic term which means Africans, Coloureds and Indians:-
• Who are citizens of the Republic of South Africa by birth or descent.
• Who became citizens of the Republic of South Africa by naturalisation.
• before 27 April 1994.
• on or after 27 April 1994 and who would have been entitled to acquire
citizenship by naturalisation prior to that date; (Definition of “black
people” substituted by section 1(b) of Act 46 of 2013).
A juristic person which is managed and controlled by person/s

contemplated in point (a) and/or (b) and the person/s collectively or as a

group own and control all issued share capital or member’s interest and
can control the majority of the member’s vote.
Broad Based Economic Refers to the economic empowerment of all black people, in particular
Empowerment (BBBEE) women, workers, youth, people with disabilities and people living in rural
areas, through diverse but integrated socio-economic strategies that
include, but are not limited to: -
• Increasing the number of black people that manage, own and control
enterprises and productive assets.
• Facilitating ownership and management of enterprises and productive
assets by communities, workers, co-operatives and other collective.
• Human resource and skills development.
• Achieving equitable representation in all occupational categories and
levels in the workforce.
• Preferential procurement from enterprises that are owned or managed
by black people.
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Term Definition
• Investment in enterprises that are owned or managed by black people.

Close Relative Close Relatives are defined in the Business Integrity Policy (and Prevention
of Corruption Performance Standard B) as “a spouse, partner, intimate,
parent, step-parent, dependant, child, stepchild, sibling, step-sibling,
nephew, niece, first cousin, grandparent and grandchild (including in-
laws).”
Collective Scheme A registered trust or incorporated not for profit company or other private
collective representative vehicles created with a view to holding and
receiving assets or other interests on behalf of a group of people or a
community and with a view to managing and/or distributing the benefits of
such assets or interests.
Doorstep Supplier Black Owned Supplier (51% Black ownership or more) with its main place
of business in the direct vicinity of the operation (Doorstep Supplier).
Pre-requisites:-
• This will not be restricted to a radius as per the old ‘local’ definition but
will be set up to align with the actual town/community names as
indicated in the operation’s SLP (primary zone). Where these do not
exist, each BU should classify communities accordingly;
• For remote operations may also include Labour Sending Areas
(Venetia);
• 51% Black ownership or more.
Not including branches.

Exempted Micro Enterprise Enterprises with an annual turnover less than R10 million or are recently
(EME) formed or incorporated entities that have been in operation for less than
one year (start-up enterprises).
Fronting Practice • Directly or indirectly undermines or frustrates the achievement of the
objectives of this Act or the implementation of any of the provisions of
this Act, including but not limited to practices in connection with a B-
BBEE initiative;
• In terms of which black persons who are appointed to an enterprise
are discouraged or inhibited from substantially participating in the core;
• In terms of which the economic benefits received as a result of the
broad-based black economic empowerment status of an enterprise do
not flow to black people in the ratio specified in the relevant legal
documentation;
• Involving the conclusion of a legal relationship with a black person for
the purpose of that enterprise achieving a certain level of broad-based
black economic empowerment compliance without granting that black
person the economic benefits that would reasonably be expected to
be associated with the status or position held by that black person; or
• Involving the conclusion of an agreement with another enterprise in
order to achieve or enhance broad-based black economic
empowerment status in circumstances in which:-
o There are significant limitations, whether implicit or explicit,
on the identity of suppliers, service providers, clients or
customers;
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Term Definition
o The maintenance of business operations is reasonably
considered to be improbable, having regard to the resources
available;
o The terms and conditions were not negotiated at arm’s
length and on a fair and reasonable basis.

Historically Disadvantaged Any person, category of persons or community, disadvantaged by unfair

Persons discrimination before the Constitution took effect:-
• any association, a majority of whose members are persons
contemplated in 30 paragraph (a);
• any juristic person other than an association, in which persons
contemplated in paragraph (a) own and control a majority of the issued
capital or members’ interest and are able to control a majority of the
members’ votes.

Host Community Refers to a community/ies in the local, district, metropolitan municipality or

(Suppliers) traditional authority within which the mining area, as defined in the MPRDA,
is located.

Immediate Families
Inclusive Procurement
Jobs
Immediate families are defined as the spouse and direct descendants of
Public Officials.
Procurement practices that recognize the diversity of suppliers in the
country/region, enabling fair access to and participation in opportunities for
all, supported by bespoke policies and procedures in line with good
governance. Sourcing processes might from time to time be applied in a
manner allowing wider participation through a process of pre-qualification
and supplier selection in line with approved strategies.
Jobs to be expressed as full-time employment equivalents (FTE) for a year
and be based in host community or region, as defined. A full-time job is one
that occupies an employee for more than 30 hours per week (for a year).
Direct jobs – Employed directly by AA Companies (on payroll, based on
site).
Indirect jobs – Comprising:-
• Off-site contractor employees working for operation.
• Employees working at operation’s suppliers, contractor’s suppliers or
sub-contractors whose employment is attributable to AA business.
• Employment generated by CSI activities, including business
development.
Induced jobs - Generated by spending of direct and indirect employees

(transport, shops etc).

Public Official Any director, functionary, officer or agent serving in any capacity in a Public
Body, a Public International Body or a political party whether under a
contract of service or otherwise or whether in an executive capacity or
otherwise including:-
• Any person employed by a Public Body or a Public International Body;
• Any person receiving any form of remuneration from South African
public funds; and
• Any person employed by state-owned company.

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Term Definition
• For the avoidance of doubt, Public Officials include, without limitation,
traditional leadership, staff of public schools, universities and
hospitals, members of the armed forces, police and other state
services as well as officers of the courts.

Public Body Any department of state or administration in the national, provincial,

municipal or traditional leadership sphere of government and any other
functionary or institution performing a function under the Constitution, a
provincial constitution or other South African legislation.
Public International Body An organisation established by two or more countries including, without
limitation, the European Union (EU), the United Nations (UN), the World
Bank or the International Monetary Fund (IMF).
Qualifying Smaller A business with an annual turnover more than R10 million but less than
Enterprise (QSE) R50 million qualifies as a Qualifying Smaller Enterprise (QSE).
Set-Asides Ring-fenced opportunities for Host Community and Zone of Influence
Suppliers. It is an inclusive procurement practice used when contracting
business; these include programs that typically designate a percentage of
contracts or funds (either for services or goods) for Black-owned
businesses.
Women Owned (Mining Women owned and controlled company” refers to an entity in which South
Charter) African women hold at least 51% of exercisable voting rights and economic
interest.

Youth As defined in the National Youth Commission Act, 1996, persons between
the ages of 14 and 35 years. For the purpose of Anglo American 18 to 35
years.
Youth Owned (Mining Youth owned refers to a) young South African citizens between the ages
Charter) of 18 to 35 years based on national or provincial demographics; or b) a
juristic person managed and controlled by a person/s contemplated in a)
where the persons, collectively or as a group, own and control majority of
the issued share capital or members’ interest and are able to control the
majority of the members’ vote.

Zone of Influence Supplier
(ZOI)
Black Owned Supplier (51% Black ownership or more) with its main place
of business within the zone of influence of the operation. Zone of impact
(primary or secondary) includes but is not limited to associated sites, mine-
managed infrastructure, where there is a physical or environmental impact
e.g. power transmission corridors, pipelines, access roads, etc.).
ZOI is as determined by SEAT evaluation for each operating entity.
Pre-requisites:-
• This will not be restricted to a radius as per the old ‘local’ definition but
will be set up to align with the actual town/community names as
indicated in the operation’s SLP (secondary zone). Where these do
not exist, each BU should classify communities accordingly.
• For remote operations may also include Labour Sending Areas (only
relevant for De Beers).
• 51% Black ownership or more.

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Term Definition

• Not including branches.

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9 Revision history
9.1 Document Governance
Approval date by Group Head of 30 Nov 2020
Supply Chain:

9.2 Document Control

This Standard shall be reviewed every two years, and more
Frequency of review frequently if necessary, by the Group Head of Supply Chain or
after date of issue: authorised delegate to reflect the Company’s latest best
practice governance requirements

9.3 Amendments
Version No. Step no. / Description of Reason for Reference (if
Section no. amendment amendment applicable)

9.4 Version Control

The following changes have been made since this document was previously issued:-

Old policy name, date and New Document - STD.GLB.SUP.004

version number:

Main changes made:

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