Debswana ‘s new Asset management strategy to unlock P100 million for citizen companies

The Projects | Engineering Assets Management

Debswana’s new asset management strategy will see the company reduce maintenance costs and empower citizen owned companies along the way with a whooping P100 million worth of maintenance contracts per annum.

This decision by the leading rough diamonds producer has resulted in non-renewal of contracts for Original Equipment Manufacturers (OEMs): Barloworld Equipment, Komatsu, Kanu Equipment and Epiroc.

Debswana said in a statement in April that the change of asset management strategy is part of implementation of its Efficiency and Productivity Improvement strategic intent across the operations.

A review of equipment maintenance strategy was conducted at the company’s flagship operation – the Jwaneng mine, following which a decision was taken to insource the maintenance of mining equipment at the mine through a hybrid model. 

This means Debswana will now take over the responsibility of maintenance of the equipment through a hybrid model which entails insourcing in partnership with citizen companies but continue with the affected OMEs on a different procurement model and different requirements.

In summary, the affected suppliers will no longer provide maintenance services but will continue as suppliers of spares and product support.

Debswana Corporate Affairs Manager, Agatha Sejoe explained to The Projects Magazine that maintenance services will now be provided by citizen companies. “We will be looking at contracting directly with the service providers who have previously been subcontracted by the OEMs, most of which are citizen owned. At this point we do not yet know how many companies will be engaged,” she said, adding that the total value of contracts expected to be enjoyed by citizen companies from the new arrangement iis more than P100 million per annum.

Debswana explained that this change of maintenance strategy is driven by several factors, and key amongst them is the need to lower operating costs in response to unpredictable market conditions, as well as the long-term vision to create value driven efficiencies within the business. The anticipated cost savings are significant and estimated to range upwards of P100 million. The effective date to move to the new maintenance strategy is 01 July 2022. 

Quizzed on the capacity and ability of local citizen owned companies to satisfactorily deliver, the Debswana media liaison explained that earmarked citizen companies are very much familiar with the job. “The local companies that we are targeting are already maintaining our equipment, albeit through the OEMs. It is on this basis that we are confident that the capacity exists,” she said.

Sejoe, further added that, Debswana stands ready to facilitate for any upskilling as required. “The capacity already exists, and any additional specialist training will be facilitated for by Debswana to ensure up-skilling and right-skilling. Debswana already has in place a supplier development programme and entrepreneurship development programme that will be availed to citizen companies as and when required,” she said.

 “Debswana has facilitated scheme with local banks for access and management of funding as part of capacity building. The banks have pledged a total of BWP4.7 billion towards support of citizen companies.”

In response to remarks by Botswana Mine Workers Union (BMWU) during a press conference that Debswana had terminated the contracts of Komatsu, Barloworld and Kanu equipment and countless jobs were on the line, Debswana said the contracts had elapsed and a decision was taken not renew.

“Contrary to the reported statements made that Debswana has terminated the contracts of the affected companies, namely, Barloworld Equipment, Komatsu, Kanu Equipment and Epiroc, we wish to clarify that no contract was terminated, but rather that these are contracts that have naturally elapsed, and Debswana has sought to not renew. In fact, the contracts for Komatsu and Barloworld Equipment both elapsed on 31 March 2021, whilst Kanu Equipment elapsed on 30th April 2021. Epiroc Botswana contract will end on 31 May 2022,”  explained Debswana.

The company went on to state that during the interim period to date it has been conducting business with the Business Partners on Purchase Order basis whilst determining the way forward.

In terms of looming job losses, Debswana said it has fulfilled its obligation where the supplier contracts are concerned. “There is no liabilities on our part regarding any imminent job losses that may arise from the suppliers’ decisions. Nonetheless, as a company we are aware that a re-arrangement of this nature may cause some concerns around potential job losses,” the company said. 

Debswana, however, says it remains committed to continuously and actively managing the impacts of its business activities and decisions on the communities and larger economy. To minimize potential job losses, as a result of this change in strategy, Debswana says it will ensure that contractor personnel, affected by this decision, are prioritized in whatever model will be selected for providing the maintenance service. 

“We wish to however caution that this is not a guarantee that all affected employees will be absorbed. Hiring will be made according to job requirements and all necessary processes will be undertaken,” the company said. 

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