ABG. Responsible. Procurement. ABG Responsible Procurement 01

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1 ABG Responsible Procurement ABG Responsible Procurement 01

2 Contents ABOUT AFRICAN BARRICK GOLD 03 ABG PROCUREMENT VISION 03 ABOUT RESPONSIBLE PROCUREMENT 04 AFRICAN BARRICK GOLD CENTRALIZED SUPPLY CHAIN 04 Sourcing the Right Supplier 05 - Knowing the Market 05 - Global vs. Regional vs. Local 05 Buying Effectively and Efficiently 06 - Competition Sourcing the Best 06 Delivery Fast and Accurate 06 - Logistics the key to remote mining 06 Managing and Building Partners 06 ABG Supplier Expectation 07 - Safety First 07 - Environment 07 - Business and Employee integrity, corporate governance and transparency 07 - Supplier Standards Supplementary Information 08 - Disclaimer 08

3 African Barrick Gold Vision To be Africa s best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. Core Values Behave like an owner We accept accountability for our actions and results. We are entrepreneurial and look for opportunities to grow our business. We act with integrity operating within the letter and spirit of the law and our Code of Conduct. Be a team player We work safely at all times. We respect our colleagues and those we interact with outside our organisation. We listen to others for understanding and we ask for help. We build trust and we celebrate our successes. We help others improve their effectiveness. We promote confidence and trust in one another s capabilities. Continually improve We are always committed to improvement. We build on good ideas, we learn from our mistakes and we challenge the status quo. We think outside the box and have a desire to succeed and add value to our work. Act with a sense of urgency We are decisive, take the initiative and make tough decisions when necessary. We set priorities and act on them. Deliver Results We have a clear vision of where we are going and of our plan to get there. We focus our resources to achieve our objectives. We pay attention to detail and keep our commitments. We deliver results. ABG_2010_Values_NEW.indd /06/21 03:58:10 PM 02 ABG Responsible Procurement

4 About African Barrick Gold African Barrick Gold (ABG) is a world leader in finding, acquiring, developing, and producing quality reserves in a safe, profitable and socially responsible manner. Over a ten-year period, the African Barrick Gold Group has become the largest gold producer in Tanzania, growing from no production in 2000 to approximately 701,000 attributable ounces in The African Barrick Gold Group has significant gold mining experience and expertise, from exploration and development to mine construction and operation. It is one of Africa s five largest gold producers and has produced approximately 5.3 million attributable ounces of gold since it began operations in Tanzania. The ABG Group has four producing mines, all located in northwest Tanzania. Bulyanhulu: An underground gold mine, which began production in April 2001; Buzwagi: An open pit gold mine, which began production in May 2009; North Mara: An open pit gold mine consisting of three open pit deposits, which began production in April 2002; Tulawaka: An open pit gold mine that has transitioned to an underground operation, which began production in March ABG Procurement Vision Our Vision: To make ABG, Africa s best gold mining company by procuring the right goods and services, at the right time from the right suppliers while delivering them when and where they are needed. ABG Responsible Procurement 03

5 About Responsible Procurement Responsible Procurement is ABG s statement of business practice as it relates to the procurement function. It outlines ABG s procurement standards and processes. It has been written to ensure that the manner in which procurement is conducted is transparent and understood by all key stakeholders. Responsible Procurement sets out a range of expectations and commitments pertaining to how business will be conducted between ABG Centralized Procurement, the ABG Mine site and all contractors and suppliers to ABG. This document outlines the entire procurement process and details the standards that ABG requires from its suppliers and contractors. African Barrick Gold Centralized Supply Chain In 2010 ABG centralized its procurement and supply chain activities to its regional hubs in Dar es Salaam and Johannesburg. ABG Supply Chain Group delivers value to the ABG mine site by sourcing and delivering goods and services to its customer, the ABG Mine Operations. The procurement group does this by following procurement policy and guidelines which ensure that ABG procurement is socially responsible while delivering the best value to its customer. Supply Chain focuses on 4 core areas: 1. Sourcing the Right Supplier 2. Buying Effectively and Efficiently 3. Delivery Fast and Accurate 4. Managing and Building Partners 04 ABG Responsible Procurement

6 Sourcing the Right Supplier ABG Supply Chain develops and executes sourcing strategies for goods and services on behalf of, and in consultation with its customers. Knowing the Market As a pre-requisite to any significant sourcing exercise a marketplace analysis is performed. A marketplace analysis is a detailed review of the total available supply and the total estimated demand for a particular product in a given market. Marketplace analysis enables ABG Supply Chain to get to know and understand, in a specific geographic area, all key suppliers, their value offerings, their demand and overall direction in which the market is heading. Marketplace analysis identifies the market dynamics so that ABG can make an educated supply decision base on the current supply and demand forecast figures. Global vs. Regional vs. Local Supply Chain group operates at the local, regional and global level. Regional or global sourcing results are used to increased leverage. Increased leverage gives better pricing, stronger contractual agreements and stronger relationships. However; the development of Local Suppliers not only leads to better delivery conditions and easier contract management, but it helps develop a partnership commitment from the local communities to the mining operations. ABG has a Buy Local First procurement policy. This means that all other things being equal, preference should be given to companies from (in descending order): 1. Mine Sites immediate impact area; 2. Mine Site Local District or Region; 3. Country of Operation (as opposed to a country office of a multinational company). ABG Responsible Procurement 05

7 Buying Effectively and Efficiently Competition Sourcing the Best In order to solicit the best products for the best value ABG has a competitive sourcing process. Whenever practical the procurement process will go through competitive sourcing. Pre-qualification and accreditation of suppliers are considered critical to ensuring the safety and quality of goods and services delivered to customers, and may be conducted before suppliers are accepted into a procurement process. Supplier quotes and proposals are assessed in a consistent manner using criteria that were established prior to them being received. Evaluation criteria are developed in cooperation with all relevant ABG stakeholders. Quotes and Proposals are evaluated using the concept of the lowest total cost of ownership and the ability of the supplier to meet the specified requirement in the time period needed. Below we state what we expect from our suppliers and how we expect them to act. Care is taken to maintain a level playing field to ensure a fair chance for all potential suppliers. Delivery Fast and Accurate Logistics the key to remote mining All of ABG Mining operations are in remote locations in Africa. Getting the right supplies to the mine can be the difference between a profitable site and an unprofitable site. ABG Supply Chain works closely with our freight forwarding partners to ensure the items are delivered when they are needed. Managing and Building Partners ABG takes a partnership approach to sourcing. A supplier is seen as a mining partner who needs to be developed and managed to ensure best value for both sides of the relationship. In developing strategic partners ABG looks for companies who are willing to not only supply but to support the goods and service they have supplied long after the original order. When ABG finds a partner it will enter into a long term contractor or forward pricing agreement showing its commitment to the relationship and expects that commitment to be returned. 06 ABG Responsible Procurement

8 ABG Supplier Expectation Safety First African Barrick Gold has a Safety First philosophy. This is integrated into every aspect of our business and how each employee of ABG conducts themselves while performing their duties. ABG demands that our contractors have the same attitude. This means that all suppliers are expect to meet ABG safety standards on site as well as follow the Safety First attitude while conducting business with ABG. Environment As a minimum we require our contractors to maintain compliance with all site environmental requirements while demonstrating a strong commitment to: responsible environmental management; the elimination of environmental incidents; waste minimization; responsible resource utilization; they must have a consistent record of compliance and remediation of damage caused by operations and incidents. Business and Employee integrity, corporate governance and transparency ABG undertakes its business with integrity, honesty and fairness at all times, building from a foundation of compliance with relevant local laws and regulations and international standards. ABG seeks to avoid conflicts of interest. ABG supports free and fair competition and prohibits bribery, in all its forms. All payments (direct or indirect), are made solely for legitimate business services at a rate that reflects their market value. ABG requires all suppliers to sign up to its Supplier Code of Ethics. This is a commitment by the supplier that they will act in the manner expected by ABG. If a supplier is found not to have acted in this manner and breaches the supplier code of ethics then ABG may take action to end the business with said supplier. Supplier Standards ABG looks at building partnership arrangement with our major Contractors or Suppliers. The strategic relationships are based on mutual benefit and centered around supplier standards. ABG focuses on the following area when selecting strategic partners: 1. Alignment with our business objectives. 2. Financially secure. 3. Manufacturer/OEM not a Buying house or Trader. 4. Robust Quality Assurance and Quality Control procedures. 5. Willing to contract under ABG Terms and Conditions. 6. Have the ability to undertake Electronic procurement and payment. ABG Responsible Procurement 07

9 Supplementary Information ABG puts all public information on its website Here stakeholders will find additional information about ABG and the way we operate our business. Disclaimer The policies and procedures in Responsible Procurement are internal to ABG and ABG is not required to disclose any documents to any external party it elects to withhold. The policies and procedures in Responsible Procurement are a guide only; they are not intended to create any contractual obligations or rights. ABG reserves the right to interpret its policies and to vary its procedures when it determines it is appropriate. ABG may at its sole discretion change, make exceptions to, or discontinue any of the provisions in this document at any time, without advance notice. ABG hereby expressly disclaims all liability and responsibility arising from any reliance placed by any third party on the information contained in this document, or by anyone who may be informed of any of its contents. 08 ABG Responsible Procurement

10 ABG offices Registered office African Barrick Gold plc 6 St James s Place London SW1A 1NP United Kingdom Registered number: Business address 5th Floor No. 1 Cavendish Place London W1G 0QF United Kingdom Johannesburg office 2nd Floor Bedford Square Offices Suite Bedford Gardens Bedfordview 2007 South Africa Dar Es Salaam office Plot 1736 Hamza Aziz Road Msasani Peninsula P.O. Box 1081 Dar Es Salaam Tanzania ABG Responsible Procurement 09