Mining is often viewed as the big boys’ sector. The barriers to entry are high, the competition is stiff, but the returns are attractive and justify those challenges. So whilst many SMEs may choose to avoid the sector, there’s still adequate room for even the small players to participate. This article will discuss mining sector opportunities for SMEs.
With Zimbabwe’s mining industry contributing about 9,5% of the economy’s GDP and the sector set to experience modest growth of about 5.3% in 2018, small and medium enterprises should keep an eye out for opportunities in this sector. Mines purchase a variety of goods and services,
ranging from consumables, safety wear, research and development projects as well as technological supplies. The entrepreneur should identify their niche and the role that they can play in this sector. This begins with understanding the difference between core and basic products and then choosing one where you have the most strenths.
CORE VS BASIC
Mining sector supplies or products can be grouped into 2 categories:
(i.) Core (strategic) products and services
(ii.) Basic (Routine) commodities.
Strategic products and services are those that are critical for the sustained operations of the mines and hence these are tightly monitored, managed and often reserved for a few large, reputable suppliers. Examples of Core/strategic products is specialized equipment or regulated chemicals.
Routine commodities are basic items which can be obtained from a wide range of potential suppliers. These include items like protective clothing and stationery.
BE THE BEST
Opportunities to supply basic products or services include, hardware, stationery, detergents, hand tools and equipment, safety wear, electrical appliances, laundry services, industrial cleaning, security and corrosion
protection. It is important to note however, that there are lots of players competing in these markets and therefore, only those providing superior value for money will get ahead. This means your quality, price and service delivery must be competitive. In many instances the prices required may not permit sustainable profit margins due to the fierce competition amongst suppliers and hence it is important to ensure that this is incorporated in the planning process. It is also important to ensure that your company supplies a unique service with the infrastructure and skills to support your bid. Entrepreneurs interested in the provision of strategic products or services can engage the mines by partnering with them to develop new and innovative products that give the mine a strategic advantage. Once your product or offering helps them to achieve tasks, faster cheaper and safer this blossoms into a long term relationship. This applies in R & D , security and other areas as well.
Diversify your offering to include an array of products that will enable more and continuous business with the mines. Depending on a narrow product range disadvantages your business and procurement officials will opt for those who provide a more comprehensive service. It also hurts your business when the mine’s production encounters challenges or declines. SMEs that are able to differentiate themselves by offering unique products and services expose themselves to favourable circumstances and opportunities in the mining sector.
Prior to approaching the mines, entrepreneurs should thoroughly do their research and homework. Once they have done due diligence the next step is to get your company on the mine’s vendor list and conforming to all stipulated requirements. You should also build relationships with the procurement officials on a professional and ethical level. Lastly, provide a superior product or service and also offer flexibility.
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