Group purchasing organizations (GPO) are commonplace in the health-care, government, hospitality and not-for-profit sectors.
Now there’s one for a segment of the mining industry in Northern Ontario.
Tamarack Mining Services, a growth-minded Toronto mining procurement company, has eyes on making greater inroads into this region.
The aim of the six-employee firm is to build its membership base, predominately of junior and mid-tier mining companies, to pool their collective buying power to achieve the kind of volume-based pricing and efficiencies on the supply chain side that's usually reserved for the big mining players.
More than two months after their Sept. 1 launch, the initial membership drive by co-founders Lee Barter and Ben-Schoeman Geldenhuys has far exceeded their expectations. They’ve signed up 11 mining companies, including Wesdome, and generated more than a billion dollars in annual procurement.
“We’re the first of our kind in the resource space,” said Barter, a former supply chain specialist with Deloitte, who's worked with companies around the world, including in South America. His business partner worked with the same consulting firm as a mining tax expert.
With Tamarack, their primary area of concentration, for now, is serving companies in the booming mining camps of Northern Ontario and Western Québec.
“Our core focus for launch is the entire Abitibi belt, indeed all of Ontario and Québec,” said Barter, with an aim to rapidly expand across the rest of Canada.
Functioning like any GPO, Tamarack negotiates contracts with suppliers on behalf of the group on items and services like explosives, fuel, ground support, chemicals, even personal protective equipment (PPE), basically anything involved in mine operations.
Barter said he and his partner are keenly aware of the technical needs of the industry, which is what sets them apart.
“Wherever you see high cost operations that are either spread out or independent, there’s room for efficiency that comes from a buying consortia. That’s why we feel it’s a perfect fit for mining.”
Barter said members also gain the added advantage of his team's wealth of international insight on best practices, emerging technologies, safety features and new products.
“We’ve been in mining in our careers, we know the mining supply space and work with miners around the world, and that’s how we can present an offering that’s unique.”
Membership for companies is free. The organization is funded by contract administration fees paid by the suppliers.
Surprisingly, Barter said this venture wasn’t born of the pandemic and resulting disruptions to many supply chains across the North American economy. If anything, it delayed their launch.
Barter previously worked with the U.S. government on the vaccine supply during the H1N1 pandemic crisis before being seconded last March by Ottawa to work on the federal government’s pandemic response by arranging shipments of PPE from China.
“We were off trying to to help the country at the time,” he chuckles, “and we stuck around at Deloitte to see that through before we actually launched.”
While Tamarack is promising members access to “world-class suppliers,” that doesn’t mean local service companies are shut out of the procurement mix.
Barter said they’re especially respectful of the local spinoffs created by the industry and the honourable commitments companies make with First Nations through impact benefit agreements (IBAs).
“We’re expressly seeking partnerships and alliances both with Ontario and Québec-based small businesses, and we’re highly sensitive to IBA commitments,” he said. “It’s expressly a commitment and a focus for us.”
And Barter insists they’re not out to replace a company’s existing procurement department but to complement it by bringing together the combined volume of the group to unlock additional value for suppliers and buyers.
“We are a market maker. We match buyers and sellers but we don’t transact. We’re not the supplier to a mining company.
“When a part breaks down they get the service from their seller; we’re not here to replace that. We’re here to help the market run more efficiently.”
Despite the restrictions and uncertainty surrounding the pandemic, Barter remains bullish about Ontario's resource economy.
“Starting a business in the middle of a pandemic isn’t for everyone, but we see a great opportunity and we’re believers in the upside of the Ontario mining industry.
“The pandemic only underlines that. It shows you the importance of supply chain and the importance of getting it right."