Local Procurement //
Endeavour uses best efforts to procure goods and services from nearby sources whenever possible. This is not only for competitive pricing purposes, but of equal importance, to ensure that local and regional communities receive significant benefit from the economic activity generated by our business activities. In Mexico, the bulk of our supplies and equipment can be acquired locally, and we only need to turn to international suppliers to provide us with certain special heavy equipment and mineral processing chemicals.
We have a company-wide protocol in place regarding local procurement. All purchase decisions must be made in compliance with our policy on Contracting Services and Working with Third Parties, which includes criteria such as location, availability and quality of product, service quality and experience, and cost and specifies that priority will be given to local suppliers should they fulfill these requirements. The company expects suppliers to follow Endeavour’s health, safety, environmental, and labour standards.
In 2017 we will review how we communicate our standards expectations to suppliers and how we enforce methods of compliance with our health, safety, environmental, and labour standards as well as our Code of Conduct and Ethic Policy.
In 2016 we spent approximately $52.2M ($83.6M in 2015) on goods and services for use in our business activities. Of that total, approximately $13.6M (or 26.2%) was procured within state (compared to 18.7% in 2015), $37.7M (or 72.3%) was acquired within Mexico (compared to 80.5% in 2015), while only a little over $800,000 (or 1.5%) needed to be sources from international sources (compared to less than 1% in 2015).
The total amount of procurement expenditures fell significantly in 2016 compared to 2015, by design, through the efforts of our operations – as part of the company’s cost-cutting and efficiency measures – but was also the result of the strategic decision to lower production in the first part of the year. Additionally, the Mexican peso significantly depreciated during 2016, reducing costs in US dollar terms compared to the prior year. The shift in regional versus within-country procurement was also intentional and successful, resulting from the work the sites did to promote corporate purchasing (one supplier for all three sites) where possible. The very slight difference in international sourcing was due to falling demand within the industry leading to more competitive pricing by suppliers.