CRADLE TO GRAVE
CRADLE TO GRAVE
TACKLING M & A CHALLENGES
Mergers and acquisitions are par for the course in the mining industry, and
historically there has always been a lot of movement in this sector. This trend
has accelerated in recent years, with larger companies divesting their interests
and selling off, while new players enter the market. The upshot of this, from a
technology perspective, is a hugely complex environment devoid of a clear view
across the organisation. Licensing transfer, software and hardware incompatibilities
are common challenges.
“Many of the mines own their own datacentres and infrastructure which could be
legacy hardware with outdated warranties and maintenance. Agreement structures
between the newly acquired mine and the holding group may differ, perpetual
license agreements may not align, and renewal dates could be out of sync.” says
Gerhard Olivier, solutions consulting manager at First Technology National.
Aside from differences with products and technologies, the fundamental business
operations may also differ between mines and the acquiring body. Existing software
and legacy hardware solutions may have no value in the new environment and
integration of different technologies is difficult to achieve. Moreover, licensing
represents a significant investment, which means that a mining group may not wish
to transfer licenses with the sale of a mine to another holding company.
“The sale of a mine may take time, and during this period they could be left with
unlicensed infrastructure. This happens because the selling company will hold
the licenses and the purchasing company might not buy new ones until the sale
is complete. This leaves everyone in a difficult situation” adds Jennifer Meggersee,
Sales Manager for Software at First Technology National.
Every mining organisation has its own technology roadmap, but with disjointed
hardware and software, a lack of insight into the environment and ineffective
asset management, this proves difficult to implement. The sheer size of mining
organisations adds further complexity.
“It is essential to understand the environment before any changes can be made.
It is also important to develop a roadmap of the desired future state of the
environment, as well as any future acquisitions on the horizon. These are essential
steps in helping customers modernise and consolidate, and start working toward
cloud and hybrid models,” says Olivier.
PREVENT PROCUREMENT FRAUD
Procurement fraud is a leading commercial risk and organisations must implement
every possible preventative measure to ensure it does not impact the business.
Described loosely, procurement fraud includes the acts of “dishonestly obtaining
an advantage, avoiding an obligation or causing a loss to public property or various
means during procurement process by persons involved in the procurement.”
For organisations serious about preventing procurement fraud, careful and
continuous evaluation of both suppliers and employees is imperative, says Rudi
Kruger, general manager at LexisNexis Data Services.
Employee vetting includes looking into property ownership, bank verifications,
lifestyle audits and screening against various databases, such as those published by
CIPC and the South African Fraud Prevention Services.
Supplier vetting includes verifying VAT and BEE status, bank verification, property
ownership, judgements online as well as screening against databases such as the
South African Fraud Prevention Services, National Treasury Database for Restricted
Suppliers and Government Employee Status of Directors.
“Fraudulent activity and conflict of interest between supply chain partners and
employees can easily slip under the radar if active vetting is neglected. Always
ensure that supplier and employee relationships do not cross the line by regularly
vetting staff and suppliers,” said Kruger.
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African Mining March 2020
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African Mining March 2020
www. africanmining.co.za