COUNTRY IN FOCUS •
PLANNING FOR RECOVERY
By Breton Scott, managing director of Bowline Professional Services
The global lockdown saw mines operating at reduced capacity or
placed on care-and-maintenance. In the aftermath proper planning and
implementation of remedial measures is critical for recovery.
The world was caught off-guard by the Chinese Covid-19
pandemic, with governments responding swiftly with
lockdown measures. This impacted severely on any
activity that was not deemed to be an essential service, this
included some mining activities.
Depending on the measures put in place and requirements,
operations were either restricted to limited production or had
to be placed on care-and-maintenance for the duration of the
lockdown period. Mining houses petitioned governments of their
host countries to allow operations to be resumed. Mining houses
are making every effort to structure the care-and-maintenance
in a manner that would allow the quickest ramp-up time once
operations can resume. This is also true for all industries affected
by the global lockdowns and pandemic precautions.
Based on the reaction from industry and clients, it was clear to
Bowline Professional Services that the mining sector was in dire
need of developing quick remedial measures to recover. The ideal
time for the development post-lockdown measures was during
the lockdown period, but logistical and technical constraints,
especially with remote sites, hampered efforts. A total or neartotal
lockdown as the result of a pandemic impacting all activities
in the mine value chain is not considered in most risk assessments
or business continuation plans.
Follow a strategic plan
Associate mining engineers of Bowline, Gerrie Bezuidenhout
and Dave Wright, agree that strategic and tactical responses will
make the difference in the success of any size operation postlockdown.
It is expected that most plans will be termed ‘restart-up’
philosophies with reduced on-site staff personnel, operators and
increased hygiene and health screening.
In the aftermath of the lockdown, it is expected that most mining
operations will require additional funds that may take the form
of loans, investments or working capital allocation. Bowline has
developed proprietary methods to develop business plans in
preparation for fund raising and evaluation of company valuations
that small- or medium-size enterprises would require. The
development of new codes of practice and standard operating
procedures will be one of the main focus areas, says Gayle Roberts,
associated documentation specialist with Bowline. It is essential
that these documents be developed fast, but without sacrificing
quality and requiring third party review, adds Roberts.
Inevitably some operations will not be able to recover, says
Bezuidenhout. These operations will likely be considered or
targeted for merger or acquisition opportunities. The team is
preparing for an uptick in the next couple of months of due
diligence reports, company review reports and a wide range of
desktop feasibility studies.
A major shift is also expected towards automation of operations,
suggests Wright. Social distancing will require fewer operators to
work in proximity, which can only be achieved by increasing the
degree of automation of production, he continues. This would
require mines, for example, to also undertake re-specification of
mining equipment, notes Bezuidenhout. In turn, it would require
a review of current mine planning and scheduling. Depending on
the model adapted by the operation, creative methods will need
to be developed to accommodate shorter shifts, alternating shifts
or staggered increasing capacity shifts.
Danielle Scott, marketing and administration specialist, goes on to
suggest that remote work for non-site critical services will become
the new norm. The upswing is that service providers and contractors
are likely to offer business recovery rates. Astute investors and
exploration companies will seize the opportunity to undertake
exploration or expansion programs, remarks Steve Kearns, project
development specialist with Bowline. It is a matter of managing
the risk versus reward trade-off during the project development,
concludes Kearns. It is also an opportune time to conduct asset
valuations and update project technical-financial models.
Revisiting the mine value, there may very well be an increase
in companies sourcing raw commodities for processing from
artisanal miners. The concern is whether or not these sources
are from legal entities and are not involved with criminal activity
or utilise child labour, as examples. This may be something very
difficult to control or identify post lockdown where companies
are looking for options most amenable to strained cashflows. The
ethical sourcing reporting of value chains, however, will continue
to be a conundrum for industry.
In the end the extended lockdown started to feel like lockup.
Even going ‘back to work’ beginning of May, means it is going
to be at least six months before most companies are back to full
‘production’ and generating income sufficient to fulfil original
salaries and wages again. Supply and demand in the retail sector
(but also others), for example, will never be more true. Shortfalls
in production, means shortage of supply in high-demand
environments that will drive prices up, while income is reducing
(or at best will stagnate). The global socio-economic impact
will be long-lasting and will take years before one sees some
semblance of normality again.
Nonetheless, though, I do see the world embracing virtual offices and
will not rely on staff being physically ‘at work’ anymore, unless there
is a physical activity that cannot be done remotely. Technological
advancements will become commercial much sooner, for example
drones doing ‘door-to-door’ deliveries, greater global (and extraterrestrial
satellite) data and information sharing and analyses,
significantly improved and expedited service delivery (including
infrastructure) to poorer communities, and advancements in
educational and skills development practices that will be far reaching.
We should not forget, necessity is the mother of invention, and
there is always opportunity in the chaos. We just need to keep our
eyes open. •
www. africanmining.co.za
African Mining Publication
African Mining
African Mining • May 2020 • 33