MINES LOOK AT
INTERNAL DAMAGE CONTROL
Paul Runge of Africa House looks at internal measures mining companies
have taken in the aftermath of Covid-19.
There has been much media coverage of the
announcements by mining companies operating in
South Africa relating to reduction of operations, the
placing of mines under care and maintenance and pledging
of donations of a substantial percentage of their executives’
salaries and sometimes those of workers too, to funds
dedicated to dealing with the effects of Covid-19 virus.
There has also been coverage of the medical and hygiene
measures being taken by the companies through their mine
hospitals and through their facilities such as the stocking of their
change rooms with gloves, goggles, gloves and other protective
items. The announced nine-point Covid-19 plan of the Minerals
Council South Africa reinforces these medical and hygienic
initiatives of the mining houses.
Less attention appears to have been paid to what the companies
are doing internally to mitigate the negative financial effects and
consequences of the virus. A study of the numerous company
announcements on what they are doing individually to reduce
the ill effects of the virus may provide useful, practical insights.
Cross-functional teams comprising of relevant divisions have
been set up to guide and coordinate company response
to Covid-19. These teams have helped formulate decisions
such as the declaration in some cases of force majeure on
customer, supplier and freight contracts and the suspension
of agreements. The objective is to cut capital expenditure by
identifying priority items and reducing procurement of nonessentials.
The need to scale down operations and to operate at
a minimised level is strongly realised.
Cash conservation measures have been reinforced and there are
efforts to improve cash flow. Reserve accounts are being drawn
upon. The sale of assets is in some cases being considered albeit
that in the present uncertain climate, it is difficult to determine
and secure the value of such assets. Company executives
are consulting their financial divisions and advisers on the
possibilities of additional tax and incentive relief although
mining specialists indicate that these are difficult to secure in
this particular sector.
On the personnel level, mining companies have temporarily
reduced staff to include only critical personnel to maintain
prioritised and continuous operations. There is particular
emphasis on supply chain management and supply chain teams
have been instructed to order and build selected priority stocks.
Equipment for mechanised operations is particularly necessary
in that these operations can be continued with the use of
minimal staff.
Some of the companies have developed interesting innovations.
An example thereof is the use of remote surveying of mines
using satellite photography and drones.
At the time of writing, the Department of Mineral Resources and
Energy has permitted the mines to recommence operations at
50% production capacity. Companies are trying to ensure the
ramp up to full production after the ending of the lock down.
The mining sector is an important earner of hard currency for
the country and gold still accounts for about a third of the
value of its exports. Mining could therefore be a vital post-virus
stabiliser. •
www. africanmining.co.za
African African Mining Mining Publication
African Mining
African Mining • May 2020 • 45