Contract mining offers
edge in depressed market
ere is a direct correlation between the
market size of contract mining and the
commodities cycle/prices and
investment patterns in capital projects
Historically, mining was a highly
protected industry and had a low
propensity for outsourcing, but more
operations are being outsourced across
Africa, says global consultant and
adviser Deloitte.
is is owing to mines not having access
to robust mining systems and processes,
expertise and the ability to control the
entire mining value chain, limiting the
realisation of a project's operational
potential, asserts Deloitte associate
director Mahendra Dedasaniya. “ere
is a direct correlation between the
market size of contract mining and the
commodities cycle/prices and
investment patterns in capital projects.
Amid current market conditions, many
mining operations have started to
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| May - June 2016
consider outsourcing part of or all their
operations to the best contractor to
achieve the best cost and productivity
possible,” Dedasaniya comments. He
notes that using contract-based mining
services is a strategic, long-term decision
and must be integrated into a mining
company's business and operational
strategy to achieve the best possible
outcome.
Contract mining is used not only to
implement rapid strategic change but
also to assist in providing a competitive
edge in the global market, Dedasaniya
points out. He illustrates that many
mining companies in South Africa,
Namibia, Botswana, the Democratic
Republic of Congo and Zambia have
outsourced their mining operations,
such as Kimberley Diamonds, Kalagadi
Manganese and Langer Heinrich, as well
as the zinc mines of Black Mountain.
e decision to outsource is normally
| FMDZ
based on operational cost, capital
efficiency, exibility, relationship and
competency, as well as the owner's
current status in terms of the age of the
eet, required skills availability,
productivity, overhead cost, the type of
mining operations and the mining
method employed, Dedasaniya adds.
Contract Criteria
He emphasises that, when considering
outsourcing mining services, it is
important to weigh the organisation's
options in terms of the type of contract,
selection of the right contractor and the
measurable output requirements while
balancing socioeconomic considerations.
e selection of a contractor should be
based on their past safety statistics,
alignment with business and corporate
strategy, shared values and cultural t, as
well as understanding the potential risks
associated with contract mining and the