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Commodity boom spurs contract-mining growth, says explosives supplier
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23rd November 2007
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A number of years still lie ahead for contractor growth in South Africa’s mining industry as a result of the commodity boom, said mining explosives supplier Bulk Mining Explosives (BME) operations manager Albie Visser at the fifteenth annual BME conference on explosives drilling and blasting techniques, held this month.

While growth is expected in the mining industry, there has been a change from owner-operated mines to contractor-operated mines in the country.

Visser indicated that the growth of contract-operated mines is driven by smaller, junior mining companies, industrial relations, and by the Department of Minerals and Energy, advocating the use of junior mining companies, as well as the skills shortage in the mining industry.

He said that the mine-owner profile in South Africa has changed from being owner operated to fragmented resources, with smaller mines now operating all over the country, using these fragmented resources.

This has resulted in contractors establishing the true value of minerals with limited core drilling data available.

“Normally, mining contractors respond immediately; however, the industry is now stretched to the limits, where mining contractors face several challenges, including the fact that they are expected to operate in a limited time window and that there are long lead times on equipment and a shorter life-of-mine expectancy,” he added.

Stakeholder responsibility for risk is also a very important issue in the contract-mining industry.

“When a contract is drawn up, it is necessary that the responsibility for specific risks is defined at the outset. Larger mining houses usually implement better mining risk cover; however, the trend in the industry is for the risk to be shared by both parties on the outcome of the blast,” said Visser.

To be able to operate successfully in the market as a mining contractor, businesses need to have a good product and excellent safety and environmental standards. However, this does not provide risk assurance and the geology of South African mines has increased risk significantly.

He said that, in relationship contracting, the focus has moved from being a low-cost provider towards a more focused approach to meet the needs of the client, where the owner is still prepared to assume some risk.

Previously, the only risk involved was that of the products; now mining contractors are liable for other issues, like the outcome of a blast.

“It is vital that both contractors and mining houses are aware of the risks involved at the very beginning,” he said.

Visser explained that BME as a low-cost provider and blasting contractor has for the last ten years depended on expertise and skills, and has taken on more risk as a provider.

However, taking on more risks comes with a price, he said.

Visser believes that in order to sustain and grow contract mining in South Africa, the focus needs to be centred on smaller areas of operation within larger mining operations.

They need to be aware of all cost implications, from drilling to blasting, and it is essential that contractors are skilled and part of the efficiency system at the mine.

“To ensure the success of contract mining, the responsibility for risk must be shared between the contractor and the mining house,” concluded Visser.

Edited by: Martin Zhuwakinyu


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BME Operations manager Albie Visser discusses contractor growth in South Africa's mining industry (1/11/2007)
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