Much has changed in the mining industry in the last two years, with large capital projects coming under pressure as major mining houses review their capital strategies, says project delivery and consulting services provider WorleyParsons RSA CEO Digby Glover.

He tells Mining Weekly that, while companies were investing in not only replacing orebodies, but also expanding operations and increasing production one to two years ago, these companies have now gone from a mode of aggressive expansion into one of capital preservation, ensuring they get the most out of their current assets and that they are in the correct markets.

Glover notes that the big challenge for mining in Africa is that many of the projects have to be fairly large scale to justify the cost of infrastructure expenditure required to access those mines and to provide the services to extract the bulk materials and ship them to port.

The cost of the mine itself can be significantly less than it is to develop roads, railways, and water and power services, so companies are looking at the possibilities of opening mining operations in areas that already have infra- structure in place, or are researching whether there are more efficient methods to carry out projects in less accessible areas.

“In South Africa, although our access and infrastructure is more established than in other parts of Africa, there are still constraints that have an impact on the decision of mining companies to invest in the country, such as social instability, as evidenced by the recent platinum-sector strike, and political instability in the country,” Glover points out.

Improved Rail Logistics
Glover notes that State-owned rail operator Transnet’s R300-billion Market Demand Strategy, which will significantly improve South Africa’s rail infrastructure, will have a marked impact on the country’s mining industry and investor confidence.

He adds that the manganese, iron-ore and coal sectors are currently constrained when it comes to getting their respective commodities to ports for export and emphasises that the development of rail routes to facilitate the transportation process is a major challenge currently facing the industry.

This has resulted in an increased reliance on trucks to transport commodities to port. “Trucking, however, is expensive, and if rail transport is improved, it will be a tangible enabler for growth and, hopefully, a signifi- cant advantage for existing operations to operate efficiently and register better returns,” Glover says.

Outlook
Glover believes that bulk commodities will have the longest legs, as these are consumables and demand is continuous. “Iron-ore will be a major player. Copper goes through cycles but as soon as there is an improvement in the global economy, copper will begin to do well. Coal will also remain in high demand, as the demand for energy in Africa is massive and coal-fired power plants will remain prominent, owing to the lower capital cost of a new thermal power plant in comparison to a hydropower plant, for instance.”

WorleyParsons RSA has a strong mining focus, comprising coal, gold, manganese, iron-ore, diamonds and platinum. This is reinforced by the company’s local and global business model and significant experience in the hydrocarbons, minerals, metals and chemicals, and power and infrastructure sectors. This multisector, local and global approach allows the company to support a wide range of customers across many different markets, and also to sustain itself through cyclical drops in a given sector.

“From an African perspective, our oppor- tunities currently lie on the east coast of Africa, with its extensive oil and gas reserves, as well as the minerals-rich West Africa,” notes Glover.

“We believe our ‘Improve’ offering will be of particular significance given its long-term portfolio management focus, assisting with ongoing operations. This has been proven to create considerable value for our global clients and generates an important baseload of stable work for the group.

“A lot of work has been successfully undertaken in the oil and gas industry through this business line, such as maintaining refineries and developing infrastructure. It is a new concept to the mining industry and we are certainly looking at growing this offering in that sector,” concludes Glover.