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Mining Charter changes may boost local equipment procurement

CRITICAL MASS To meet the needs of the large mining majors, manufacturers still require the ability to supply in large volumes and be regarded as long-term, reliable suppliers

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CRITICAL MASS To meet the needs of the large mining majors, manufacturers still require the ability to supply in large volumes and be regarded as long-term, reliable suppliers

DECLAN VOGT There is significant scope for an electronics market to be developed locally, owing to the industry being supported by a strong electronics culture

4th December 2015

By: Mia Breytenbach

Creamer Media Deputy Editor: Features

  

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With the Mining Charter being aligned with the revised Broad-Based Black Economic-Empowerment (BBBEE) Codes of Good Practice, now is the time to “level the playing field” and entice greater procurement from South African mining equipment manufacturers in the local mining industry, regardless of their status, says Centre for Mechanised Mining Systems (CMMS) director Dr Declan Vogt.

This could include more relaxed regulations, or a greater balance, in the charter regarding the obligations of mining companies to procure content from local manufacturers that adhere to specific black-economic empowerment (BEE) ownership and credit-rating requirements.

“One of the key issues that local equipment manufacturers face is the lack of local-content procurement that is, to some extent, dictated by the Mining Charter,” Vogt tells Mining Weekly, emphasising that this poses a challenge for local manufacturers with regard to sustainability.

In addition to regulating BBBEE, the Mining Charter imposes strict obligations on mining companies in respect of the suppliers from which they procure capital goods, consumer goods and services. Mining companies are required to procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from BEE entities.

Vogt acknowledges the BEE credit advantages for mining companies that procure equipment through BEE agents and distributors of international-based suppliers or through imports, but suggests that a subtle balance between BEE ownership of suppliers and the manufacturing of local content could be incorporated in the charter to encourage mining companies to consider increasing their local procurement.

“This will lead to improving the chances of South African manufacturers in supplying the local mining industry and expand a secondary, or downstream, beneficiation industry that will further enhance economic benefits for the country.”

South Africa’s underground mining industry remains a significant market for mechanised and underground mining equipment that local manufacturers can explore.

Subsequently, Vogt notes that large equipment manufacturers can also service the needs of the international mining market.

“It is a route the smaller manufacturers could easily take, with the necessary support from government,” he states.

Vogt also highlights the benefit of making additional design capacity from research facilities available for these manufacturers to enable them to increase their product range.

All the potential changes in the Mining Charter can be supported by the drive for localising resource-based capital goods, which include processing plant machinery and mining equipment and machinery, he adds. This drive is based on the Department of Trade and Industry’s Resource Based Capital Goods Development Programme, for enhancing beneficiation in South Africa.

Electronics Value
Vogt points out that automating their products using electronics will enable mining machine and equipment manufacturers to increase equipment efficiency and productivity.

“There is significant scope for an electronics market to be developed locally, owing to the industry being supported by a strong electronics culture,” he avers, adding that if a mining electronics company is established in South Africa, it could also service the global market.

Vogt believes that South African mining equipment manufacturers have a strong technical ability to serve mining companies and stresses the comprehensive qualities of locally manufactured load haul dumpers and articulated dump trucks, as well as hydropower equipment such as drill rigs.

He nevertheless notes that, to meet the needs of the large mining majors, manufacturers still require “critical mass” – supplying in large volumes when required and being regarded as long-term, reliable suppliers.

Route to Mechanisation
While many platinum mines are implementing mechanisation, with about 30% of South Africa’s current underground platinum produced by mechanised mines, the gold mining industry continues to face mechanisation difficulties, as the orebodies are steeper and narrower than those of platinum mines, Vogt explains.

However, gold producers AngloGold Ashanti, Sibanye Gold and Gold Fields have plans to introduce new technology, with some already in production.

Therefore, he expects the activities currently explored in the mechanisation trials by these companies might slowly mature or even become routine. These activities could include mobile platforms carrying drilling equipment and dozers used to clean ore material.

These sentiments are similar to Vogt’s statements at the Swedish mining initiative conference that was held in Pretoria, in December 2014, where he highlighted that mechanisation was becoming more viable with a new generation of ultralow-profile (ULP) machines entering the market.

“An entire ULP fleet can deal with all mining operations, including drilling of blast holes, sweeping, dozing and installing roof bolts,” Mining Weekly reported him saying at the time.

Vogt attributes the lack of mechanisation in the majority of the South African gold mining industry to the shortage of viable and suitable gold-specific mechanised mining equipment for the various mineral seams.

“This creates the need for technological innovation through which companies can develop effective machines for the industry, thereby changing the gold game in South Africa,” he concludes.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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