Despite Africa being considered a high-risk mining environment, professional multidisciplinary services provider SMEC South Africa has sustained its holistic approach to African mining projects on account of its company profile, says SMEC South Africa resources GM Gerrit Lok.
Our profile enables us to strategically emphasise our focus on not just the mine but also he non- process infrastructure services that every mine depends on to thrive.

“The development of key common infrastructure service utilities, such as water, waste management, and electricity power generation, transmission and distribution, lies at the heart of our approach to mining on the continent as opposed to just concerning ourselves with com- modities,” he tells Mining Weekly.

He adds that the company studies exploration areas that could potentially be targeted by resource companies in clusters, which subsequently enables SMEC to establish channels with those companies for collective infrastructure interests, Lok explains.

“Our engagement with a myriad of transactional advisory services and public–private partnerships (PPPs) displays the company’s unequivocal diligence towards facilitating finance for mining companies,” notes Lok.

He adds that, typically, from an engineering procurement contractor and construction management (EPCM) perspective, SMEC South Africa would collaborate closely with major contractors to specifically provide smaller mining clients with much-needed feasibilities that assist in the facilitation of project funding.

Junior mining clients are often at a disadvantage, owing to a lack of in-house finance and feasibility execution skills. SMEC has a large footprint in Africa and understands the business environment well. Armed with this knowledge of the region, SMEC aims to assist clients to better manage their risks in the region

Challenges and Risks

The substantive challenges that the African mining industry continues to face stem from several sources, including the inability of mining companies to effectively habituate their management and operational practices.

With regard to EPC-related risks, Lok notes that political instability, safety, health and security concerns are the predominant challenges that mining companies face in Africa.
Other concerns that could impact on successful execution come down to critical goods and services, as well as the availability of support infrastructure.

“These are the familiar themes that almost never go away,” he states.

Lok further acknowledges that, as Africans, we have devised something of a “coping mechanism” to manage these obstacles. However, with new technologies in the information management and communication fields, risk management is better managed as data has become more integrated and useful, adds Lok.

Though corruption still remains a concern in African mining, Lok hails African mine companies for their efforts in addressing this challenge. From a marketing perspective, more exertion needs to be placed in the management of perceptions when it comes to corruption. Investors and financiers want to engage with honest and predictable businesses.

Meanwhile, Lok attributes the diminishing number of greenfield mining and oil and gas projects to the unpredictability of the global commodity demand forecasts, which have a direct impact on forward pricing.

He adds that the major prevailing regions for mining in Africa are Nigeria, South Africa, Tanzania, Ghana, Kenya, Guinea and the Democratic Republic of Congo (DRC) by virtue of the rich mineral spectrum, including all the mainstream commodities which inhere in those countries.

Coal

South Africa is the sixth-largest holder of coal in the world, with 31-billion tons of recoverable coal reserves, equivalent to 11 % of the world’s total coal reserves; therefore, coal exploration remains an indispensable mining activity for the country and on the rest of the African continent. Lok states that the continuous exploration for coal being conducted by the major players in the industry remains important; coal, as an income generating commodity for the country, diversifies to an extent our dependence on other commodity revenue streams, such as gold.
Junior and midtier mining companies should pay particular attention to their coal exploration programmes such that their coal resources and reserves are [sufficient] to adhere to the period of loan agreements required by financers,” adds Lok.

SMEC officially launched its mining and oil and gas division in 2013 and Lok maintains that, currently, coal remains a dependence mineral in terms of energy and that exploration will continue to happen.