The purchase of mining consultancy Venmyn by professional services firm Deloitte resulted in the combination of financial, technical and economic capa- bilities into one minerals advisory firm, Deloitte Southern African mining leader Abrie Olivier tells Mining Weekly.
Deloitte’s South African member firm acquired 100% of the Venmyn business in November last year for an undisclosed amount, creating a new technical and economic minerals advisory practice called Venmyn Deloitte.
“This is the first time that such a transaction has taken place within the big four auditing firms, which include Deloitte, KPMG, Ernst & Young and PricewaterhouseCoopers, and we see ourselves as being the first movers in this type of acquisition,” Olivier adds.
Through this transaction, Venmyn also has an instant global technoeconomic mining presence, he says.
Deloitte Australian mining leader Stephen Reid commented in a media release in November last year that the new entity was an exciting development for the increasing number of Australian resource companies seeking to invest in African projects and those considering projects in Australia.
“Venmyn Deloitte has the potential to deliver a new level of insight and expertise to Australian resource investors, considering investment potential in Africa, which will be hard to match,” he said.
Meanwhile, Venmyn was often regarded as being too small but, through the purchase by Deloitte, it has added significant size to its business, Venmyn Deloitte MD Andy Clay points out.
Through the acquisition, two strong brands have been combined and, currently, Deloitte is positioned strongly in the mining industry of Southern Africa. The added depth of expertise, especially with regard to geology and mining engineering, allows Deloitte to provide clients with more extensive and high-quality services, Olivier states.
Further, Venmyn Deloitte is able to provide clients with a broader service in the transactional space. “We see a synergy between technical and financial capability and, through this takeover, we will be able to provide better transactional advice,” he says.
Previously, Deloitte’s client base mostly comprised major mining companies, but now the company also has access to the midtier and junior mining industry, where it feels it has significant value to add.
Clay says determining the value of a mining asset is difficult, as one cannot see what is in the ground; therefore, a mining company is often listed for a value determined by a corporate finance person and, generally, there is a poor link between the understanding of the technical and financial aspects of a mining project.
“For this reason, the unity with Deloitte is of great importance for Venmyn, as an audit firm has taken notice of what we want to achieve. This purchase provides an opportunity to provide proper valuation,” says Clay.
Further, Venmyn Deloitte places emphasis on independence.
“Deloitte has a range of compliance procedures and independence checks, which is an advantage for Venmyn Deloitte, as it provides protection and proof that independent goals have been maintained,” Clay says.
This purchase is a game changer, he says, adding that Venmyn Deloitte is not aware of any other company that has completed this type of transaction. “We currently have a unique offering in the market and are well placed to serve our clients better and add more value.”
In 2013, Venmyn Deloitte will focus on integrating the businesses locally and globally, which is generally one of the priorities after an acquisition has taken place.
The company will also aim to educate the market on its new capabilities, Olivier says.
Meanwhile, Venmyn Deloitte has identified an opportunity in shale gas.
“Globally, shale gas is regarded as being a new energy solution; however, South Africa is experiencing problems in this regard, as the Petroleum Agency of South Africa and the Department of Energy have not yet put together a specific strategy on how it should be handled.
“Therefore, we are collaborating with several additional Canadian and UK advisory practices to help write the codes for [a shale gas industry],” Clay explains.
“Should a client come to us for advice relating to shale gas, we have the expertise to give sound industry advice.
“We are willing to work with anyone who requires assistance – be it government, industry clients or the regulator,” he adds.
Olivier states that there is an expectation that Venmyn Deloitte will continue to be the frontrunner with regard to rules, regulations and codes, creating standards in the industry and providing innovative services.
However, the company is also aiming to become the preferred multidisciplinary service provider for mining clients, especially in Africa, Olivier adds.
“I believe that there is a need in the market for a company that can assist mining companies in expediting their projects by means of a single advisory service provider, as opposed to a complex network of service providers,” he says.