ROGER DIXON Africa’s growing population and its demand for commodities and energy is a positive underlying factor that will promote future economic growth as soon as global conditions improve
SRK, a firm of consulting engineers and scientists, stresses the need for miners to look beyond the despair of the current commodities slump and start planning their next projects without delay.
SRK corporate consultant Roger Dixon says that far-sighted companies should not wait too long before initiating new projects or expansions. He adds that Africa’s growing population and its demand for commodities and energy are positive underlying factors that will promote future economic growth as soon as global conditions improve.
“But it will require mining companies to plan now, while investing in skills and technology to improve operational efficiencies and meet growing challenges, such as the security of energy supply and inferior water quality,” he elaborates.
His comments coincide with a recent report from leading management consultancy McKinsey & Company, which argues that
diminishing ore quality and the limited accessibility of new deposits will squeeze mineral supply between now and 2020, potentially driving a commodity-price rebound as global demand continues to rise.
“The commodities likely to be the most severely affected by ore-quality decline are copper, gold and phosphate rock,” notes McKinsey.
The consultancy expects the level of geological cost inflation to continue being the main determinant of cost increase and total inflation to average 4% to 7% a year in future.
Dixon indicates that South Africa’s mining sector missed out on the last commodity boom, owing to minerals policy uncertainty and companies’ unwillingness to commit to projects early enough.
“It has been a difficult period for most mining companies and cost cutting has been the order of the day,” he says, noting that shareholders, however, will soon ask where their future returns are going to come from and what plans have been put in place to rebuild their business again.
He further emphasises that it is imperative that mining companies take a strategic long-term view of their business so that they can invest timeously in well-researched studies and methodical implementation.
Mining Indaba Attendance
SRK hopes to address industry issues face to face with clients by participating at the Investing in African Mining Indaba from February 8 to 11 at the Cape Town International Convention Centre. The company believes it is important to attend the event to keep up with the current thinking of clients.
Although Dixon says “there is no other event where we can meet such a concentration of people involved in the minerals industry on the African continent”, he predicts a decrease in attendance, owing to the downturn in global commodities.
SRK chairperson Graham Howell adds that the company will remind its clients of its experience and knowledge to provide focused advice and solutions, and offer guidance on howto avoid the ever-present risk of losing the social licence to operate.
The company has attended the Mining Indaba since 2002 as an exhibitor and partici pates regularly as a global group, with representatives flying in from its international offices.
SRK will attend sessions where it can gain insight into the views of the thought leaders in the African minerals industry, as this helps the company to keep abreast of trends that are going to affect future business, Dixon notes.
The company aims to demonstrate what differentiates it from other consultants in the mining industry, such as its technical expertise across the mining life cycle, from exploration to mine closure, and its experience in the field. “By attending the Mining Indaba, we will communicate our ability to reduce a client’s risk in all aspects of a mining project, especially with regard to achieving that all-important social licence to operate – the lack of which can lead to the demise of even the best engineered project,” he stresses.
Dixon adds that each industry has a flagship event and the Mining Indaba provides African countries with an opportunity to showcase their mining industries: “The continent still has a lot to offer and should be proud to demonstrate this to the rest of the world – not only in mining but also in various aspects of related infrastructure, water and energy in particular, which are vital to Africa’s future.”
Howell adds that, while there are numerous other indabas being organised throughout Africa, “the Cape Town Indaba remains the flagship”.
SRK clients comprise mining companies, other engineering consultants and African governments; however, Dixon tells Mining Weekly that the company will also meet with advisers from funds and banks that need technical studies and assessments of mining projects to guide their funding decisions.
SRK also has capabilities in civil, geotechnical, tailings and water engineering, which, Howell points out, can best be harnessed to improve the operation of mining projects.