Mobile capital equipment specialist Eqstra’s contract mining, plant leasing and rental division, MCC, is taking a new approach to contract mining to improve its partnerships with clients.

The company has embarked on creating a contract model that works on a project-to- project basis to reduce costs, increase revenue and grow with its clients. MCC CEO Justin Colling notes that this is not always the case in the company’s contracts.

Using these new models, MCC will provide solutions based on the requirements of each mine it services so that the company is aligned with, and can adapt to, the changing needs of clients. As a result, MCC’s focus aligns with the client’s to mine as much high-quality ore, reef or coal as possible at the best quality and lowest cost.

MCC adds that revenue management is also an important factor. Focusing on the quality of ore or coal being mined will also improve the revenue generated by the project.

Colling states that, by communicating and working more effectively with clients, both parties reduce risk and create an understanding of what is required.

He explains that it is essential to have an understanding of what is important to MCC clients, what is important to the project and what is needed to make it successful. “We need to think about what it is that we do that results in unnecessary costs and vice versa. The mere fact that we are having this conversation opens doors to work better, smarter, quicker and cheaper,” states Colling.

In August last year, MCC piloted this new approach to contract mining with Pilanesburg Platinum Mine (PPM), in the North West. In January, the company was in a position to sign the term sheet and begin the new contract.

Colling explains that the dry run of the contract model with PPM was initiated to determine the future of the mining structure, the exact costs and whether there was actually a visible reduction in costs.

Determining some of the interaction among people was also necessary, as the new contract structure integrates both parties into one team. Previously, situations would arise where various clients would overarch the mining contractors’ work. Colling notes that MCC has spent a substantial amount of time and effort on communication to create an understanding in terms of how to go about this integration, as well as the change in management style and the mutual respect and trust among the parties involved. “Someone who might previously have reported to somebody might now be on the same level, working on the same team as that person.”

PPM’s mining department is a combination of PPM and MCC employees who have taken an integrated approach to project planning, budgeting and costing.

Colling states that there are mines that have taken an interest in the new approach to contract mining.

Locally, mines include diversified miner Anglo American’s openpit Mogalakwena platinum mine, in Limpopo; integrated resource group Tharisa Minerals’ Tharisa chrome mine and Aganang, all in the North West; and Nsele Coal, in Mpumalanga.

In sub-Saharan Africa, clients include Brazilian mining company Vale, operating in Mozambique’s Tete province, as well as diamond exploration and mining company Lucara Diamond’s Karowe diamond mine, in Botswana.

“This contract model is the first one of many, but we also understand that one contract does not fit all. Each mine, each commodity has its own challenges and . . . key drivers that need to be taken into account when . . . constructing a contract and partnership with clients,” concludes Colling.