Mining projects in South Africa have been placed on hold, owing to the current commodities oversupply and price slump, as well as the shortage of funding for projects, but the concern is whether South Africa will be able to ramp up production when the industry recovers, states mining industry consultant Sound Mining Solution MD Malcolm Lotriet.
To survive this turbulent time in the industry, mining companies have reduced the number of permanent skilled employees on their payroll. As a result, more mining com- panies operating in South Africa might employ contractors to fill these skills gaps once business conditions improve.
Lotriet adds that solid growth in the industry will be possible when the market recovers and if government can facilitate change in terms of the mining regulatory environment and the prevailing complex relationship between mine management and trade unions.
He notes that South Africa’s uncertain legislative and volatile sociopolitical environment is contributing to the challenges faced by industry, along with the gap between employee expectations and an operation’s long-term profitability.
Disadvantages and Advantages
Lotriet points out that the most notable disadvantage of outsourcing is that some competencies might be lost to mining com- panies when jobs are outsourced, which could also result in labour unrest at mining operations.
He adds that the contractor’s business drivers might also not be aligned with those of the mining company it is servicing. In this case, it could result in operations not being completed according to a mining company’s specifications or the company lodging a dispute with the contractor.
The scope of a project might also change as it progresses, therefore, requiring the contractor to be flexible. “Meeting our clients’ expectations is one of our most important goals. Thus, being prepared and able to adjust the project scope and requirements will reduce challenges and disadvantages that may arise,” Lotriet comments.
Using a contractor for certain aspects of an operation alleviates skills shortages and allows for flexibility, as it could result in reduced long-term costs because expensive skills are only used and paid for as and when required.
Lotriet emphasises that companies can focus on their core operations and not be distracted by both brownfield and greenfield mining projects, which by definition have a defined life.
He asserts that training, mentoring and skills transfer are also possible if they are included in the various mandates of the contract, adding that outsourcing is bene- ficial when used appropriately by mining companies.
“Being a privately owned company, we display integrity and prefer to build long-term relationships in the mining industry. We pride ourselves on developing and confirming the mining logic and business case before starting work for a client,” Lotriet concludes.