New Solutions for New Challenges

Non-stop during Lockdown

In the countries featured in this report, the service and equipment providers are the bridging entities that make no challenge - from security, remote terrains, regulatory and logistical hurdles – too difficult. Recently, Covid-19 has been one of the most difficult. Besides dealing with the impact of the pandemic on their own businesses, service and equipment providers are required to respond with solutions for the new challenges their clients face.

While mining companies were deemed essential businesses and largely continued operations through the pandemic, the providers sector was cruelly divided into two categories based on the demand from their customers: indispensable and dispensable. On the one end, logistics companies became critical in ensuring supply chain continuity, but consultancies and contractors were left with a distressed clientele that either renegotiates fees fiercely, delays payments, or cancels their obligations altogether. Ama Nketiah, regional manager of Knight Piésold (KP) Ghana, a consultancy specialized in geotechnical and environmental services, observed her clients’ hesitance in advancing projects or making any major decisions: “Our clients were cautious due to the possibility of an outbreak shutting down their operations. Also, the logistical nightmare of getting people to site delayed the commencement of certain projects.”

image

This slowdown made it difficult to maintain stable balance sheets, particlarly equipment and parts suppliers who need to import their products. “To keep the cycle going, we need steady cash flows, but since we buy in US$, the conversion is unfavorable, leaving us with very small margins and with very little to reinvest into the business,” said Peter Quarm, director at Dutylex, based in Accra.

In Ghana, the Cedi has been losing value over the years, making imports expensive. Borrowing rates in Ghana are much higher compared to the US or Europe: “While interest rates in the US hover around 0%, the interest rates for equipment financing are between 8.5% and 13% in Ghana. This makes us uncompetitive to foreign contractors who are able to source cheaper funds,” shared Joseph Titus Glover, CEO of Quantum LC.

Another financial burden came from the uneasy transition in working patterns. With lower average internet penetration, local companies had a tougher job equipping their personnel with digital resources. For Stéphane Cervellera, Western Africa manager for explosives’ providers Titanobel, this was one of the biggest challenges the company dealt with at the onset of the pandemic: “The initial panic of the pandemic was mostly around IT equipment and ways to quickly empower each of our employees to work digitally.”

At DHL, Serigne Ndanck Mbaye, CEO West Africa and country head Ghana, highlighted another important lesson: “Managers around the world are learning that the old control-and-command model of monitoring employees is outdated, and it needs to be replaced with trust: people are working from home and they continue to do their jobs very well.”

“Like many francophone countries, the logistics sector has had few players and my view is that the market is welcoming new operators.”

Charles Sugden, Country Manager Senegal, OMA Group

With air travel halted for months, large logistics suppliers increased sea shipment transits, re-directed routes, and invested heavily in chartered flights. DHL came up with “Ubuntu”- a weekly chartered flight connecting African countries with China, while French-headquartered Bolloré similarly launched a dedicated airfreight carrier called WARA, connecting West Africa to Europe.

Soraya Anglow, founder of Greenline Logistics in Ghana, saw an opportunity to offer warehouse management for clients: “What we realized is that items that one company runs short of could be stocked by other companies in abundance, but the two have no platforms to communicate. Our warehouse space will work as an integrated system to make these connections based on needs.”

The anxiety around a shortage of supply also created a trend towards stockpiling. For example, Saudequip, the official distributor for Caterpillar, increased its inventory of parts by a value of 1 million euros to prevent logistical issues. Mining companies used the same logic, buying more equipment. Mincon, an Irish-based engineering company specialized in developing and manufacturing hard-rock drilling tools, noted a growth in revenues over the months of the pandemic: “Many of our clients increased their replenishment orders for consumables and equipment to avoid running short in case of lockdowns or disruptions to shipping,” said Martin van Gemert, managing director, Mincon West Africa.

Moreover, some suppliers were incentivized by the uncertainty created by the pandemic to bring manufacturing closer to the destination country, as a permanent solution to future disruptions, and in anticipation of a mining boom. Titanobel, the French explosives producer, after creating subsidiaries in Senegal, Cameroon and Benin, is now checking opportunities to build a manufacturing plant in the region, as well as looking for partners in the emerging Burkina Faso and Ivory Coast: “We are continuing to expand in the international markets, more so now that uncertainty prevails, and it is important to have a widespread presence to buffer potential economic shocks in a given country,” said Stéphane Cervellera, Western Africa ,manager.

Cypher Environmental is also assessing the possibility of satellite manufacturing in the future, but it is concomitantly relying on remote work- earlier this year, Cypher employees supervised the construction of a road in Zambia from the Canadian HQ. Will Coetzer, managing partner at Stratum International, a recruitment consultancy focused on West Africa, believes the mining industry is evolving into a tech business, using AI, automation and quantum computing which require less field work and more computer-mediated work.

Image courtesy of Roxgold