Adapting to the new norm
The pandemic will likely dampen export performance in the region given its trade relationships and interconnectedness with China, the US and the EU, as lockdowns had a severe effect on supply chains, trade and logistics channels. “The pandemic has proven that having product flows to the marketplace is key to success and long lead times will no longer be acceptable in any territory,” commented Justine Stubbs, managing director of Axis House, the Johannesburg-based global supplier of reagents and technical services to the mining industry. “This has made us review our position in some of our newer territories and we aim to stock products in-country or form partnerships with local manufacturers to reduce lead times.”
Spencer Eckstein, director and business development manager at Ukwazi, a South African based mining services provider with operations across the SADC region, concurs: “Increasing commodity prices have created an environment where mining companies are more willing to take investment risks,” he explained.
Nonetheless, physical presence on the mine sites has been limited, and some mines such as Menar’s assets in South Africa, Debswana and Gem Diamond’s in Botswana, Weatherly’s Tschudi copper mine in Namibia and Vendanta’s Skorpion zinc mine in Namibia were placed on care and maintenance or decreased their production between Q1 and Q2 of 2020. “Our mining operations stopped with the exception of our iron ore mines, where authorities allowed us to mine under stringent protocols which we adhered to successfully,” confirmed Andries Van Heerden, CEO of JSE-listed Afrimat, the operator of the iron ore assets Demaneng and Jenkins.
Gold Fields’ South Deep was also placed on care and maintenance for the first four weeks of Q2 2020 in compliance with government restrictions, and lost approximately 32,000 oz due to Covid related stoppages in 2020, according to Martin Preece, executive vice president of Gold Fields in South Africa.
The extent and depth of the spread of the Covid virus’s second and third waves over the course of 2021 will determine the region’s growth trends for 2021 and 2022. However, the mining industry is unlikely to witness any major slowdowns as remote operations and exemptions from lockdowns will facilitate its performance. Metal prices are also expected to be favourable: “The combination of the commodity demand and price forecast that we are currently experiencing indicates a positive future for the African mining industry,” confirmed Shirley Webber, coverage head of natural resources and energy at ABSA Group, one of Africa’s largest diversified financial services groups with a presence in 10 countries across the continent.
“In the mining industry, some employees cannot work remotely and the industry had to get creative in developing and applying policies as not to be seen as discriminatory.”
Lizle Louw, Partner, Webber Wentzel
As a result of closures and lockdowns, service and equipment providers had to be creative to carry out scheduled maintenance trips, training, sample gathering, aftersales and delivery. For example, Evolve Mining was working on an inspection for an iron mine which it was forced to conduct fully virtually and remotely using drones. “A 3D model was built using the data from the drones, which left our geologists mesmerized due to its level of detail and accuracy, and allowed them access to the high walls, which would not have been obtained through traditional on the ground inspection,” elaborated Trevor Garden, CEO, of Evolve Mining and African Mining and Crushing (AMC). “It also allowed us to save thousands of man-hours in travel as each individual was in the comfort of their home office.”
Alternatively, the South Africa Capital Equipment Export Council (SACEEC), which relies on trade shows and face-to-face interactions to promote South African equipment globally, was forced to adapt under CEO Eric Bruggeman’s leadership. “SACEEC was one of the first councils to offer an interactive webpage. Within two months, we were able to put our members in front of all their clients on a virtual platform that is still running today,” he said.
The pandemic redefined working culture and labour dynamics across the world. “Post-pandemic, I see us continuing with remote work via digital platforms considering the considerable cost savings and time savings of interacting with clients virtually,” explained Frank Beerthuis, managing director of Vermeer Equipment Suppliers, the exclusive distributor of Vermeer branded equipment throughout Sub-Saharan Africa. “Depending on the client requirements, we would want to continue our day-to-day interaction virtually. However, we will still conduct our product support, operator training and service activities face-to-face and on-site.”
There emerged some winners, such as South African family-owned crane supplier and manufacturer Condra Cranes, known for deliveries in record-times, which made it competitive relative to suppliers from abroad that were facing delays. “The reason our equipment has been so successful in the current sales environment, which is difficult, is partly due to the recent boom in resource prices. The mining industry is trying to move mineral commodities as fast as possible while the prices are strong,” explained Kyle Kleiner, sales director at Condra Cranes.
“Our mining operations stopped with the exception of our iron ore mines, where authorities allowed us to mine under stringent protocols which we adhered to successfully.”
Andries Van Heerden, CEO, Afrimat
Another positive impact has been the acceleration of the adoption of technologically advanced automated solutions in a traditionally conservative industry that was forced to operate remotely to a large extent. “In the past, mines might have focussed on the risks of having remote access to a site, but now it has become a necessity,” confirmed John Manuell, local division manager of ABB. “Post-pandemic mines will continue on this digitalization trend as the huge benefits of remote operations have become apparent.”
Overall, the Southern African mining industry withstood the external pressures presented by the health crisis and benefited greatly due to the surge in commodity prices, which has renewed appetite for exploration across the region and will positively impact production in 2021. As a result, the region is forecasted to witness economic growth of 3.1% in 2021, according to the IMF.
Images courtesy of Kumba Iron Ore and FLSmidth