"My business journey so far has moved from selling mining equipment to offering mining contract services, and hopefully it will eventually lead to the dream of owning a mine. We deserve to take ownership of our own resources and set an example in the industry."
What have been the main projects driving growth at Quantum LC in the past two years?
2019 was a challenging year for Quantum LC because of contracts scarcity, and also because there were delayed payments for the few contracts available. Fortunately, by the end of the year, we secured a contract for the AngloGold Ashanti Obuasi mine. As part of the redevelopment plan at the underground mine, our role is to help integrate the process plant that extracts the gold with the underground miners. This contract has become the lifeblood of the company and we have a chance of being there for the life of the mine if we perform well.
Could you share more details into Quantum’s recent JV partnerships?
We entered into a JV partnership with WBHO, a South African civil works and earthworks service provider, for whom we had previously worked as a subcontractor, renting equipment and providing personnel for them. Late in 2019, we decided to combine our strengths in a JV company called WBHO/QuantumLC JV Ltd.
We also entered into a JV with a Portuguese company, Mota-Engil, and together we tendered for a project at AngloGold Ashanti Iduapriem mine in Tarkwa. My view is that the mining industry in Ghana must empower local contractors to execute most of the contracts. It is only with a strong foundation of robust local companies that an industry can flourish. The oil and gas industry in Ghana is enforcing a 30% local talent policy, and I believe similar requirements will be extended to mining.
Quantum LC offers a wide range of services - from equipment rentals, to drilling, blasting, haulage, construction of tailings dams and training of personnel. Why is it necessary for a contractor to cover such a wide spectrum of services?
Our industry has become so competitive that contractors cannot afford to be picky. Contracts do not come up regularly, which is why it is not advisable to focus solely on the provision of one service. We need to keep cash flow running because we take loans to purchase equipment and we cannot let our equipment sit idle and not generate income.
Could you comment on the banking system and the access to capital for private entities like Quantum?
We are privileged to have the support of various banks in the region, who finance our equipment purchases by using our equipment as collateral. Banks will assess applications based on performance and, with the introduction of the credit bureau, this process has become more accurate. However, borrowing costs are much higher in Ghana than in most countries in the world: the interest rates for equipment financing are between 8.5% and 13%.
Quantum has historically had a big focus on renewable energy, becoming at some point a distributor for Smart Flower. How receptive is the mining industry to alternative energy sources?
So far, the penetration of sustainable energy sources in the mining industry in Ghana is low. There is some room for solar energy sourcing and also synergy with the mines, for instance by using old rehabilitated open pits as solar farms, but these ideas remain mere talking points without a near-term realistic chance of success. The renewable energy solution boils down to the initial costs of having panels lined up, as well as storing the energy in batteries. Mining companies, like other industrial concerns, seek to reduce costs constantly but the capital outlay required for their power-intensive processes may make the renewable energy option unattractive, which is why I do not believe renewables stand a chance to become mainstream very soon at an industrial scale.
What is your final message to our audience?
My dream has always been to own a mine and I understand fully well that in life, we go from crawling to walking, and then to running. My business journey so far has moved from selling mining equipment to offering mining contract services, and hopefully it will eventually lead to the dream of owning a mine. We deserve to take ownership of our own resources and set an example in the industry.