Converting mining contracts to asset management contracts

Technology is not just a factor in the future of mining operations, it’s also impacting the market for mining’s outputs, often faster than companies can respond (1)

 

The once reliable foundations for competitive advantage in the mining sector are shifting under companies’ feet.

 

As owner mining operators continue to reap the benefits of introducing ever-changing and irreversible technology into their operations, the gap between this and traditional contract mining methods continue to grow. Gone are the days where contract mining is seen as a competitive alternative to owner mining, in many instances this is no longer the first choice to those who want to keep up with technology that continues to change the way we mine.

 

Those that can show best in class for productivity, efficiency, and mining techniques, and have a brand built on delivering to a mine plan, do well (1)

 

Traditional contract mining methods leave no room for what is now fast becoming the new industry norm.

 

While many viable owner-operator mines that employ contract mining methods, in an attempt to keep up with technology, will have their hands full to merge old and new technology, those spending time, money and energy on converting traditional contract mining arrangements, will reap the benefits sooner than those who don't. Why? Traditional contract mining provides for the operator to make a profit, and the more pressure on efficiencies and contractors costs, the less attractive the contract and more complex the Client-contractor relationship become.

 

 Many mining companies have a deeply ingrained, conventional view of their sector and the environment in which they operate. But while it’s served them in the past, it’s less likely to work in the future (1)

 

The perfect storm - capital is constrained, profits under pressure.

 

Due to the influx of technological advances of which the upside on productivity and efficiencies are continually published by the majors, many mid-tier miners have to reinvent themselves to survive and whilst capital is constrained, it may not be viable to follow in the footsteps of the majors. Contract miners on the other hand have suffered from contract cut-backs and some are financially severely strained and would need to go to great lengths to be as profitable as in the past.

 

What needs to change to ensure mining can benefit from technological advances and other disruptive influences, rather than fall victim to them (1)

 

Converting the traditional mining contract into an asset management contract provides for a win-win relationship.

 

Through decades of serving mining companies in the operational improvement space, backed by experience gained as contract miners, Tacmin's core expertise has analysed, studied and developed mining solutions that embrace continuous improvement through the latest technology, systems and processes. Among others, which emanated from ongoing research into contract mining alternatives, is a highly effective and competitive asset management contract model that strikes a win-win balance between mining contractor and Client.

 

To create an organization that is match fit for the future, miners need to build a more constructive and effective culture – one that rewards collaboration and encourages people to work together.

 

For more background or information visit us at www.tacmingroup.com or contact us
 

(1) PWC - We need to talk About the future of mining, pwc.com/futureofmining