Planning for Recovery

2020-06-04T07:43:32+00:00 June 4th, 2020|Country in Focus, News|

By Breton Scott, managing director of Bowline Professional Services.

The global lockdown saw mines operating at reduced capacity or placed on care-and-maintenance. In the aftermath proper planning and implementation of remedial measures is critical for recovery.

The world was caught off-guard by the Chinese Covid-19 pandemic, with governments responding swiftly with lockdown measures. This impacted severely on any activity that was not deemed to be an essential service, this included some mining activities.

Depending on the measures put in place and requirements, operations were either restricted to limited production or had to be placed on care-and-maintenance for the duration of the lockdown period. Mining houses petitioned governments of their host countries to allow operations to be resumed. Mining houses are making every effort to structure the care-and-maintenance in a manner that would allow the quickest ramp-up time once operations can resume. This is also true for all industries affected by the global lockdowns and pandemic precautions.

Based on the reaction from industry and clients, it was clear to Bowline Professional Services that the mining sector was in dire need of developing quick remedial measures to recover. The ideal time for the development post-lockdown measures was during the lockdown period, but logistical and technical constraints, especially with remote sites, hampered efforts. A total or neartotal lockdown as the result of a pandemic impacting all activities in the mine value chain is not considered in most risk assessments or business continuation plans.

Follow a strategic plan

Associate mining engineers of Bowline, Gerrie Bezuidenhout and Dave Wright, agree that strategic and tactical responses will make the difference in the success of any size operation postlockdown. It is expected that most plans will be termed ‘restart-up’ philosophies with reduced on-site staff personnel, operators and increased hygiene and health screening.

In the aftermath of the lockdown, it is expected that most mining operations will require additional funds that may take the form of loans, investments or working capital allocation. Bowline has developed proprietary methods to develop business plans in preparation for fund raising and evaluation of company valuations that small- or medium-size enterprises would require. The development of new codes of practice and standard operating procedures will be one of the main focus areas, says Gayle Roberts, associated documentation specialist with Bowline. It is essential that these documents be developed fast, but without sacrificing quality and requiring third party review, adds Roberts.

Inevitably some operations will not be able to recover, says Bezuidenhout. These operations will likely be considered or targeted for merger or acquisition opportunities. The team is preparing for an uptick in the next couple of months of due diligence reports, company review reports and a wide range of desktop feasibility studies.

A major shift is also expected towards automation of operations, suggests Wright. Social distancing will require fewer operators to work in proximity, which can only be achieved by increasing the degree of automation of production, he continues. This would require mines, for example, to also undertake re-specification of mining equipment, notes Bezuidenhout. In turn, it would require a review of current mine planning and scheduling. Depending on the model adapted by the operation, creative methods will need to be developed to accommodate shorter shifts, alternating shifts or staggered increasing capacity shifts.

Danielle Scott, marketing and administration specialist, goes on to suggest that remote work for non-site critical services will become the new norm. The upswing is that service providers and contractors are likely to offer business recovery rates. Astute investors and exploration companies will seize the opportunity to undertake exploration or expansion programs, remarks Steve Kearns, project development specialist with Bowline. It is a matter of managing the risk versus reward trade-off during the project development, concludes Kearns. It is also an opportune time to conduct asset valuations and update project technical-financial models.

Revisiting the mine value, there may very well be an increase in companies sourcing raw commodities for processing from artisanal miners. The concern is whether or not these sources are from legal entities and are not involved with criminal activity or utilise child labour, as examples. This may be something very difficult to control or identify post lockdown where companies are looking for options most amenable to strained cashflows. The ethical sourcing reporting of value chains, however, will continue to be a conundrum for industry.

In the end the extended lockdown started to feel like lockup. Even going ‘back to work’ beginning of May, means it is going to be at least six months before most companies are back to full ‘production’ and generating income sufficient to fulfil original salaries and wages again. Supply and demand in the retail sector (but also others), for example, will never be more true. Shortfalls in production, means shortage of supply in high-demand environments that will drive prices up, while income is reducing (or at best will stagnate). The global socio-economic impact will be long-lasting and will take years before one sees some semblance of normality again.

Nonetheless, though, I do see the world embracing virtual offices and will not rely on staff being physically ‘at work’ anymore, unless there is a physical activity that cannot be done remotely. Technological advancements will become commercial much sooner, for example drones doing ‘door-to-door’ deliveries, greater global (and extraterrestrial satellite) data and information sharing and analyses, significantly improved and expedited service delivery (including infrastructure) to poorer communities, and advancements in educational and skills development practices that will be far reaching.

We should not forget, necessity is the mother of invention, and there is always opportunity in the chaos. We just need to keep our eyes open.