Capital Equipment News July 2018

MINING NEWS

Global top miners in good health

The world’s 40 largest mining companies have delivered an impressive financial performance in 2017, increasing reve- nue by 23% to USD$600-billion. This is according to PwC’s Mine 2018 report. The report confirms an upswing in the mining cycle, which comes on the back of rising global economic growth and a recovery in commodity prices. Helped by astute cost-saving strategies over the past few years, margins and cash-generating ability has improved significantly, leading to a 126% jump in net profits. Our 2018 outlook indicates that the Top 40’s improved financial performance will continue as companies continue to benefit from this upward momentum in the mining cycle. “For the world’s Top 40 Miners, 2017 was a remarkable year. We are expecting the improved performance to continue into 2018 as companies continue to reap the benefits of the upswing in the mining cycle,” says Michal Kotzé, Energy, Utilities and Mining Industry Leader for When planning and implementing load-haul mining contracts, the importance of close cooperation between contractor and customer cannot be over-emphasised, says Graeme Campbell, commercial and operations manager of Raubex Group company SPH Kundalila. “It begins with the customer providing relevant and accurate data, so that the contractor can make the right calcula- tions, but it goes much further than this,” says Campbell. “When both parties are focused on improving cycle times, the project efficiency can be significantly improved, and the cost reduced.” He highlights that contractors will not be able to achieve the required cycle times if the customer causes any delays.

PwC Africa. “One of the risks currently facing the world’s top miners is the temptation to acquire mineral-producing assets at any price in order to meet rising demand. While we expect capital expenditure to increase next year as companies imple- ment their long-term growth strategies, miners must be careful to maintain disci- pline and transparency in the allocation of capital.” While the Top 40 Miners are enjoying a bounce back, miners will need to stay focused and deliberate in the pursuit of their long-term goals to create value for all stakeholders on a sustainable basis. PwC’s Mine 2018 analysis is based on the major Top 40 global mining com- panies by market capitalisation. The results aggregated in this report have been sourced from the latest publicly available information, primarily annual reports and financial reports available to shareholders Miners continued to focus on strength- ening their balance sheets in 2017, But, on the other hand, it only takes small improvements to shorten cycle times and reduce the cost per tonne. This result should provide enough motivation for a constructive partnership. “There are basic principles of earth- moving that influence cycle times, and these include ensuring ideal conditions both on-site and off-site,” he says. “On site, the loading area should be level and stable underfoot, while the haul road needs to be well-maintained, quality surface with as few stops as possible.” The off-load area should also be easy to access, as this contributes to a quick turnaround time, he emphasises. “Conducive off-site conditions mean that all activities must be accurately record-

Andries Rossouw, Assurance Partner at PwC.

Michal Kotzé, Energy, Utilities and Mining Industry Leader for PwC Africa.

with $25-billion being allocated to the repayment of debt, and capital expenditure at a record low of $48-billion. As a result, gearing has fallen from 41% to 31%, which is back in line with the Top 40’s 15-year aver- age. With the liquidity concerns that were still lingering in 2016 now largely resolved, balance sheets are strong, and companies have the flexibility to act. ❂

Good partnerships can lower mining contractors’ cycle times

ed, information on tonnes handled and hours worked per shift must be regularly provided, and there must be constant feedback on health, safety and machine status,” he says. Not only will this achieve the shortest cycle times possible, but it will ensure a safe working environment – to the benefit of both the contractor and the customer. “When adjudicating load and haul tenders, it is therefore vital that mines scrutinise the cycle times that contractors estimate, as this is a key criterion on which service providers can differentiate themselves,” says Campbell. “The difference between a couple of minutes per cycle could add unnecessary millions to the cost of a contract.” ❂

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