Implats considers mechanisation option

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OrbitalDawn

Ulysses Everett McGill
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http://www.fin24.com/Economy/Implats-considers-mechanisation-option-20140328

Leeuwkop mine near Brits in North West could become mechanised if Impala Platinum [JSE:IMP] (Implats) finds it is more profitable that way.

"Mechanisation is one of the options we are looking at," Implats corporate relations group executive Johan Theron told Sapa on Friday.

"We will not take the project to the board for final approval if we are not able to prove that the mine will be profitable in future."

Leeuwkop mine would take another 10 years to build and in the meantime the company was weighing up all its options.

"We are doing a study and upfront work, but no decisions have been made yet. What we have to factor in is what labour costs will be like 10 to 15 years down the line."

Implats is the world's second-largest platinum producer. Its Mimosa, Two Rivers, and Zimplats operations are mechanised.

"We want to check if Leeuwkop can be like Two Rivers... some of the differences is that Leeuwkop would be cheaper," said Theron.

"But we need to finalise the design of mine before taking it to our board."

Theron said historically labour-intensive mining had always been considered the lower risk and cheaper option.

This had changed in the past two to three years, he said.

"As we do design work... it is clear that a mechanised mining operation is increasingly being seen as the lower cost, low risk option.

"We have not done the numbers for how much mechanisation would cost but these kind of shaft systems cost in the region of about R10bn to put together."

Mechanisation could be more efficient, improve safety, have a more profitable life span, and cost less, he said.

"If you had to go down this path, typically the mines would hire less people but they will be higher skilled people who would be doing more sophisticated work and earning more wages."

Theron estimated that around 10 000 people would have been hired at Leeuwkop mine once operations began, but if mechanisation was carried out that number would drop to around 3 000 people.

Workers at Impala's Rustenburg operations, Anglo American Platinum [JSE:AMS] (Amplats), and Lonmin [JSE:LON] downed tools on January 23 to push for a basic monthly salary of R12 500. They rejected a wage offer of up to 9%.

The companies, in turn, rejected a revised demand from the Association of Mineworkers and Construction Union (Amcu) that the R12 500 could be achieved over four years.

Talks to resolve the strike are being mediated by the Commission for Conciliation, Mediation, and Arbitration.

Earlier this week, platinum mining bosses said the strike had caused irreparable harm as R10bn in revenue had already been lost.

"These impacts are not only on the companies, but also on employees, local businesses, suppliers, and on communities. The financial cost... does not tell the full story," said the chief executives of Implats, Amplats and Lonmin.

Amplats CEO Chris Griffith, Implats CEO Terence Goodlace, and Lonmin CEO Ben Magara said mines and shafts were becoming unviable, people were hungry, children were not going to school, businesses were closing, and crime in the platinum belt was increasing.
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Hmm...
 
Viva Amcu Viva!

Wonder how many BEE deals will be concluded with the machines being purchased.
 
mechanisation has been overdue for a long time. We cannot expect to compete against the first world with a 18th century mining tradition.
 
Not very clued up on mining licenses but I'll bet that job creation is a factor, so if Implats says 3000 jobs and Zuma's nephew says 10000 jobs, I wonder who'll get the license...
 
Normally I wouldn't support this move since our economy needs labor intensive economic activities. In this case I support the move. Such a pity because jobs will be lost.
 
Labour intensive work only create short time wealth creation. FW de Klerks government (later adopted by Mandelas government) thought that it would be best to demechanise our construction industry. At the end of the day a lot of contractor had to sell their machinery for peanuts. Digging by hand simply cannot compete to a machine. Get the job done early and more economic activity can then take place.

The exact same goes for mining.
 
Good News! We are giving you the R12,500.00 a month.
Bad News! 70% of you will be retrenched.
 
Well if we want to compete with other countries, then machines will win.

But I want to see what government will say (they will try to block it somehow)
 
This has been coming for ages, and to be honest, AMCU have played right into the mining companies hands with this... they're pushing the labour wage into the realms of mechanisation being affordable...
 
ngwe23 said:
Normally I wouldn't support this move since our economy needs labor intensive economic activities. In this case I support the move. Such a pity because jobs will be lost.
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+100

But when labour becomes both expensive and irresponsible management cannot ignore mechanisation as a cheaper alternative.
 
Yes use "intelligent robotic" machines instead of useless uneducated and demanding labor. Robots and machines cannot join unions and do not demand increases.
 
Mechanization is not the solution to prevent labour disputes and strikes. However, it will improve safety, production efficiency, workflow and help manage cost/ton better.
 
efitol said:
Not very clued up on mining licenses but I'll bet that job creation is a factor, so if Implats says 3000 jobs and Zuma's nephew says 10000 jobs, I wonder who'll get the license...
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I doubt this will be an issue because many mining operations are using mechanised equipment already. Coal mines switched from underground drill/blast designs to using continuous mining operations. In most situations, mechanized mining will improve safety which is also an important aspect of granting a licence.

The upside for Zuma's nephew and most BEE beneficiaries is that mining at a lower risk means they get to make more money, pay their BEE deals sooner.
 
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dlk001 said:
Mechanization is not the solution to prevent labour disputes and strikes. However, it will improve safety, production efficiency, workflow and help manage cost/ton better.
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dlk, are you familiar with the theory of constraints and it's take on price per unit?
 
R13... said:
dlk, are you familiar with the theory of constraints and it's take on price per unit?
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I'm 100% familiar and funny you mention it because we are implementing TOC at all our mines to help drive value. They actually nickname me "Bottleneck" at work. :D

The TOC is helping us to better manage processes, buffers and bottlenecks. However, driving value also requires a change and managing the attitude of the people. Mechanisation requires people and there will never be a fully mechanised mine.

Mechanisation drive will go a long way of improving production flow and makes long term planning easier. We think of mechanisation as de-risking the current risk. However, there is a residual risk associated with strikes which requires a political intervention and discipline.

At Sishen mine, we had 150 people (out of 15 000 employees), sabotaging the whole operation's machines and bringing production to a stand still for a month. We have a political problem in mining and it is getting worse.
 
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Great idea, but this will never happen. The ANC will stall and stymie it however they can. Import duties on these machines will skyrocket. Mining licenses will be reviewed and reallocated. As a final resort the machines will be sabotaged. Unemployed workers will attack the mines and the remaining workers, continued [illegal] strike action will cripple the industry and the police will do nothing (except maybe shoot a few more protestors resulting in another inquiry that costs a billion rand and takes three years to complete). Never underestimate the ANC's power to absolutely stuff everything up. Mechanisation works in countries which are serious about industrialisation and investment (and also deal with crime effectively). It won't work in a country where the government are hell bent on stuffing up the economy at any cost and in the name of "wekkers raits".
 
Yay... more people demanding free stuff (funded by tax payers), and destroying public and private property.
 
dlk001 said:
I'm 100% familiar and funny you mention it because we are implementing TOC at all our mines to help drive value. They actually nickname me "Bottleneck" at work. :D

The TOC is helping us to better manage processes, buffers and bottlenecks. However, driving value also requires a change and managing the attitude of the people. Mechanisation requires people and there will never be a fully mechanised mine.
.
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Haha interesting, it's just that one of the "golden rules" of TOC is that cost per unit is a no-no. So if you're doing something and justifying it on per unit cost then you're probably doing something wrong. It's an interesting and almost counter-intuitive way of the way things should work. I'm surprised that you get people sabotaging a process that is so anti-cost cutting which is the short term myopic way most consultants try to derive value while not telling you what will happen in the long run.
 
Nicodeamus said:
mechanisation has been overdue for a long time. We cannot expect to compete against the first world with a 18th century mining tradition.
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+1

Stop trying to compete with the third world, ffs. We have to compete with the first world.
 
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