Current Issue 52
African Underground Mining Services has successfully instilled its contractor mining model into the continental landscape over the past decade and is being rewarded for its efforts via key projects in Burkina Faso, Tanzania and Ghana in 2016
A Model of Excellence Continent-Wide
Writer: Matthew Staff
Project Manager: Arron Rampling
African Underground Mining Services (AUMS) is celebrating almost 10 years in Africa via a series of ongoing, forthcoming and prospective projects – continent-wide – which are set to cement the Company’s prominence in numerous regions’ mining domains; compounded by a nationalisation strategy that is set to ensure long-term sustainability for the business.
While the industry situation has left much to be desired globally, AUMS’ business model uniquely positions itself to benefit in times such as these, taking the pressure off organisations looking to move into the continent via a plethora of different outsourced operators, by offering a value-for-money, quick, mobile, one-stop shop gateway into the continent.
As such, the Company’s success over the years – since moving into Africa via a joint venture in 2007 – has derived from its success in carrying out underground mining contracts for both local and international clients looking to formulate quick and holistic works with a limited physical presence on the ground themselves.
The past 12 months especially have epitomised this ability and the
subsequent prominence that AUMS has been able to establish across both West and East Africa; with two defining projects underway, and a third on the horizon.
“2015 was pretty good for AUMS. We won three of the four contracts available for the Group – including new projects in both Tanzania and Ghana – as well as achieving internal growth at our other sites previously touched upon last year,” affirms the Company’s Chief Operating Officer (COO), Blair Sessions. “We have embarked on an intensive capital programme which will realise benefits through new technologies at our upcoming operations and we look forward to rolling out these technology improvements to all our sites in time.
“Our revenue continues to grow through contract awards and organic growth in the operations we are involved with, and ‘almost all operations’ are in the growth phase, with scope in the near-term; doubling and sometimes tripling the current activities at our sites.”
All of this comes despite working under a model that remains largely underused and previously unfamiliar on the African continent. With traditional methods usually following an owner-operating ethos, the willingness to embrace the notion of contractor-operated mining works has taken some coercing by AUMS over the past decade, but Sessions believes that inroads have been made to this end; especially during cost-cutting times that have been endured more recently.
“Industry trends are still all about cost cutting at the moment,” he says. “The foremost driver for the industry remains ‘how do we drive down our costs?’ But there is now a bit of sunlight on the horizon and we’re starting to see activity in the market that’s a bit more positive compared to the end of last year.
“Certainly, gold project metrics are now far more favourable than they were, and it’s a case for us of maintaining our key focus on delivering premium performance, by achieving higher physicals, driving down unit costs for our clients, and allowing expenditure in other areas where it may not have previously been possible; such as in exploration for example.
“Subsequently, while it’ll always be a challenge to break companies out of their traditional methods, there is now an acceptance of what we do in the marketplace.”
Much of this acceptance derives from the Company’s ability to instil a strong sense of indigenousness into its operations, finding a right mix within the workforce to ensure long-term sustainability and wider social enrichment from a skills development perspective.
Such a philosophy can be attributed to AUMS’ early successes in Ghana, and is now being replicated in each new project undertaken; especially in Burkina Faso where one of its flagship projects continues to go from strength to strength.
“The Yaramoko mine in Burkina Faso is a Roxgold operation, part of an exciting, Greenfields complex which represents their first operation in Africa. We have been contracted to establish and operate the underground operations, in close cooperation with the client, which has been a real success story for the whole team collectively.
“As part of our remit, we have supplied and installed the power station and infrastructure associated with establishing the underground operation, and then together we share the technical services aspect of the operation where we combine to deliver best-for-project practices, in terms of engineering, design, scheduling and implementation,” Sessions explains. “This is now to the point where we’re into the ore and have delivered the two key milestones for the project two and three months ahead of schedule respectively.
“The mine is up and running and is a success story in the marketplace, with it going on to be stronger and longer in 2017 and beyond.”
Not without its challenges, AUMS’ work at Yaramoko has made up for delays in order to establish the decline and further developing ahead of target to establish the mine to a state of production two months ahead of schedule.
Sessions continues: “This has been of great benefit to Roxgold who were also ahead of schedule with their mill, so have been able to get started earlier than they told the market and had planned for. This brings down the cost curve for them and had similar benefits for the national Government and the local communities too.
“Now that the mine is in full production and delivering substantial benefits to all concerned, the possibility for expansion of the project is real, and with exciting prospects on the lease for Roxgold, organic growth at the operation is expected.”
Geita gold mine
The ability to move seamlessly from its original base in Ghana to neighbouring West African nations like Mali and Burkina Faso has gone a long way in facilitating the Company’s exponential growth over the past 10 years. However, Sessions has always maintained that a service such as AUMS’ has no jurisdictions when it comes to geography, and this notion has more recently been put to the test via a much more expansive migration into Tanzania.
The COO notes: “We were awarded the Star and Comet contract at Geita gold mine in Tanzania on behalf of AngloGold Ashanti; a large, fantastic complex with plenty of scope in the underground sphere.
“We were awarded that in November and we started the mine in late January, and that has been a major success story in terms of how quickly we were able to mobilise into a new country.”
While Tanzania is one of the continent’s more accomplished mining jurisdictions, the physical logistics of crossing eight countries to set up a presence in a new nation inevitably comes with complications, but these were rapidly overcome as AUMS relied on the same model that has already proved so lucrative to the west of the continent.
“It was an intensive start-up with a somewhat ‘Greenfield’ site in terms of the underground set-up we went into a pit with three portals and three declines which meant a significant amount of infrastructure was established,” Sessions continues. “It was a very successful start-up as part of a fantastic complex, one of AngloGold Ashanti’s flagship operations.”
As just the first underground section of the total complex, the scope for further development and contracts is vast for AUMS, with announcements set to be made soon surrounding future expansion.
The initial achievement of mobilising in a new country so quickly and effectively, however, is evidence enough that the Company really can replicate its model on an equally fruitful basis, anywhere on the continent; embracing not just the logistical challenges of migrating so far afield, but also the regulatory, governmental, and nationalisation considerations that need to be made when entering a new jurisdiction.
“The expansion in Geita with AngloGold Ashanti is an enormous focus for us moving forward. The underground aspect of Geita is the next phase, with the underground scope to potentially increase significantly in the near-term, compared to what was originally scheduled, it will continue to be one of our main areas of focus in the coming years,” Sessions sums up.
Growth across borders
The notion of international migration may sound complicated, especially across such a widespread continental footprint, but the AUMS model is every bit as conducive to such broadenings as it is to harnessing the effects of the industry downturn at present.
As such, the Company hasn’t found moving into Tanzania any more difficult than its previous forays into new West African domains, and was further aided to this end by its sister Company, AMS’ exploits in the country previously.
“The projects in each part of Africa are still bubbling along and we can showcase each of these operations to clients in providing an understanding of what we can do, in line with what they’re trying to achieve,” Sessions states.
This same principle applies to all future and potential projects, relying on AUMS’ experience in Africa to conduct works where they themselves may have never had a presence, or require a more comprehensive solution.
Sessions adds: “That’s what we’re trying to do with every project. We remain headquartered here in Africa and a group with a corporate office in London, New York or anywhere in the world can come and tap us on the shoulder and ask us to get things started for them.
“We provide a great opportunity for institutions like these to get involved in a lucrative continent like Africa.”
In turn, AUMS’ international expansion has facilitated similar growth for some of its longest standing and most significant business partners, as the Company looks to retain strong business relationships where possible and to re-utilise successful supply chain partners when the opportunity arises.
“A lot of our local partners are expanding with us,” Sessions confirms. “If they can offer us that same service in different countries then that’s the easiest way to go; especially in West Africa where all the countries sit next to each other. A lot of our service providers can grow across those borders.
“Tanzania has obviously been more of a significant step, so it’s harder for them to join if they don’t have an Africa-wide presence already, but we try to bring them along with us if possible. If we can continually develop our supply chain management strategy where we’re getting the best deal in all countries, it can only be of great benefit to us, our suppliers and our clients.”
Paramount across the business’ entire structure and ongoing success is the ability to not just be a continent-wide operator, but to establish a strong local ethos in each individual case.
AUMS’ nationalisation strategy has therefore been one of the key pillars of the organisation since day one, with the Company’s prospects “dead in the water” without it, according to the COO who places internal promotion, local development and wider social enrichment beyond the Company’s core mining capabilities in terms of long-term significance.
“Our personnel strategy remains keenly focused around training of the local workforce and driving this aspect of our business to the benefit of the community in which we operate,” he enthuses. “The retention of key personnel and their skills is paramount to the business, and we ensure a vibrant, challenging and ultimately rewarding atmosphere is maintained. Our turnover is minimal in these key areas, we ensure a tight team environment of inclusion and rewarding roles drives this result.”
Naturally ensuring financial stability and sustainability throughout, the dedication to training and individual progression for each member of staff is one that not only benefits the Company, but benefits the wider sector and industrial realm in Africa.
For instance, across its entire Burkina Faso operations, AUMS is operating with an 80 percent national workforce, with half the remaining staff members comprised of African expatriates having come across from Ghana, Mali or other African Nations.
Instantly, this relieves pressure on the business having to source more expensive key skills from further afield, but in the longer term, it ensures the general betterment of a generation in terms of the attributes now available in Burkina Faso; inevitably and initially being utilised within the expansions planned in the coming months and years.
“Driving all of that are our nationalisation programmes and different training programmes that we want to continue developing and materialise in the future; to further benefit our training of graduates, fostering relationships with local universities, and in making sure we’re training our own supervisors and managers in a way that is specific to AUMS’ operations,” Sessions says. “It’s a lot easier for someone to learn something and know it intimately if they’re working on and using that machine, technology or process themselves, rather than coming into the Company in three years time and expecting to pick up all the different variables that might occur.
“To that end, our key business driver of internal training and bringing up the national workforce through our own bespoke programmes will always remain paramount so that they can grow to be management material in the near term.”
Safety, integrity and excellence
The concept of enrichment continues internally via a health & safety commitment reaping its rewards over the past two years.
As a primary driver within the Company’s day-to-day operations, the business’ two years LTI (lost time injury) free accomplishment – equating to more than four million man hours, and growing – is a statement to the wider industry in terms of complementing its rapid mining turnarounds with unparalleled safety processes.
“I am particularly proud of this achievement, for a Group such as ours where 90 percent-plus of our workforce work every shift underground, in ‘hands-on – at the face’ roles, our lagging indicators stack up against anybody worldwide,” Sessions says. “Process improvement in this area has also delivered strong results, including nearly halving our TRI (total recordable injuries) rate in the business.
Outside of the confines of AUMS’ offices or site operations, the business’ corporate social responsibility (CSR) efforts are given equal importance; yet again compounding its position as a global operator able to thrive in accordance with local conditions and considerations.
Initially, this emanates from the Company’s recruitment strategy and the aforementioned nationalisation drive, but this quickly escalates to each operation’s periphery through community engagement and in ensuring that each employee understands the area in which they are working.
Sessions continues: “We continue to engage with and sponsor many charitable organisations; the newest being Bridge 2 Aid in Tanzania that provides dental training and equipment to local practitioners, to enable these skills to trickle down into the villages and communities in our location. This is a great initiative from these guys, providing a much needed resource and long-term benefit to the community.
“Our latest contributions to the orphanage we sponsor in Burkina also allowed us to construct a new borehole for the orphanage and the community to replace the unreliable current one, delivering water and subsequent nutritional benefits from the irrigation it provided.
“We also continue to support the donations of medical supplies, food and miscellaneous requirements to local villages and communities, including sponsorship of sporting events and the construction of facilities.”
Investing significant capital
External enrichment is facilitated largely by internal evolution at AUMS, and while the on-site operations often speak for themselves in terms of showcasing what the Company does best, it is often the work and investments going on behind the scenes which lay the foundations for the business to flourish.
And, especially during cost-cutting times, the ability to boost efficiencies and to provide evidence of this to prospective clients is worth its weight in gold.
“We attempt to drive down our administrative costs at every opportunity, and pride ourselves on a slim structure, while focusing on operational capability,” Sessions elaborates. “This leaves administrative roles as high level support roles only, with the focus at site level.
“Investment in administrative systems is procured as a matter of necessity, but in terms of delivering process benefits and lower costs, I am happy with our current suite of systems and processes, that are internally updated to focus on the business on a yearly cycle.
“From a facility perspective, we have invested significant capital at some of our sites in the establishment of infrastructure such as workshops, power stations and personnel facilities; including change house, ablutions, meeting rooms, mine rescue facilities and office complexes. We invest heavily upfront, so the facilities see the test of time on site, and are hopefully not required to be upgraded in the future. Building a complex that is sizable and future-proofed is a lot more cost-efficient than continual expansion over time.”
Continued growth and success
Among the Company’s more sizable investments over the past 12 months is the adoption of new technologies aimed at enhancing levels of automation, quality, consistency and safety within the business; largely targeted towards the final of the three contracts awarded recently, in Ghana.
Beginning in the coming months, the new levels of autonomy to be achieved in Ghana will be complemented by improved real-time monitoring for employees and further initiatives to save its clients time, money and waste from production.
“This significant investment in technology with the fleet we’re introducing to that operation as well will see a lot of automation and monitoring systems introduced, as part of what I believe will be the most technologically advanced underground operation in Africa,” Sessions details. “It will therefore be a major focus area for us moving forward in getting that right and then trickling it down to the rest of the operations, if it all goes as planned and gives us the performance indicators we believe it will.
“We’ve partnered with Sandvik on that operation who will deliver us the exciting new fleet to take underground. One of these is not just new to African operations, but to underground operations anywhere in the world, so it’s a really exciting focus for us.”
The upcoming Ghanaian contract brings AUMS full circle from its inception in the country almost 10 years previously, and represents all that the Company is proud of as an enterprise as it once again turns towards a local workforce it initially began training in 2007.
Moving forward, the project also emphasises once again how the market has begun to adopt the previously untried and untested AUMS model, indicating towards even more concerted business being attained in the future once the sector begins to pick up speed as well.
Sessions concludes: “Looking ahead to the next 12 months, we’ve got this big operation in Ghana which will be a key focus, and projected expansion in both Tanzania and Burkina; along with keeping our eye on all operations to ensure we’re delivering the same performance and benefits across the board.
“Continued growth within the organisation, continued success in our training and development of the local people – with further advancement of our graduates into not just supervisory, but management roles – and continued success of our African expatriate programme – where we take skills developed in-house, to all operations – will all combine as we look towards the rest of 2016 and beyond.”