Escalating costs, the increasing number of projects in the construction pipeline and a shortage of competent skilled human resources to deliver those projects have caused delays and cost blowout for major construction projects in the mining industry in recent years.
To manage the risks associated with the delivery of major projects, mining companies are looking for the assistance of mining consultants to take the necessary steps towards the successful development of mine projects.
Professional advice and help with technical and financial project management, financing and detailed engineering can be a valuable source of expertise and make the difference between long-term success and failure of a mine project.
The planning and management of mid-size and large-scale mining projects requires not only time and monetary resources, but also state-of-the-art technology and human assets with the necessary knowledge and know-how to successfully develop mine projects from exploration and feasibility through to design, international bid management, contract negotiation, construction and operational mine management.
The role of mining consultants
In the early phases and throughout the development of a project, a professional mining consultancy can help to manage complex operations, to detect unknown risks and to achieve the ever higher safety and security demands of the industry.
"We are expertise, experience and know-how carriers, delivering professional support to investors, mining companies and contractors who either need a second, independent opinion or who don't have sufficient in-house capacities available," says DMT head of international mining consulting Elbert Loois.
"We are familiar with the challenges and problems of the members and new entrants to the mining industry and advise them using our commodity specific competence, established benchmarks and toolboxes to deliver high project management standards."
As a subsidiary of TÜV NORD Group, the company and its business units International Mining Consulting, Mining Services and Exploration & Geosurvey offer independent technical and financial consulting and services for the full mining cycle, from early exploration until mine closure.
These include the fields of geophysics, exploration geology, hydro-geology, geo-mechanics, mine-planning, mining engineering, mineral processing, infrastructure engineering as well as environmental mine management and mine rehabilitation.
"The first step of every project is to find out the status quo at its current development," says Loois. "Then, after detailed assessment or due diligence, advice is given on the to-dos and specific measures that have to be taken to make a project successful. The goals of the projects range from technical assistance to launching mining companies on the stock market. For financial feasibility studies, we first conduct technical studies that form the base for consecutive operational cost-modelling and investment calculations."
The first stage of a mine development project can be particularly crucial and professional consultants have the means available to conduct scoping studies, which determine if there is sufficient opportunity to justify the investment required for further studies.
In a second step, pre-feasibility studies have to be carried out to select the preferred operating options, and at the end definite and bankable feasibility studies are used to refine the optimal operating scenario. Only after the completion of those steps projects can go ahead with the design and construction, followed by the implementation and operation of the programme.
IMC-Montan Consulting (IMC-MC) mining director Ulrich Ruppel says: "The question here is if the client has in-house core competences available or if they need someone to assist them. We've been guiding some companies as owner's engineers for more than 20 years from the first scoping of brief, through the feasibility study until procurement and now its operation too. We are basically functioning as the mine management consultant in these companies."
Assessing the risks
According to Loois and Ruppel, one major benefit of mining consultants is their independence from clients and the mining industry itself - an essential tool when assessing the risks of a project.
"We generally perform a standard set of risk assessments, including analyses on political, market, technical, labour, social, environmental and legal and financial risks," explains Loois. "They are part of the safety and security procedure and contain all possible risks that can take place in a project." Divided into quality, time and funding risks assessment, the data quality risks are the first one's to be analysed in every project. Measuring, processing, modelling and interpretation of drilling data through the assessment of subsurface formations and mineral resources is part of geological and geophysical exploration campaigns that include intelligent precision instruments.
Using a number of cutting-edge methods and technologies, qualified persons are able to define resource and reserve estimations to global standards in order to determine the potential success of a project in its early stages.
The mineral resource specific quality risk assessment is then followed by identifying time and money risks, which is usually conducted by experienced senior project managers within the consultancy. "Project managers stay on the side of the client and advise them in all questions of risk assessment and measure implementation," says Loois. "Competent and experienced engineers with skill-sets concerning the particular part of the project are responsible for the professional input of the final report."
Focus on safety and sustainability
With thousands of people dying from mining accidents each year, especially in the processes of coal and hard rock mining in emerging countries, pressure on the safety and security demands in mines has progressively increased in recent years.
Related to the risk assessments, professional experts can help contractors and companies to minimise their safety risks from the start to the end of a mine operation.
"Improving operational mine safety has been a significant element of our work," says Loois. "Many national and global mine companies now have to act towards state-of-the-art safety and security principles such as those promoted by the UN and other professional institutions."
Ulrich Ruppel adds: "Decades ago people in the mining industry would think that safety and profitability contradict each other. That is wrong. Today, all well-established mining companies have acknowledged that safety pays off. If they have accidents or a mine disaster they're losing millions of dollars every day the mine is on hold."
How significant high safety levels are shows in the work of DMT itself. If there are unacceptable risks for the company's technicians and engineers out in the field, the management would not take on the job. "We wouldn't send our people to politically critical regions even if they had a vast amount of mining resources," says Loois. "Consultancy is a people's business. Our employees are the highest value asset that we have and this value has to be secured and protected."
Another trend in the mining industry, boosted by national and international policy makers and activist groups, is the focus on environmentally friendly and sustainable mining programmes and projects. "Social and environmental impact assessment are integrated in our feasibility studies with a look on how a project influences its communal and ecological environment," explains Loois.
Environmental planning, supported by initial investigations, environmental impact assessments, environmental audits and management studies through remediation and rehabilitation of post-industrial sites, often exceed the capabilities of mining companies and contractors. Also here, professional international consultants supported by local experts can have the necessary expertise and know-how available to resolve problems related to land, water and airborne pollution.
The client is the decision-maker
Professional mining experts seem to gain an ever bigger foothold in the mining industry. With their expert advice they can help mining companies where their own capacities miss out and assist them in the project management of newly developed mines, with international project cooperation, feasibility studies, technical-economic assessment, management assistance and due diligence.
However, even if mining consultants have the necessary skills and technologies available to lead mining projects to success, the operational decision making lies in the hands of the client.