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Mining Services

Focusing on West African Growth An exclusive with PPM Director, Jeremy Clarke By: J. Landry


aving been in business for nearly ten years, Paradigm Project Management (PPM) have a wealth of experience in diligence work, concept, pre-feasibility, and feasibility studies. Working in 18 countries in sub-Saharan Africa, the organisation is well positioned to discuss the current issues facing the region.

In our exclusive with Director Jeremy Clarke, he candidly discusses their efforts to focus on West African growth, and PPM’s success in mine and project management for clients including Sierra Rutile, Nimini Gold, Stellar Diamonds, Taurus Gold and Kumba Iron Ore. 2

PPM · South Africa

Mining Services off-grid communities pay more for their energy than on-grid households! � JC

Jeremy Clarke Director

Marropino Mine, Mozambique

J. Landry: Can you tell us about your background? Jeremy Clarke: I started in mining in 1977 by leaving the UK for South Africa and joining the Anglo American Corporation as a trainee process engineer, or metallurgist as we called them then, and went through various parts of the Anglo American and De Beers Group doing some work in gold, some in copper but mainly in diamonds. I then went to work in mining in Botswana, Namibia and various mines in South Africa before being appointed as the Consulting Metallurgist at De Beers. In 1997 I left De Beers and moved to Toronto where I was involved in the startup and subsequent public listing of various junior mining companies. All three of these

companies are still operational, but I decided to return to South Africa in 2002 in order to start my own consultancy company, Metcon. This company started to undertake a lot of work with PPM, and therefore it seemed sensible to merge the two companies around seven years ago and that’s when I started playing a more significant role in PPM. My background therefore started in operations, moved through executive management within De Beers, then into the junior mining industry, including the financing, listing and ownership of mining companies, and now contracting back into the mining industry as a service provider with PPM. This experience therefore covers the majority of the potential sectors of the global mining sector. Aspire Africa ¡ July/Aug 2015


JL: Can you talk a little about when you came on board with PPM and how that changed the dynamic of the business and its service offering? JC: At the time the consulting company Metcon was just me. I had a large network within the junior industry but my work was purely consulting and I couldn’t undertake work in the downstream sectors. PPM however was positioned to undertake a much broader scope of services including due diligence work, concept, prefeasibility, and feasibility studies, and moving into EPCM implementation. So we just linked the two. PPM was doing implementation work with companies I was in consulting to, and they provided a bigger engine room for me and I brought in a larger client base for them. Now we’ve done over a hundred projects for 18 countries across Africa, covering 17 commodities. So, it’s been a synergistic merging of the two. JL: What are the changes you’ve noticed in the industry from when you started to present day? JC: That’s the tricky one. PPM is now eight years old and started at the tail end of one recession, has benefited and grown though the past resources boom, seen through the global financial crises, and now we’re hopefully just getting out of this. The business has therefore been up and down in-line with global mining cycles. I believe that there has been a change with this latest financial crisis and downturn. Previously, mining ventures were generally driven by growth for long term value in the companies, but the recent serious downturn, especially in the mining industry, has been driven more by the perceived need for 4

PPM · South Africa

investors to gain quarterly returns, rather than understand the high costs of entry to mining and the need for a long term vision. The mining industry is a long term industry. It can take ten years for a project to come to fruition. Trying to supply quarterly returns to investors in this industry is extremely difficult and I think that eventually reality has set in; unfortunately there have been many casualties along the way. Hopefully the right investors are now getting into the market where people are not chasing instant returns and understand the industry better. This is having an impact on solution providers like us. PPM tries very hard to increase the value of projects. We have proven examples where we’ve taken what we consider to be non-viable projects and made them economically viable. We believe that’s a niche market we want to stay in and grow.

Mining Services mine operations for clients putting our own operating teams on site. PPM has also been very successful in the areas of Business Rescue which is a new South African law designed to minimise company failures that allows for an experienced management team to be parachuted into a failing company in order to rescue it from liquidation. We also do project management consulting whereby PPM develops and integrates project management systems into companies: one recent success being Kumba Iron Ore. We have a broad spectrum of services that can help clients.

Letseng Diamond Mine, Kingdom of Lesotho JL: When facing down turns in the mining cycle, what does PPM do to try to diversify their offering and differentiate itself in order to continue to find new projects to undertake? JC: We look at the number of different scenarios in the mining industry. PPM undertakes a lot of studies: concept, prefeasibility and feasibility. In this latest downtown, we moved into business optimisation work streams for current and operating mines. Due to our operational and executive management experience, we are able to go in and assist clients with modifying plants, equipment and infrastructure, in order to improve availability and overall utilization thereby increasing the revenue stream with limited investment, thereby immediately improving their bottom line. PPM has also moved into managing the overall

JL: Are there any common issues that clients tend to overlook? JC: We have found that there is often lack of integration in some companies approach to their projects. For example, some companies will try to save money by getting numerous organisations to look after different aspects of a feasibility study. Unfortunately there is often no internal capability to ensure that these disparate services are correctly integrated throughout the study which can significantly reduce the veracity of the final document. Some design parameters will not be consistent between disciplines due to the inevitable changes of scope during the study, and some things will fall between the cracks all together. This leads to errors in both the scope of work and the estimate which, when subjected to the financiers due diligence, leads to a reputational risk as well as additional time to rectify and therefore also more costs. Very few people in this day and age are looking at new and innovative ideas. It is Aspire Africa 路 July/Aug 2015


PPM tries very hard to increase the value of projects.” Jeremy Clarke

Kalagadi Mine, Thembeka Myedi Shaft. South Africa


PPM · South Africa

Mining Services one of the biggest problems of the mining industry. The financiers are generally extremely risk adverse and want “proven technology”; however proven technology is inevitably old technology.

innovations which don’t necessarily change the functionality of the mine.

When this approach is adopted, the capital cost risk may be mitigated, but the mine’s operational costs will increase due to this old technology and will generally not be able to so easily ride out price fluctuations as other more modern mines due to not being in the lowest quartile of operating costs.

JC: It’s through numbers of factors. One is definitely streamlining, that’s a good word for it.

Thus in many cases, current financiers are condemning new mines to a long and difficult life. The solution is the correct application of innovation. JL: Do you have an example of PPM using your innovative solutions to address this? JC: Yes. Utilising a unique project tool that PPM calls Strategic Value Management (SVM) we were able to re-vitalise a project in Botswana with a project that was previously seen as uneconomic. We were able to reduce the capital expenditure by approximately 60%, as well as reducing the operating costs, when compared to other similar operations, by about 40%, whilst retaining the mines functionality. This mine has been built to these standards and is currently operating very well. Another example, currently at pre-feasibility study level is a junior mining company’s project in West Africa. PPM has reduced the capital expenditure by 30% on just the plant design alone compared to our competitors. The operating costs will also be considerably lower as there is 40% less power required saving the client over a million dollars per annum on power costs alone. All these changes can be made with

JL: Is that typically through the streamlining of these processes?

The other thing is using technologies that are proven, but not necessarily currently used in the same industry. If you look at the copper industry they’ll do things one way, the platinum industry in another way, the gold industry also have their own standard methodologies. Sometimes you can crossfertilise between industries. So it’s not necessarily taking brand new ideas off the shelf, rather taking proven technologies and moving them across to other applications. JL: PPM has been active in immersing itself in other opportunities across Africa. What is the theory behind this? JC: As you know South Africa has been going through a bad time in the mining industry. There is a general lack of investment in the country due to political and labour instability, including the recent talk about mine nationalisation and the more regional debate concerning resource nationalism. New projects have therefore been few and far between. West Africa on the other hand is seen as a more exploration friendly area in terms of geology and to some extent in terms of the fiscal and the political regimes. So, there’s been a move by a lot of investors into this area, and PPM follows the investors and their projects. JL: What sort of on the ground knowledge does PPM have that would make our readers consider you first and foremost? Aspire Africa · July/Aug 2015


JC: PPM’s focus is sub-Saharan Africa as we have experience of operating in 18 countries in this region. We understand the difficulties of managing mines and projects in remote and difficult locations including the ever more challenging area of logistics. We also understand the localisation needs of providing jobs to the communities as well as proper training, healthcare, and services such as potable water. PPM staff have all worked in those operations and know the difficulties that will be faced by the mining companies and this allows us to build this experience into our feasibility studies and the overall mine design such that a complete solution is derived that will last for the total life of the mine. A lot of projects in Africa don’t fall over because of technical issues. They fail or become more difficult because of environmental, social and sustainability issues. PPM has experience of managing those types of operations and can therefore assist our clients in better understanding the project requirements. JL: What are you doing with Sierra Rutile? JC: That project is now finished. We completed the feasibility study for their dredge 3 that involved looking at a complete new dredging operation including final treatment plant, modifications to the land plant and additional on-site infrastructure. That project was completed about two years ago, but was a major one for us in the area. We’ve also done work with Nimini Gold in Sierra Leone. We completed a preliminary economic asset done in conjunction with the MSA Group. Nimini Gold is now looking at increasing the mineral resource before it moves into the feasibility study, and we obviously hope to be an integral part of that ongoing project. 8

PPM · South Africa

Also in Sierra Leone we’ve done a lot of work with Stellar Diamonds. PPM completed a conceptual study for a new diamond project in the area. This project is now moving forward to the next stage of deriving the mineral resource such that a feasibility study can be completed. Finally, we’ve also done a project in Cote d’Ivoire for Taurus Gold on their Afema project. This pre-feasibility study was finished for them about a year and half ago I believe. There’s therefore been a good mixture of projects and commodities for us in West Africa. JL: When undertaking projects like these for clients, what sort of problem solving is required to find the best solutions? JC: I think all the projects require a proper

Mining Services recommended utilising much higher percentages of local labour and local skills than has been done before with regard to developing the required surface infrastructure. This will help to provide skills and ensure sustainability for the local communities. JL: Is growing the local economy important to you in these emerging economies that are seeing a lot of investment? JC: I don’t think it’s important, I think it’s absolutely essential. I don’t think you will get a license to operate in Africa unless you undertake the effort to benefit the local area and local economy. I think that mining companies ignore that at their peril. JL: Is there anything else that you’d like to share with our readers?

Afema Mine, Cote D’Ivoire analysis of the problem areas and if this is not done it can lead to future difficulties. PPM’s SVM model is a powerful tool for brainstorming possible innovative solutions. These concepts are not just valid to the mining and processing aspects of a new project but must be carried through into areas such as infrastructure, power generation, HR, etc. PPM believes that, for remote operations, simplicity is the key. This has a massive impact on difficult operational problems such as logistics which is the most underestimated problem-child when working in West Africa. The less you have to take in to the mine, the better. On the Stellar Diamond project we looked at very innovative ways for shaft thinking and getting early access to ore. We also

JC: I think that there are two things that we try and push as hard as we can in PPM: First, is adding value to the projects that we undertake. We always see the project itself as the client. If we believe that the project needs specific attention in certain areas, then we strongly recommend this. Sometimes that can lead to initial difficulties with our clients but as long as both parties see the project as their end client, these will always be adequately resolved. Secondly PPM is a solutions provider to projects. We have a track record of taking projects that other companies find difficult to do and make them viable through the innovative routes that we take. Not just in technology, but also in the methodology, costs and time taken to do the studies themselves, and hence the solution that they generate. We’re always aiming to ensure the industry can move faster, and with more value from a greenfields position to an operating mine than has been done previously. ASPIRE Aspire Africa · July/Aug 2015

9 Building 5, Rand Airport Germiston, Gauteng, South Africa, 1234 Tel: +27 11 824 1704 Fax: +27 11 824 1705

Paradigm Project Management (PPM) | Company Brochure  

Focusing on West African Growth.

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