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BusinessExcellence Weekly ISSUE No. 31 | www.bus-ex.com

europcar:

move as you choose Understanding travellers needs keeps Europcar ahead of the trend

Telecel Zimbabwe

Talvivaara Mining Company

KGHM Polska Miedz - Sierra Gorda Project

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contents 6 Lead story: Two decades of change (part two)

6

The emergence of national markets After twenty years of market creation in China, profound changes have taken place that affect how international companies operate there.

14 EVENTS

BASRA OIL & GAS INTERNATIONAL EXHIBITION & CONFERENCE

A special preview of Iraq’s major international event, at a time when the country needs huge investment in infrastructure.

16 Executive insight

Sechaba Letaba

20 28

The CEO of Kudumane Manganese Resources talks about leadership, Nelson Mandela and labour unions.

20 Europcar

Move as you choose

Understanding the behaviour of travellers keeps the leading global car rental brand ahead of the trend.

28 Telecel Zimbabwe

Gaining national coverage

CEO Francis Mawindi talks about delivering mobile phone coverage to 90 percent of the population by 2013.

BE Weekly | 3

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contents 36 KGHM Polska Miedz: Sierra Gorda Project Into the deep

Business manager Roberto Luna discusses the on-going development of the Sierra Gorda open pit copper mine in Chile.

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50

50 Kudumane Manganese Resources Keeping it simple

Developing a mining operation in one of South Africa’s poorest regions, and keeping the local community at the core.

60 China Africa Resources A sign of things to come

CEO Roderick Webster explains how the company’s operation in Namibia can be a springboard to greater success.

66 Talvivaara Mining Company Top of the heap

CEO Harri Natunen explains how bioheapleaching technology is getting the most from low grade nickel deposits.

74 Caledonia Mining Corporation The golden touch

66

The government of Zimbabwe is aware of the role its mining industry can play in the growth of the nation.

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Two decades of change (part two)

The emergence of national markets After twenty years of market creation in China, profound changes have taken place that affect how international companies need to operate there. Part two of our three part series examines the growth of national markets written by: David G. Hartman

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Lead story

e

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I

n the first part of this article, we observed that three profound changes have taken place in China since Deng Xiaoping announced the replacement of a planned, centrallydictated economy by a market economy just twenty years ago. A quite different China has emerged, one in which business-tobusiness markets have been created, markets have begun to transition from local to national, and sales and distribution have become important business functions. Below, we will focus on the implications of the second of these major changes.

Geographic isolation of markets has also seen tremendous change. Most consumer markets have moved with reasonable speed toward the brands in each major city being familiar to visitors. In personal and home care markets, P&G has become a China market leader by understanding how to advertise and create recognition across the nation, joining some wellknown Chinese brands like White Cat, Liby and Jakwa.

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Even as recently as last year, however, we cited the inherently local nature of China’s markets. In defining opportunities for businessto-business suppliers, our work in China remains heavily oriented around geography, even today.

But, while markets are still different, the knowledge gap is narrowing quickly across regions, pointing to continuing change. Whether we will always find a large number of local Chinese competitors with a very restricted geographic reach, or see a transition to truly national market participants is a critical question for western business looking at China, either as suppliers or as competitors. And, for Chinese companies, the key question they must ask is do they in fact face the choice of either growing towards national stature or being overcome by competitors that do so?

A decade ago, we were working for a company ma king advanced construction materials looking for China market opportunities. In our first customer interview, we

World-cla

ass competitors are emerging in China

Lead story were told that the product on which we were focusing was illegal in China and would therefore not be found anywhere. With visions of the shortest strategy consulting project in history, but also knowing how complex and confusing China can be, we proceeded to a different part of the country where we found competitors’ products for sale everywhere. We were told that the local market in that region was large and growing rapidly.

That was one of our most important lessons about the written and unwritten rules in China.

Today there are fewer places in China where a superior technology is unknown or unaccepted, due to the much better access to information.

Those selling solutions have spread their messages across the country. The emergence of national suppliers is in no way restricted to global firms.

World-class competitors like Sany, Zoomlion, and Liugong in heavy construction equipment, for example, are emerging

in China with broad reach across the country and beyond. We have seen Chinese companies achieve national reach in industries ranging from medical equipment to cooling towers to renewable energy.

In agriculture, with perhaps the most difficult geography of any market, we earlier found that different types of equipment were being used in different provinces, despite much the same climate and topography. The short explanation was that the leaders of agricultural extension stations, which are a vital information source for farmers as well as a link to government funds and policies, simply had different levels of knowledge of and opinions about products in the market. We have seen the knowledge gap close over the past ten years because of training and outreach, by both government and suppliers of equipment. Once again, those suppliers include western and Chinese firms.

Both market forces and the government have helped local markets become more

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national. But, even in the face of the changes taking place, thinking about “the China market� is usually a bad assumption for a company to make. Knowing exactly how far markets have gone in becoming national is an important step to understanding opportunity in China.

Markets involving smaller equipment in agriculture and construction are still more local than national,

Audi is a popular brand in Beijing

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with different practices and products and suppliers of those products dominating on a local basis. Many suppliers of such types of equipment are completely unknown outside their home region.

On one recent project, we met a business-to-business supplier of specialized manufacturing equipment.

This company is of significant size and wellrespected by its customers,

but we had never heard its name in many interviews in other parts of China. We soon learned why. Their factory has a set of loyal customers nearby who come to them when they need equipment and actually pick it up themselves from the factory. So, in essence this company has no marketing, sales, or logistics capability, no brand name, and no means or ambition to sell to anyone not in close

Lead story

“Even the best-known brands still have a strong geographic focus.

Volkswagen and GM dominate in Shanghai, Audi and Hyundai in Beijing� proximity to their factory door. While extreme, this company is not unusual in being a respected businessto-business supplier in a very narrow geography within China.

Understa nding the landscape of potential customers or potential acquisition targets is quite an undertaking, since industries which would have two or three major participants in North America could have many hundreds of firms in China, each with its own geographic footprint.

Even the relatively advanced auto industry, selling to consumers informed by advertising and many enthusiast magazines, recently had over 100 manufacturers, which the government is attempting to combine into a few large companies able to compete on the global stage. And even the best-known brands, with a truly national sales network, still have a strong geographic focus to their sales. Volkswagen and GM dominate in Shanghai, Audi and Hyundai in Beijing,

etc. But they and their reputations now have a much wider reach.

The fact that many brands are present across regions and their suppliers are trying to penetrate a wider market speaks to a gradual maturation.

Consumer market firms will likely lead the way in terms of China-wide reach.

Business-to-business suppliers, without national advertising channels to reach customers, are even more likely than consumer goods producers to divide up the country according to home territories. This will inevitably evolve in many cases, as winners emerge from among the Chinese firms that have growth aspirations or as roll-up strategies create advantages of scale.

In short, the structure of most industries is still fragmented across

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“When local governments have influence they tend to favor local products” geographies but the knowledge of competitive products is far greater than twenty years ago. Why, then, have we not seen some markets move faster toward the emergence of national brands that displace most of the local products? One factor is China’s geography, w ith an immat ure transportation system, a variety of languages, dialects, and ethnicities, which is challenging in itself, probably a more extreme version of the challenge that faced European suppliers that sought to reach additional country markets.

And, once again, we have to emphasize the heavy influence of the government in markets. When local governments have influence, as business-to-business customers or just as heavyhanded influencers, they tend to favor local products.

Even the best manufacturers are often challenged to

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achieve success outside of their home areas. “We have no relationships anywhere else” is the most common reason that companies have given us for their limited sales reach. When we look ahead at whether China is headed toward being a national market, the role of government is the major reason to believe that China will stop considerably short in any near-term time frame.

The champions among the Chinese Second Mouse companies that we mentioned earlier – those high flyers that look likely to take on global competition in mid-markets around the world – are succeeding in those market segments where success accrues to the firm that is faster, more adaptable, more focused on meeting mid-tier customer needs, and highly price competitive.

Finding examples of companies like that a decade ago was akin to finding a needle in

a Chinese-sized haystack.

That multiple examples are obvious today is a clear sign of evolution.

The trend will continue, but the transition from local markets to national markets will continue for many years to come.

The immature regional market structure that exists today means that entering China through acquisition involves great challenges and tremendous opportunity for those above to overcome the challenges.

We often find that the potentia l acquisition candidates know far less about “the China market” in which they participate than we do. Their total knowledge is often limited to their own province, sometimes only to a radius of a few miles. The opportunity is to extend their business into virgin territory, a task which even ambitious Chinese firms see as formidable.

Lead story

Entering China through acquisition involves great challenges

Combining together a set of local companies that can have wider reach, more relationships, and greater scale offers opportunity for an outsider that sees the big picture, as long as he is aware of what factors drive market decisions in each geographic segment.

Succeeding as a supplier in such a marketplace is also not easy. The markets are difficult to characterize and selling into fragmentation is expensive. Sometimes there will be strong local competitors and sometimes the playing field is wide open. Where markets have

David G. Hartman is Blue Canyon Partners’ China Practice Director. He has previously served on the faculty of Harvard University and as executive director of the National Bureau of Economic Research. He has been

become national, sales and distribution systems have grown to handle the geographic reach that is required. We turn to that dynamic, the third major change that has taken place since Deng’s speech of two decades ago, in the next section of this article.

an active participant in China’s markets for over twenty years, speaks Mandarin, and resides in Beijing. His clients include a roster of Fortune 500 firms and Chinese companies. www.bluecanyonpartners.com

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EVENTS

Iraq: The Hub of BASRA OIL & GAS INTERNATIONAL EXHIBITION & CONFERENCE 6-9 DECEMBER 2012 BASRA INTERNATIONAL FAIR GROUND, IRAQ The 3rd Basra Oil & Gas International Exhibition & Conference 2012 will be held in Basra from 6 to 9 December 2012.

Internationally acclaimed experts from across the oil & gas sector will be addressing the challenges and opportunities in the Iraqi market. Speakers from Weatherford, Gulf Energy, South Oil Company (SOC)

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and Penspen will put forward their views on technology, health & safety, laws and regulations, petrochemicals and many other topics related to the conference theme “Iraq: The Hub of Future Energy.”

Industry veteran, Mr. Falah Al-Kahawaja, ex-director general of the State Company for Oil Projects (SCOP), will manage the conference, bringing to the event his wealth and experience of Iraq’s growing influence. “This conference provides an unrivalled opportunity for the oil and gas industry to understand more about Iraq and the expectations for the future,” he said. “It is a complex market to navigate, and we want to provide a platform that gives local, regional and international companies interested in doing business in Iraq somewhere to share knowledge, experience and insight.”

Though the data are still unreliable, the current government thinks that Iraq’s oil reserves are the largest in the world, amounting to upward of 350 billion barrels. Even the independently confirmed levels of 143 billion barrels put Iraq at third place in the world league. With a total of 79 fields, however, only 23 are currently producing, signifying significant potential for the future development.

Special preview

of Future Energy

Iraq is now planning to double its refinery capacity by 2017 and a vast number of oilfield service, development and extraction projects will be put out to tender by SCOP in the near future. One of the biggest projects coming up is the new refinery to be built at Kirkuk, in Kurdish northeast Iraq. SCOP will be offering the construction of the Kirkuk oil refinery to international companies on a build, operate and own (BOO) basis in December 2012.

The first Basra International Exhibition & Conference welcomed 218

participants, and the second saw 17,000 visitors and 411 participants (including exhibitors, delegates and sponsors), the largest oil & gas event ever held in Iraq.

This year’s exhibition will host over 400 companies, showcasing the very latest products and technologies.

For more information about Basra Oil & Gas International Exhibition & Conference visit: www.basraoilgas.com

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CEO of Kudumane Manganese Resources

Sechaba Let

taba

executive insi ht Nobody’s perfect. What quality or ability do you wish you had?

Patience, I am impatient. I also wish I was more in touch with my emotional side which would help me express feelings such as sympathy, etc.

What is the best business book you have ever read, and why?

Effective Leadership through Effective Relationships (John Maxwell). This book resonates with my own approach when it comes to leadership. I have a strong belief that there must be chemistry between people who work together. You have to like each other in order to be effective in what brings you together.

Someone you would most like to have met, living or dead, and why?

Nelson Mandela. He has charisma and possesses the rare qualities such as intelligence, and he expresses and articulates his thinking so well that he reaches his audience. He develops courtesy in all situations, disarming even the guards who had been placed to trouble him.

As my motto goes, Mandela believes in people too. He is quoted as he reflected on his life later saying, “all men have a core of decency and if their heart is touched, they are capable of changing.” This is what I believe in. He has mastered patience and compromise.

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“Having walked every step of the way in my mining career starting as a miner to the CEO position” What do you consider to be your major achievement (in life or business)?

Believing in people and giving them second chances. As a result, I witnessed people evolve to levels they themselves never thought were possible.

Having walked every step of the way in my mining career starting as a miner to the CEO position. “Been there, done that, got a T-shirt for it,” as the cliché goes.

Having successfully managed to lead in a diverse environment that did not support my background.

Creating the best work teams in my career and being instrumental in bringing about change in South Africa’s mining industry.

Who or what do you think is overrated?

The attitude and the mind-set of the labour unions. Labour unions should never lose sight of the fact that they are the major contributors in either making or breaking the mining industry; hence their approach should be aligned as such.

The success and failure of the industry will affect them just as much as it will the employers.

People miss the fact that human rights go hand in hand with both accountability and responsibility.

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What mistakes have you made (professional or otherwise), and what did you learn from them?

I have often only believed in the good in people and buried my head in the sand like an ostrich. I have learnt that I must influence decisions that involve my life and career and not leave it in the hands and mercy of others.

Which one piece of wisdom would you pass on to your successor?

Understand the environment and the people you have to work with. A happy workforce equals a good safety record and

executive insi ht high productivity.

Keep your emotions and temper under control.

Who has been your inspiration professionally?

Philbert Rweyemamu. He was my manager as a young mining engineer in my career.

He believed in people. He was charismatic and yet that did not translate into poor job performance and compromised outputs. He could be both the boss and the friend.

How would you like to be remembered after your retirement?

As someone who sees and acknowledges all human beings. Someone who encouraged uniqueness and individuality in people.

Someone who took a chance on people.

Supportive and consistent.

Do you have a quote or motto you live (or work) by?

Let those I lead spend time on what they know best, (which I don’t know), so that I can spend time doing what I do best. ‘I let them run with it’. Never question a man’s integrity unless they have given you a reason to do so.

Sechaba Letada, CEO of Kudumane Manganese Resources. www.kmr.co.za

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editorial@bus-ex.com BE Weekly | 19

Move as you choose Most travellers would be unaware how fast their individual needs are changing, but understanding their behaviour keeps the leading global car rental brand Europcar ahead of the trend written by: John O’Hanlon research by: Jon Bradley 20 | BE Weekly

Europcar

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Europcar buys around 270,000 cars a year

Europcar

R

oland Keppler has been at the helm of Europcar for nine months and is determined to lead the company towards a new and not always familiar role in the travel industry. In the public eye Europcar is seen as one of the big three car rental companies, together with Hertz and Avis. Its strategic alliance with the global Alamo and National Car Rental brands provide it with the world’s largest car rental network.

What the public eye does not always see is the direction in which its own behaviour and needs are moving the market. Car rental is beginning to complement other modes of transport rather than simply competing, revealing new opportunities that Keppler for one is keen to seize.

Keppler came to Europcar in 2009 from the German low-cost airline TUIfly where he was CEO. Having made the German subsidiary, which represents approximately 30 percent of Europcar’s revenues, into its most profitable asset, he also played a key part in the launch of several projects including car2go urban mobility, which represents one of the sources of future growth for Europcar.

Since his appointment earlier this year he has continued to push forward his enthusiasm for customer focus and developing people in that sense, innovative mobility models, digital solutions, and operational excellence.

Europcar is owned by investment group Eurazeo. It is organised into nine ‘corporate’ countries (Germany, France, Spain, the UK, Italy, Belgium, Portugal, Australia and New Zealand) in which it owns 100 percent of the operation and 140 franchises around

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Statistics show a fall in private car sales across the developed world

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the world, normally one to a country. Global revenues for the brand are in the region of €3 billion, including National and Alamo, while the corporate territories generate two thirds of that.

Traditionally car rental customers fall into two broad categories, business and leisure.

Germany, having been more dependent on business travel than other countries, has been hit the hardest by the recession in Europe, but private rentals have remained surprisingly buoyant. “This year we are performing better than in 2011, and beating our own business-to-consumer targets.” This may be partly due to investment in direct sales channels and more flexible pricing, he says, but he suspects underlying customer behaviour has played its part.

Statistics show a fall in private car sales across the developed world. “The signs are that people are looking for mobility on demand rather than owning a car. So I think the onus is on the industry to bring out more flexible offers. We are certainly more accessible and customer oriented than we used to be.”

In 2011 Europcar entered a joint venture called car2go Europe, a business its partner Daimler has been developing since 2007. It’s a bit like Boris Bikes in London except that the vehicle members pick up or relinquish is a Smart Fortwo. The system combines swipe card technology with mobile apps to locate and book vehicles without reservation, and is currently available in Dusseldorf, Hamburg, Ulm, Lyon, Vienna and Berlin though there are plans to launch in 40 to 50 European cities.

Europcar

Europcar is increasingly accessible and customer oriented

Mobility by the minute is a concept unlike any other, traditional car rental included, he believes. It’s already very successful where it has been in operation for a while, as in Hamburg where it launched in April 2011. “People like the spontaneity and that it makes it so easy to move around the city.

We believe it will grow as customers get used to the idea – the market will change over time, not overnight.” Now Europcar, car2go Europe and the Hamburg Hochbahn metro are embarking on a two year trial to join up services in a way that will accommodate both private and business users. Passengers could seamlessly switch between train,

underground, bus, spontaneous or preplanned rental vehicles, and even bike, he explains. “All the modes will be connected via an app, and physically located at centres close to subway stations.”

Initiatives like this suit customer lifestyles, but are made possible through technology.

And investing in digital technology is one of his central strategies. A further example that is now streamlining the work of the rental stations across the Europcar group is a new fast-track service for business users called eReady. Registered customers who book online can cut out the usual form filling, so at the dedicated Ready Service counter all

“The signs are that people are looking for mobility on demand rather than owning a car” BE Weekly | 25

they need to do is sign the rental agreement and collect the vehicle.

At the other end of the process eCheck-in will scan the vehicle and its inventory using a handheld device linked to back office software that controls the rental process from end to end. “All customers will notice is that the process is fast and paperless,” says Keppler. “People are coming to expect this level of service from our industry – after all it is very convenient to buy something from Amazon – one or two clicks and the item is delivered to your home. Invoicing, payment, delivery are all digital. This is what I think people now expect from our industry and we are preparing ourselves to meet these expectations.”

Operational excellence (the customer’s expectation that the process – and the car – will work) can’t be separated from customer focus. Europcar introduced its Promoter Score feedback system at the end of 2010 with the question ‘would you recommend us to friends and family?’ Respondents giving nine or ten out of ten are classed ‘promoters’; nought to six ‘detractors’. “When we started about 50 percent of respondents were promoters: we are now up to 70 percent, well on the way to our target of 80 percent

‘convinced customers’ who would actively promote our business.”

The detractors were in for a shock too – senior managers were asked to pick up the phone to talk to customers about whatever issues they raised. Here Keppler leads by example, enjoying the reaction of people taken aback by a personal call from the CEO. “It was a learning experience for us too,” he admits. “Suddenly head office managers are

“The buy-back model is one of the strategic pillars we have as a company.

We believe that in the long term it is more robust than the risk model” 26 | BE Weekly

Europcar

Vehicles are repurchased by the manufacturer after around six months

talking to customers where by competitors, he believes, formerly they were making because it allows Europcar to concentrate on its core decisions without much idea of what was happening on business of selling mobility. the ground. Now they are The balance of value Target for getting first hand feedback between rental company and ‘convinced customers’ and dealing with it, and manufacturer is a delicate that’s a cultural change for one, depending largely on demand for new and used the whole organisation!”

By and large Europcar operates on cars. Nevertheless, “The buy-back model what is called the buy-back model – rather is one of the strategic pillars we have as a than being a long term asset, vehicles are company. We believe that in the long term it repurchased by the manufacturer after is more robust than the risk model.” around six months and resold. “You could say we are a big producer of young used cars,” For more information about he jokes. “We buy around 270,000 cars a Europcar visit: year.” Buy-back works better than the lease www.europcar.com or outright purchase ‘risk’ scenario favoured

80%

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Gaining national coverage Chief executive officer Francis Mawindi explains how Telecel Zimbabwe plans to deliver mobile phone coverage to 90 percent of the population by 2013

written by: Will Daynes research by: James Boyle

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Telecel Zimbabwe

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Telecel Zimbabwe is the country’s second largest mobile telecommunications provider in terms of subscriber numbers

Telecel Zimbabwe

A

cross Africa, the winds of expanding 2G and 3G coverage, enhancing cha nge a re being network capacity in those areas with felt throughout the increased demand, and by introducing new telecommunications sector. products and services to the marketplace.”

These winds are being driven Being an important player within the by the rapid movement consumers have been industry, Telecel Zimbabwe’s contributions making away from basic telephony services towards the development of the country’s to data services. In response to this, operators telecommunications sector have proven to have had to capacitate their data service be significant. “What we have been doing provision capabilities in order to cater to the during the course of this year,” Mawindi changing needs of their customers. continues, “is expanding our coverage to Aided by the high literacy rate of its ensure that the majority of Zimbabweans people, Zimbabwe is one such country have access to our services. At present, our experiencing high levels of demand for coverage stands at close to 80 percent of the data services. In fact, with population and we intend to an estimated 58 percent of increase this to 90 percent Zimbabweans accessing the by the end of 2013.” internet today through their In addition to increasing mobile phones, the country coverage, Telecel Zimbabwe ranks within the top ten has made a concerted effort to price its products and services African nations as it relates to this trend. aggressively to ensure that Current subscriber base One of the companies they are affordable to almost leading the way in responding everyone, including those to the changing requirements, and dynamic situated in rural areas. “The vast majority needs and demands of Zimbabweans is of our promotions,” Mawindi says, “have Telecel. With a sizable market share of succeeded in bringing and delivering value to around 29 percent, as recorded at the end our subscribers. We were the first operator to of September 2012, Telecel Zimbabwe reduce the price of our SIM to just $1, when is the country’s second largest mobile others’ prices still averaged close to $20, and telecommunications provider in terms of we continue to offer best-of-breed voice and subscriber numbers, boasting a subscriber data bundle rates, the latter going for as low as $0.04 per megabit.” base of over 2.3 million users.

“As a business on a growth trajectory,” While boasting some of the most explains chief executive officer, Francis competitive prices available in the Mawindi, “we have been growing rapidly marketplace, the company also prides over the last 16 months. This has coincided itself on its strong customer centric focus with our ability to capacitate our network by and its prudent cost management systems.

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million

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“Our customer focus,” Mawindi enthuses, “has seen us taking home various national awards in recent years, including the Customer Service Excellence award from the Zimbabwe Institute of Management in 2011, to this year’s Call Centre Association of Zimbabwe, Best Call Centre Award.

Meanwhile, our embracing of cost management and cost leadership strategies has enabled us to optimise our subscription prices and thus offer great value for money.”

One of the significant and notable developments at the heart of Telecel Zimbabwe’s operations today is an extensive network expansion programme. The central theme of this programme is to enable the company to develop sufficient scale and this will be facilitated through the acquisition of more than 575 physical sites across the country by the end of 2012, with an additional 100 to follow in 2013. It is this phase of expansion that will allow the company to achieve its goal of delivering coverage to 90 percent of the population.

“Another thing we are doing,” Mawindi states, “is enhancing our 3G coverage to the extent where we hope to have around 275 sites located countrywide. To date, the roll-out programme is on track and proceeding well, with all the major cities, towns, rural service centres and highway corridors being covered, and efforts are under way to cover a sizable

number of mining and commercial farming areas, which were previously not serviced.

Nonetheless, we still believe that, even within some of the major urban and metropolitan centres, there is a need to optimise coverage and target those black holes that still exist and in the process improve network availability and quality of service.”

Recently, the company has been re-certified as ISO 9001 compliant and remains the only certified mobile operator active within Zimbabwe. Naturally

“The company prides itself on its strong customer centric focus and its prudent cost management systems” 32 | BE Weekly

Telecel Zimbabwe

Telecel Zimbabwe pursues the vision of total customer delight

this is a very important customers at heart. It is also achievement, and indeed important to point out that a significant milestone for the time is near when no significant differentiation the business, and is one that will exist between mobile is tied to the system of best National coverage operating practices that it network operator offerings; planned by the operates under. the difference will primarily end of 2013 “Our re-certification,” be on how we do business.”

Mawindi says, “is a clear This ISO 9001 status testimony that our company allows Telecel to eliminate is unequivocally and irrevocably committed waste and duplication, while at the same to achieving excellence in products, services time controlling its operating costs. and business processes by actively pursuing This added value is then passed on to its continuous improvement and sharing the subscribers through lower pricing. vision of total customer delight. In addition “We are currently in the process of the attainment of this status has meant putting the finishing touches to enable that, as a corporate body, Telecel has the the technical deployment of a new AYAYA confidence and assurance that it has its Call Centre system,” Mawindi adds. “Once

90%

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complete, this will drastically improve upon our ability to manage customer relations.

This will inevitably result in better customer service delivery, while generating greater customer value.”

Challenges, however, do still remain for the company, the major one being that of capitalisation of the company’s mobile network. For some time the country risk for Zimbabwe has remained high, though

now the political landscape has changed with the new coalition government, in addition to the promising economic fundamentals, which have triggered international organisations and the global investing community to show greater interest in the country.

For Telecel Zimbabwe, the company has been boldly resilient for quite some time, even in difficult times characterised by economic

“The biggest opportunity for us going forward will be in the provisioning of national backbone broadband infrastructure”

Telecel is continuously expanding its network coverage and capacity

34 | BE Weekly

Telecel Zimbabwe

Telecel has won awards for customer service

contraction, hyperinflation, liquidity challenges and inadequate investments.

These factors in the past put enormous pressure on the company’s capacity and capability to capitalise on market growth opportunities. However, once economic stability returned, Telecel was quick to rise to the challenge and take advantage of the new opportunities this presented. “We have managed to secure vendor financing for our network expansion programme,” Mawindi says, “with the bulk of the guarantees coming from our principals.”

Despite some of the challenges that it faces in its industry, Telecel’s future is certainly brighter. “We are continuously expanding our network coverage and capacity,” Mawindi concludes. “Our

subscriber growth and revenue performance are both healthy, and we believe that we are in a good space in the market. The biggest opportunity for us going forward will be in the provisioning of national backbone broadband infrastructure, utilising fibre technology to connect and gain access to submarine cables coming into and leaving the country. This will allow us to further reduce mobile broadband connectivity costs and improve penetration rates, thus ensuring an affordable universal service to all Zimbabweans.”

For more information about Telecel Zimbabwe visit: www.telecel.co.zw

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Into the deep written by: will daynes research by: abi abagun

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KGHM Polska Miedz - Sierra Gorda Project Business manager Roberto Luna discusses the on-going development of the Sierra Gorda open pit copper mine project

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Salt water pool - Earth work

KGHM Polska Miedz - Sierra Gorda Project

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s well as having the distinction of being known as the driest desert in the world, the Atacama Desert of Northern Chile is home to the Sierra Gorda project. “A large tonnage, open pit copper mine development,” explains business manager Roberto Luna, “it boasts deposits that total up to 2.2 billion tonnes of measured and indicated resources, and reserves amounting to some 1.3 billion tonnes.”

Estimated to have a useful life of 20 years, two phases of activity have been proposed.

The first of these will run from 2014 until 2017 and will feature an ore throughput rate of 110 kilotons per day. The second phase will then commence in 2017 and is expected to involve ore throughput reaching levels of 190 kilotons per day on average.

The main plant equipment needed to be brought together for the first phase of the project includes one primary crusher, four secondary crushers, three ball mills, four high-pressure grinding rolls and 32 floatation cells. In turn, six 73yd3 shovels, 41 cubic metre front loaders, six drills, and 29 trucks with a 300 tonne capacity are being considered for the mine.

As is the norm for an open pit mine, the ore from Sierra Gorda is hauled by trucks to a primary crusher. By means of conveyors over the ground the ore is then transported from the crushing stages to the concentrator plant, before grinding is carried out through ball milling using hydrocyclone classification circuits. The ore released from wet grinding is then recovered during the bulk copper and molybdenum flotation stage.

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SIERRA GORDA KGHM Polska Miedz - Sierra Gorda Project

SalfaCorp As an industry leader, Salfa Montajes, a SalfaCorp subsidiary working in industrial construction and assembly in mining and energy, has been awarded construction and installation of the Sierra Gorda Processing Plant (110,000 ton per day capacity) dry and wet areas. With a contract totaling over $350 million dollars, the Sierra Gorda project covers all multidisciplinary areas with a commitment of over 10,000,000 man-hours from the start of Civil Works to the launch of the plant, including raw materials stockpiling, secondary and tertiary grinding (HPGR), secondary and tertiary sieves, crushing, floatation, filtration and tailings thickeners, among other areas.

As part of this process, for the past two years Salfa Montajes has taken part in the project’s constructability with Sierra Gorda S.C.M., both in Chile and Canada.

Salfa Montajes has been involved in every stage of the project, including construction strategy, organizational structure, logistics, as well as assessment and awareness of the construction CAPEX in each of the engineering stages.

With 83 years of experience behind it, SalfaCorp is ranked in the top 5 in Latin America companies in engineering and construction, leading the Chilean market with annual sales of more than $1.7 billion dollars, and with a workforce of over 44,000 and 2,400 professionals.

Constant evolution and innovation has permitted Salfa Montajes to be an industry leader in its areas of specialty and service. It has reached successful international expansion to key regional markets such as Peru, Colombia, Panama, and Uruguay, with active participation and dedicated client service.

Throughout its history, the company has demonstrated an outstanding ability to grow in a sustainable manner and offering solutions for a variety of services, including construction and industrial assembly, civil construction, infrastructure, industrial maintenance, mine development, marine works, earth moving and EPC projects.

E. salfacorp@salfacorp.com www.salfacorp.com

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KGHM Polska Miedz - Sierra Gorda Project SIERRA GORDA The final product is a mixed copper Sierra Gorda feature text.....Lorem ipsum and molybdenum concentrate that is sent dolor sit amet, consectetur adipisicing elit, to a flotation plant where molybdenum is sed do eiusmod tempor incididunt ut labore recovered and copper concentrate remains et dolore magna aliqua.

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HATCH HELPS SIERRA GORDA BECOME ONE OF WORLD’S LARGEST MOLYBDENUM PRODUCERS Sierra Gorda has turned to Hatch’s EPCM expertise to support its ambitious copper / molybdenum plant project in the Antofagasta region of Chile. This is a unique opportunity for the company, since the mine’s molybdenum ore grade for the first three years is about 900 ppm, which is significantly higher compared to the industry standard of less than 90 ppm.

Working with a tight timeline between July 2012 and May 2013, Hatch is responsible for all detailed engineering duties of the molybdenum flotation plant, including a thorough analysis of the basic engineering stage, and delivering all documentation needed for procurement and construction.

During its first three years of operation, the 110-ktpd ore throughput copper and molybdenum concentrator is expected to produce 450 ktpa of collective concentrate, of which 7 percent is molybdenum

concentrate. For the remainder of its estimated 22-year life, the plant will continue processing at 190 ktpd of ore generating 790 ktpa of collective concentrate with 1.5 percent being molybdenum concentrate. That transition will require a flexible design in order to accommodate the different ore throughput to be processed from year four onwards.

“We have always believed that Hatch delivers strong engineering capabilities and expect they will fulfill their commitment to design this plant, a critical part of the project, within the tight schedule,” said Joe Tis, vice president of development for Sierra Gorda.

Equipment covered under the project includes thickeners, flotation cells, molybdenum concentrate filters, regrinding mill, dryers, packing maxi bags equipment and associated infrastructure. www.hatch.cl

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Knight PiĂŠsold S.A. Knight PiĂŠsold S.A. is currently developing the detailed engineering of the tailings transport, tailings storage and water management systems for the operation of the Sierra Gorda Project. In order to address this project and comply with the expectations of Sierra Gorda, we have formed a multidisciplinary team composed of specialists from the following disciplines: civil, electrical, instrumentation, water and tailings transport, geotechnical and geology, construction, risks, project control, quality and safety.

The strengths of our team, coupled with the collaboration and participation of the team from Sierra Gorda, have

enabled us to comply with the objectives defined at the outset of the project, in terms of both the agreed upon goals and deadlines. This has resulted in a final design of the deposit that meets the highest standards of both safety and constructability.

E. santiago@knightpiesold.com www.knightpiesold.com

KGHM Polska Miedz - Sierra Gorda Project

Workers

and position strategy for the global copper where deadlines are incredibly demanding and molybdenum market. The project and shorter than the industry average.” presents the ideal opportunity to bring Of equal importance is the need to about increased resources, reserves and capture, retain and train the employees production, and ultimately raise the value required for the construction, operation and of the three companies on a global scale. development of the project. At present, over “The primary challenge at the heart of 3500 people are assisting in the construction this venture,” Luna continues, “is being able phase, with this number expected to peak at to design, procure, construct, commission and around 7000 in the near future. Once into successfully start up a large the operational stage, a total scale project for a foreign of 2000 individuals are due company, where different to be active in carrying this visions inherent to the stage of the project through. cultures of each participant As a result of internal are successfully integrated. and external factors in Length of pipeline Chile, and the mining Another challenge stems from carrying sea water the fast-track status of this world in general, there is an to the project increasingly strong demand particular greenfield project

141 km

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SIERRA GORDA: SEAWATER TRANSPORT PROJECT

BRASS Chile S.A. was contracted by Sierra Gorda S.C.M. for the Detailed Engineering of the 145 km – 36� diameter Seawater Transport with a maximum capacity of 1,500 l/s.

The pipeline utilizes a RFP Pipe at low pressure and CS at high pressure section. To enable delivery from coast to mine site at 1700 masl, 3 pump stations connected in booster mode are utilized: one at the coast and 2 intermediate. Each intermediate station has 7 high pressure pumps in parallel with 3,160 kw motor capacity each.

A chemical treatment plant with high efficiency filters are located at the first intermediate pump station. Operation is controlled through a SCADA system connected through fiber optic cables.

www.brassengineering.com

KGHM Polska Miedz - Sierra Gorda Project for qualified labour and Ingeniería Civil Vicente (ICV) mining supplies, which Ingeniería Civil Vicente S.A. (ICV S.A.) is proud to have has conspired to produce been able to participate, from the very beginning, in the an increase in prices. This Sierra Gorda mining project in Chile, providing earth has impacted directly on movement services for the construction of its preliminary projects that are currently platforms and infrastructure. under execution. “The The implementation of this important contract implied major logistics and engineering challenges for our company Sierra Gorda project has and its successful completion reflects the joint efforts of not escaped the effects of ICV and the client, Minera Quadra Chile Limitada. this,” Luna highlights. “As This key milestone in ICV’s history has added to our a hedge against potential company’s experience, enhancing its capacity to undertake f luctuations that could other similar projects for Chile’s large-scale mining industry. impact upon project costs www.icv.cl and completion, moves have been made to commit purchase orders and contracts at the earliest stage possible.”

Northern Chile’s geog raphic characteristics, namely the scarcity of water and energy, have also raised several issues.

To overcome these, the project follows the current trend of using seawater in the mining process. This water will be carried by means of a 141 kilometre pipeline with a flow rate of 1500 litres per second. Furthermore, two industrial water supply contracts have been entered into with Aguas Antofagasta and FCAB respectively. Processed at its on-site water treatment plant, this water will be made suitable for human consumption.

Meanwhile, the power required for the project will be generated by a coal-fired thermoelectric power plant located in Mejillones. From here a 140 kilometre long, 220 kilovolt transmission line will supply energy to a primary substation that will also be located on-site.

To date, 2012 has seen the project achieve Flotation cells

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CAT shovel

KGHM Polska Miedz - Sierra Gorda Project several milestones, all of which revolve around the mine area itself. In addition to the mine loop now being in operation, March 2012 saw the start-up of the prestripping stage. Looking towards the years ahead, by the end of 2013 it is hoped that pipeline construction will be complete, plant mechanics in place and the precommissioning stage will have begun.

These events will then be followed in 2014 with the starting up of the commissioning phase, the opening of port facilities and the completion of ramp up operations.

“The project has been progressing as planned and in accordance with the schedule put in place by the joint venture partners,” Luna says. “The project’s critical path remains unchanged with originally scheduled deadlines still maintained and entry into production expected to begin during the first semester of 2014.”

As it relates to the immediate future, the goal for the rest of 2012 is to have the entire necessary infrastructure in place in order to allow the normal development of construction work. This requires the completion of camps, mesh halls, offices, recreational areas and a polyclinic. “In addition,” Luna says, “prestripping, pipeline and civil construction work in dry and wet areas have begun with our own equipment and personnel, while the project will continue to meet its expected output levels.”

For more information about KGHM Polska Miedz - Sierra Gorda Project visit: www.quadrafnx.com

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Keeping it simple Kudumane Manganese Resources is developing its mining operation in one of South Africa’s poorest regions, and is keeping simplicity and the local community at its core

written by: Becky Done research by: Jon Bradley

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Kudumane Manganese Resources

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Sechaba Letaba, CEO

Kudumane Manganese Resources

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outh Africa-based Kudumane Deepwater Port becomes operational Manganese Resources is the outside Port Elizabeth, it will become latest mining operation to enter the preferred exit point for the mine’s the competitive manganese ore product. Production of manganese ore industry. Located near Hotazel from the project is expected to eventually in South Africa’s Northern Cape Province, increase to two million tonnes per annum the mining operation will produce and later 2.5 million tonnes per annum, manganese from the rich deposits that with the introduction of underground characterise the region. The project is operations in 2019. The expected life of located about one kilometre from Hotazel the mine is 10 to 15 years for the open pit and about 50 kilometres from Kuruman. or combination mining operations, after Kudumane Manganese Mine is owned which underground mining will continue

by Kudumane Manganese Resources, for an estimated 30 years. a joint venture between two BBBEE The project infrastructure consists of compa n ies, Dirleton an open pit or combination Minerals & Energy and the open pit and underground Northern Cape Manganese mine, a crushing and screening plant, mine Company (NCMC), which own equal shares in the residue disposal storage and firm. Hong Kong-based facilities, and various other manganese multinational support infrastructure Asia Minerals Limited and services.

Cost of Kudumane (AML) owns a 49 per cent The project will be in project full production by the share in both companies, end of 2013, with the first and is the project’s technical partner. AML will market and sell the phase being bulk sampling activities manganese globally and has arranged all followed by production. “We are currently project financing in its role as technical at the first stage of the project, which and marketing provider. Bold Moves and is pursuing bulk sampling,” explains NWC Manganese are also shareholders in Kudumane Manganese’s project manager NCMC and Dirleton.

Schalk van der Merwe. “That will be The R1.5 billion project will consist of complete by December. Then we will be both open pit and underground mining, building the rest of the infrastructure, with the intention of shipping an initial including a railway siding for future 1.5 million tonnes of manganese ore loading of the manganese, housing, offices, out by both road and rail to the harbour workshops and stores. We’re just spending at Port Elizabeth each year. When the money at this stage!”

Coega Industrial Development Zone and The infrastructure to be developed as

r1.5

Billion

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BLUE CHIP MINING & DRILLING

2009 Fabriek St, Kuruman Industrial Area, Kuruman Email: martin@bluechipmining.com | Telephone: 053 7122858

Kudumane Manganese Resources

Traditional dancers - Setswana

part of the project includes 5.3 kilometres of railway siding, an automated 3,500 tonnes-per-hour rapid loading station, road trucks with a loading capacity of 300 tonnes per hour, a crushing and screening plant, and storage facilities to handle the mine’s residue. Plans are also underway to construct a sintering plant, which will allow the mine to ship out the ore after undergoing this pre-smelting process.

Other infrastructure being developed includes roads and general developments in and around Hotazel such as housing, schools, and a hospital.

As the project is located in the remote and harsh environment of the Kalahari Desert, bulk services had to be laid down from scratch at the outset. “That has been our biggest challenge,” admits Van der Merwe, “getting bulk services in such as

“The operation is a simple set-up with no major technology involved—it is a simple blast-and-haul mining process” BE Weekly | 55

RESTORING BUILDINGS, BUILDING COMMUNITIES

Tel: (051) 403 0400 Fax: (051) 4030450 info@ruwacon.co.za www.ruwacon.co.za P.O.Box 13596, Noordstad 9302, 6 Mimosa Street, Bloemfontein

Heard Tell us about your company and we’ll tell everyone else www.bus-ex.com

Kudumane Manganese Resources water and electricity.”

Ho w e v er, d e s pit e Ruwacon has a reputation for being a dependable, the challenges, it is the professional company operating according to industry simplicity of the project standards, international best practices and uncompromised that defines it, says Van business ethics. Ruwacon recently entered the mining der Merwe. “The operation industry by engaging in a civil earthworks project with is a simple set-up with Kudumane Manganese Resources in preparation for the construction of a railway line and internal roads. no major technolog y Our scope of expertise ranges from construction, involved—it is a simple maintenance and repair as well as civil contracting blast-and-haul mining making us one of the preferred construction companies process. The plant itself is to a growing number of clients in the mining industry. also very simple. There’s Ruwacon’s mission is to complete every project no technology involved successfully, within budget, on schedule and with in the first phase: for the impeccable quality. www.ruwacon.co.za next five to seven years, it is a simple process. This keeps the level of capital investment low as well.”

The operation occupies one of the poorest regions in the whole of South Africa, and Kudumane Manganese hopes that its social and labour plan will have a positive impact on surrounding communities. “The social and labour plan makes provision for many different activities we must undertake according to the Mining Charter in South Africa.”

Under the Mining Charter, mines should work together and pool their resources in order to maximise their benefit to an

Ruwacon

2013 End of year target for full production Minister Shabangu

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individual area, he explains. “So we’re now negotiating with other mines to see what is already in place; and at the same time we’re talking to local communities to see what is outstanding and what we still need to do.”

The company has recently met with the regional council to identify the activities in which it can participate. The mines in the area are looking at developing Hotazel; as well as the housing, schools and hospital, the mines hope to bring in a better water supply, as the current supply is not sufficient for the population. Also on the agenda is the renovation of electrical power lines. “This is the poorest part of our country, and anything that is of assistance is greatly appreciated by everybody,” says Van der Merwe. “There’s a lot of participation locally and a welcoming environment, ensuring everybody benefits.”

The company also has a robust plan in place to employ local people. “As part of our social and labour plan, 80 per cent of our skilled workers must come from the local community; then we aim to ensure that through skills transfer, 100 per cent of our workers will come from the local community in the future. We will achieve this through giving out bursaries, training, or whatever is needed; but eventually that’s our goal.”

The bulk of workers will be sourced from within the region’s John Taolo Gaetsewe District Municipality. Once fully operational, the project will give preference to the locally unemployed wherever possible, and only where local employees cannot be sourced with the requisite skills and experience will national recruitment take place.

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Kudumane Manganese Resources

Suzuki, the late Mr Sisulu, former chairman of KMR, Minister & others

Specific areas that will benefit from the employment of between 200 and 300 people directly and up to 300 indirect employees will be the Joe Morolong Local Municipality, the District Management Area, Hotazel as a whole and thereafter the rest of the province. Up to 500 people will be employed during the construction phase.

In terms of the environment, the operation’s simple nature means that risks are fairly easy to assess, says Van der Merwe. “In essence there’s not a lot of waste from our mine. However the biggest risk is fuel: we store a lot of fuel on-site for our equipment, so that’s our biggest environmental risk. The rest is simple,

it’s all from the mine—issues such as dust, for example. But there’s no hazardous material from the mine itself.”

The key to success on this project has been keeping things simple and costs down, says Van der Merwe. “The biggest thing for us is making sure our capital is low. You need to be a low-cost producer and if you can’t do that you’ll be priced out of the market. In a sense, there is nothing exceptional about our project: it’s really very simple,” he concludes.

For more information about Kudumane Manganese Resources visit: www.kmr.co.za

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China Africa Resources

A sign of things to come

Chief executive officer Roderick Webster explains how the company’s operation in Namibia can be a springboard to greater success for not only China Africa Resources, but its parent companies as well written by: Will Daynes research by: Jeff Abbott

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The metallurgy of the mine is complex, with multiple product streams

China Africa Resources

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ocated on the southwestern tip of these resources, it was determined that the Africa, the dry lands of Namibia estimates made within the CPR could be provide not only a home to more established and validated through the use than 2.3 million inhabitants, but of 3D modelling of the available data and to a bustling mining sector that through diamond drilling. provides approximately 25 percent of the While the metallurgy of the mine is country’s total annual revenue. The fourth complex, with multiple product streams, largest exporter of non-fuel minerals the significant advances that have been in Africa, and the world’s fourth largest made over the past three decades in producer of uranium, Namibia is also rich extractive metallurgy mean that it is in the likes of gold, tin, tungsten, copper, highly likely that any future metallurgical lead and zinc. plant will have a vastly different design, It is in the northwest of the country that process detail and recovery to that which China Africa Resources (CAR), a joint venture was previously in operation. company between ECE and The geolog ica l Weatherly International, component of the feasibility can be found undertaking study comprises shallow work on the Berg Aukas RC drilling to assess the project. An active explorer upper regions of the project, in Namibia, ECE holds 18 diamond drilling of the Proportion of Namibia’s exploration rights that cover deeper resources to validate total annual revenue an area of approximately and extend the historical derived from mining resource, the compilation 7146 square kilometres and of data and subsequent is the majority shareholder of CAR, owning 65 percent of the business. development of a complete 3D computer Weatherly, meanwhile, has a 25 percent model and the reporting of all resources. shareholding. Its role in the joint venture “The base strategy, as was set out is to provide all the necessary management during the early days of the joint venture,” services to CAR for an interim period. explains chief executive officer, Roderick According to a competent person’s Webster, “is for CAR to take the Berg report (CPR) carried out on the project, the Aukas project through to its feasibility historical non-compliant mineral resource and then to see if it can be developed into estimate for December 1977, just prior to the a small lead-zinc mine. To this end, we mine’s closure, indicated that significant, have been extremely busy over the last high grade, lead, zinc and vanadium year, drilling close to 6000 metres of mineral inventory remained in the ground. deep, diamond drill holes and uncovering While insufficient data previously existed a number of exciting intersections.” to properly establish the exact location of Managed by Weatherly, pursuant to

25%

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The Berg Aukas project is recognised as a very high grade mine

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the terms of its management services agreement, the feasibility study is expected to cost $3 million over the full period.

“With the drilling phase now close to completion,” Webster continues, “we are proceeding into the metallurgical phase of the study. Upon determining what kind of flow sheet we will require, we can then complete the feasibility study. This we hope to have achieved by the end of 2013.”

Recognised as a very high grade mine, the Berg Aukas project is seen as a small, yet very profitable development. More importantly to CAR, it is an undertaking that it hopes will establish the business within the market as good, competent operators, while helping to further build on the relationship between Weatherly and ECE. “It is quite clear to us,” Webster states, “that ECE has aspirations on being a much larger player on the world stage and is actively seeking ways to achieve that goal.”

One of the ways in which ECE is doing so is by seeking partners that understand what it is like to operate in core western markets. As such, the partnership between ECE and Weatherly is very much a mutually beneficial arrangement in that the latter is quite familiar with the ins and outs of being a publically listed company on the London Stock Exchange and can claim to be experienced hands when it comes to conducting operations throughout Africa.

While the immediate focus for CAR revolves solely around the successful development of the Berg Aukas mine, its long-term strategy is to build a profitable

China Africa Resources

Aerial Berg Aukas

and widely based resource business that may ultimately include the acquisition of additional assets from Weatherly, ECE or through third parties.

“As far as the immediate future is concerned,” Webster says, “I do not see the demand for minerals diminishing, particularly with all the major global markets remaining major consumers of various metals. While it is true to say that it is becoming more and more difficult to mine these metals and that they are increasingly being sourced from countries that have a fairly risky profile, with demand still exceeding supply the mineral resources market has a strong future ahead.”

One of the possibilities for CAR in the years to come could see its parent

companies turn their attention to the potential amalgamation of a number of assets. “It is well known,” Webster concludes, “that ECE has been exploring Namibia for quite some time and boasts a number of projects that it is keen to expand upon. Together with its access to projects in China and other countries such as Australia, what we potentially envision over the course of time is a consolidation of those assets to form a much larger, successful company with a view to a full London Stock Exchange listing.”

For more information about China Africa Resources visit: www.chinaafricares.com

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Top of the Chief executive officer Harri Natunen explains how the company is using bioheapleaching technology to get the most from its low grade nickel deposits written by: Will Daynes research by: Jeff Abbott

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Talvivaara Mining Company

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hough it is perhaps not the first country that one associates with the industry, Finland’s mining history in fact dates back to 1540. Today the raw material base for its metal industry is made up from the exploitation of nickel, copper, cobalt, zinc and lead ores, as well as chromium, vanadium and iron deposits.

Located in Sotkamo, in the east of the country, Talvivaara boasts two metasedimentary hosted, low grade nickel sulphide ore bodies, Kuusilampi and Kolmisoppi. Originally discovered by the Geological Survey of Finland in 1977, the deposit was at first deemed to be too poor for existing technology. It was determined at this early stage that the only process that would be capable of concentrating the nickel enough would be bioheapleaching, a technology which, at that point, remained untested in such a scenario.

Obtained by Outokumpu Corporation, the mining rights were eventually sold to one of its former employees, Pekka Perä. It was Perä’s purchase of the rights that gave birth to the Talvivaara Mining Company in 2004.

Today an internationally significant base metals producer, with its primary focus on nickel and zinc, the company’s Kuusilampi and Kolmisoppi deposits are now recognised as comprising one of the largest known sulphide nickel resources in Europe. Their combined contents of 1.1 billion tonnes of ore, in measured and indicated categories, are thought to be sufficient to support extensive production levels for several decades to come.

Talvivaara supplies metal intermediaries

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Mine site

Talvivaara Mining Company

to companies with metal refining operations.

Arguably its most important contract to date is the ten year off-take agreement it has entered into with Norilsk Nickel Harjavalta.

This agreement involves the delivery of the entire output of the mine’s nickel and cobalt production at market prices. A similar long-term partnership was established in November 2010, with the company entering into a zinc concentrate streaming agreement with Nyrstar NV. The terms of this contract involve the delivery of all of Talvivaara’s zinc concentrate to Nyrstar up to 1,250,000 metric tonnes.

“What makes the work we carry out unique,” explains chief executive officer, Harri Natunen, “is the fact that we apply

Dumpers

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bioheapleaching technology to extract nickel from the ore.” Commonly used in copper processing, particularly in Central and South America, bioleaching is a process in which metals are leached from ore as a result of a bacterial action. Triggered spontaneously by micro-organisms in the presence of air and water, commercially applied bioleaching technologies replicate the same natural phenomenon, but accelerate the process in order to speed up metal recovery.

“What we do is,” Natunen continues, “we mine the ore, crush it down in four stages to a size of minus 15 millimetres and then utilise a process of agglomeration using a pregnant leach solution.” After the agglomeration process the ore is conveyed and stacked

Talvivaara Mining Company

“The company’s Kuusilampi and Kolmisoppi deposits are recognised as comprising one of the largest known sulphide nickel resources in Europe” eight metres high on the primary heap pad to undergo one and a half years of bioheapleaching. The heap pad is equipped with piping and laid on the bottom of the pad, through which low-pressure fans supply air to the stacked ore. From the top, the heap is irrigated with leach solution, which is recycled through the heap until its metal content is sufficient for metals recovery.

Following its time on the primary pad the leached ore is then reclaimed, conveyed and re-stacked onto a secondary heap pad, where it is leached further to recover metals from those parts of the primary heaps where the leach solution couldn’t previously penetrate. After secondary leaching, the barren ore remains permanently on the secondary heaps.

“The total leaching process,” Natunen says, “takes approximately five years, at which point the pregnant solution is collected, with the majority being pumped to a metals production plant where it is infused with hydrogen sulphate. These materials are precipitated as sulphites and then, through a combination of dewatering, thickening and filtration the final product is processed ready for delivery.”

Bioheapleaching was chosen as the preferred technology for the Talvivaara mining project based upon its favourable capital and operational cost profile. A low cost process requiring only air, sulphuric acid, water and microbes to work, bioheapleaching has lower capex and opex than traditional grinding and flotation processes. It is also widely recognised as a cleaner and more environmentally friendly process.

The concept of responsible mining exists

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throughout Talvivaara’s business operations and incorporates three dimensions of corporate social responsibility, these being economic, environmental and social aspects.

Across its operations the company seeks to meet the challenges associated with achieving sustainable development.

The primary objective of Talvivaara’s environmental management is to ensure the sustainable and economical use of natural resources, while at the same time minimising any adverse effects on the environment that could be caused by its mining operations.

From a social perspective, the company is equally as committed to the development of its employees, encouraging them to acquire

and develop the necessary professional skills.

“In all that we do,” Natunen states, “our aim is to be a pioneer within the mining industry. As a young company we have had the opportunity to develop responsible best practices from the offset, while introducing environmentally efficient technology at every possible turn. As a result of a combination of an eco-efficient metals recovery process, the very best new technology, an advanced operating environment, and a high level of expertise, we are in a prime position to be able to grow into our desired role of being a leading player in responsible mining.”

Today, the company finds itself on the cusp of making its first test delivery of copper

“Perä has created a company that has incredible potential and the ability to increase its production levels”

Stacker

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Talvivaara Mining Company

The company is in the construction phase of a uranium recovery plant

concentrate, marking another milestone in its short history. In addition to this, Talvivaara has recently entered into a co-operation agreement with Cameco, one of the world’s largest publically traded uranium companies.

This partnership will allow Talvivaara to make use of the uranium by-product which is created during the bioheapleaching process.

Furthermore, the company has entered into the construction phase of its building of a uranium recovery plant. This project is expected to be completed during the first six months of 2013 and will create an additional revenue stream for the business.

“When Pekka Perä first set about developing this operation,” Natunen says, “he worked especially hard to bring together a group of individuals that boast experience

and expertise in different areas of mining, as well as those that specialise in the use of bioheapleaching. In doing so he has created a company that, while still in its ramp-up phase, has incredible potential and the ability to increase its production levels, and achieve the cash-cost position it is targeting. What Perä has managed to do in such a short space of time is already a wellrecognised achievement here in Finland, and I’m sure it will only continue to garner the attention of the mining world as a whole as time passes.”

For more information about Talvivaara Mining Company visit: www.talvivaara.com

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As t mine ove Zimba

74 | BE Weekly

Caledonia Mining Corporation

golden touch

the developments that have occurred at the Blanket gold er the last several years have proven, the government of abwe is becoming ever-more aware of the important role its mining industry can play in the growth of the nation written by: Will Daynes research by: Robbie Hodgson and Jon Bradley

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Caledonia Mining Corporation

Z

Zimbabwe’s terrain is among the most productive of its kind in the world

imbabwe is, by its own admission, a gold country. In terms of gold yield per square kilometre, the country’s Archaean terrain is among the most productive of its kind in the world. In fact it has been estimated that from the seventh century through to the start of the 20th, when modern mining activity began, some 700 tonnes of gold was mined in what would have been a very crude fashion.

While Zimbabwe does boast a long mining history, many areas still remain that have yet to be scientifically investigated.

Furthermore, many of the modern exploration techniques that have proven to be the catalyst for significant finds elsewhere throughout the world are yet to be adopted by companies operating within the country.

What this does do, however, is provide a number of exciting opportunities for those that do decide to invest in the exploration of Zimbabwean gold.

One such entity is Caledonia, a Canadian registered mining and exploration company with several assets across Southern Africa, including the Nama cobalt-copper project in Zambia, the Rooipoort and Mapochsgronde platinum-nickel projects in South Africa, and the Blanket gold mine in Zimbabwe.

Blanket gold mine is wholly owned and operated by Caledonia’s subsidiary company, Caledonia Mining Corporation, which acquired the mine in April 2006 from Kinross Gold Corporation. Operating at a depth of approximately 800 metres, Blanket is a well-established mine that currently has a production capacity of 40,000

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Caledonia CALEDONIA Mining Corporation MINING CORP tempor incididunt ut labore ounces Caledonian of gold per Mining annum. set in motion a series of Located feature text.........sit in the south-west amet, measures to liberalise et dolore magna aliqua. Ut consectetur the arrangement enimexport ad minim veniam, of the country, 15adipisicing kilometres for producers.

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We are a distributor of leading international brands, providing integrated power, rental, fleet management, product support and logistics solutions. The company was founded in 1902 and has been one of the largest leading Caterpillar dealers for 85 years.

Based in South Africa, Barloworld Power is a leading provider of engineered solutions in the mining sector for custom designed prime and standby electrification solutions driven

by Caterpillar’s extensive proprietary suite of diesel, heavy fuel oil and gas generator engine configurations.Today Barloworld Power’s Cat territorial responsibility encompasses 11 countries in southern Africa, in addition to its dealer coverage in Portugal, Spain, Siberia and

the Russian Far East. Our design teams work side-by-side with our mining clients to develop an optimised package. In some cases, the specification caters for back-up power, and in others, where no grid connection is available, 24/7 continuous operation. For independent power producers (IPPs), Barloworld’s project scope extends to include Cat power stations that serve as dedicated plants to meet private sector as well as public utility needs.

Barloworld Power manufacturers its own low voltage switchgear and synchronisation panels. These are integrated to form a seamless changeover for medium and heavy voltage systems during transition to and from grid connections, where applicable.

For more information visit www.barloworldpower.com

OCTOBER BE Weekly 2012| |792

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Caledonia Mining Corporation

Zimbabwe boasts a long mining history

production capacity from 24,000 ounces of primary crushers. Meanwhile, below-ground gold per annum to 40,000 ounces. works have commenced with the shaft being Recent undertakings have focused concrete lined from its surface collar, down to predominantly on a similar programme a depth of 90 metres, and a surplus mill has involving the upgrade of the mine’s No.4 also been refurbished and installed within shaft and the milling section of the plant, the mine’s metallurgical plant. while at the same time maintaining the During the course of October 2011, the mine’s production levels. To date, surface Blanket gold mine was the recipient of two work on the shaft has been completed, as prestigious safety awards following an audit has the construction of on its occupational safety the winder house and the and health (OHS) policy and installation of a 650 kilowatt procedures by the National winder therein. Other works Social Security Authority (NSSA). This audit also undertaken include the fabrication and installation of covered the mine’s training Ounces per annum a 40 metre high headgear, a and management systems. production capacity of the Blanket mine As a result of the findings 120 metre overland conveyor system and a series of made by the NSSA, Blanket

40,000

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“Caledonia Mining Corporation has identified future growth as coming more from organic expansion, as opposed to acquisitions� gold mine was awarded the gold medal in the mining and quarrying sector in Matabeleland, as well as the bronze medal across all industrial sectors in Zimbabwe.

In June 2012, Caledonia Mining Corporation announced the signing of an agreement with the National Indigenisation and Economic Empowerment Fund (NIEEF) to transfer 16 percent of the Blanket gold mine. At the same time it

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revealed it had been awarded a Certificate of Compliance in accordance with the Zimbabwe Indigenisation Act. The conditional agreement signed for the sale of the 16 percent stake in the mine is valued at $11.742 million in accordance with the Memorandum of Understanding (MoU) that was signed with the Zimbabwean government in February 2012. This previous agreement will see indigenous

Caledonia Mining Corporation

The company intends to increase Blanket’s production levels significantly in the years to come

Zimbabweans acquire 51 percent ownership of the Blanket mine for a paid transaction value of $30.09 million.

Further terms of the MoU include an agreement for the sale of 15 percent of the mine to a consortium of indigenous Zimbabweans for a consideration of $11.008 million and an agreement for the sale of ten percent to the Blanket Mine Employee Trust, a body established for the benefit of both present and future employees of the mine, for $7.339 million. Additionally, ten percent of Blanket is to be donated to the Gwanda Community Share Ownership Trust, which has been established for the benefit of the local community.

For the year ending 31 December 2011, Blanket gold mine’s unaudited revenues

and profit, after tax, were recorded as $56.6 million and $19.2 million respectively. In looking to the future, Caledonia Mining Corporation has identified growth as coming more from organic expansion, as opposed to acquisitions. Accordingly it is focused solely on developing existing projects and addressing its properties with a view to increasing its reserves and resources. Depending on the outcome of its forthcoming exploration and feasibility studies, the company intends to increase Blanket’s production levels significantly in the years to come.

For more information about Caledonia Mining Corporation visit: www.caledoniamining.com

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