Bucking the trend on shared mining risk

In our experience, there are many logical reasons why contractors working on remote open-pit mining projects in complex orebodies may not have an appetite to share mining risk with the client, much of which has to do with the conventional unit rate contract, gearing and geology. 

Unless a considerable volume of detail was provided at the tender stage, which depicts with a high level of accuracy the various mining stages, stripping ratios, etc., planning the precise gearing of mobile mining equipment and associated resource requirements, are generic. Moreover, subject to those above, establishing equipment and resources in logistically remote mines is more economical when the once-off establishment of mining resource requirements is based on the average stripping ratios over the contract term.

 

In those instances mentioned above, in a typical conventional unit rate contract, and once all the equipment is delivered, mine planners have to consider the production capability of contractors' fleets to avoid the costly standing time of equipment. Moreover, few contractors will allow equipment to be parked-up and not be compensated since these machines would earn revenue elsewhere. Considering only a limited number of factors, like those above, it is evident that due to the lack of alternatives, by no fault of theirs, the contractor's gearing may take precedence over the economical mining requirement of a complex orebody.  

 

In the case of a unit rate contract, and let's say the client at some point in time wishes to reduce the stripping ratio, the contractor is once again caught between a rock and a hard place and should consider either an increase in unit rate and or else remove resources from the mine. Consequently, it is unfortunate that the widely used conventional unit rate contract hardly leaves room for risk sharing with the Client.

 

TacminMadini Australia specialises in engineering, project delivery and operations management for complex open-pit mining and infrastructure construction challenges. Unlike the conventional contractor-client model, our services are structured as an extension of the owner's team with a purpose to:

 

  • Support open-pit mine owners when projects are exposed to challenges and risks associated with capital and operating costs, delivery or performance.

  • Share mining risks with our Clients using our engineering know-how and consultancy expertise to design, build, operate, train and hand over mining operations that are engineered for safety and optimal sustainable efficiency. 

  • Introduce our services on such a basis that our customers will benefit from improved operational performance and reduced mining costs from the onset. (scalability of services)

  • By partnering with you from inception through operations, our teams build a thorough picture of your assets and enable us to operate and train personnel until handover, whereupon we maintain by way of project controls.