Covid-19 disruption and commodity price volatility have caused delays to projects in all industry verticals. Despite the turbulence, mining projects appear to be better placed than most to ride out the crisis, writes David Kershaw.

Bertling said that mining projects are picking up again in South and Central America.

Unprecedented market volatility has placed a huge burden on all sectors of the heavy lifting and project logistics supply chain. Oil and gas, a key generator of cargoes for the heavy lift sector, has been hit hard by recent price fluctuations and capital expenditure budgets have been slashed. However, there are indications that mining projects have been somewhat less affected by the current crisis.

According to Alberto Morante, chartering director for Bertling in the Americas, mining projects that were postponed as a result of Covid-19-related disruptions are picking up again in South and Central America, as well as in Africa.

“There are quite a few mining projects in the pipeline for which we tendered for logistics [resupply] services in Africa,” said Patrick Golden, regional director of Bertling in Africa. For instance, rising demand for metals used in batteries is driving the development of cobalt projects in the DRC, while lithium, nickel, graphite and manganese projects are developing in Zambia.

Mining transition

Mining projects often require a huge input from logistics services, for which technological advancement is posing new challenges. Morante said that a transition to digitalised mining operations is under way, resulting in increased demand for IT services and solutions.

Another trend is a move to one-stop-shop service providers, which need to be located in close proximity to clients in order to resupply stock. Golden explained that independent strategic partners, who are well placed and have intimate knowledge of the territory are considered for joint ventures, while investment in infrastructure is also analysed.

Morante added: “We need to keep local presence with our supervisors, heavy haulier experts and being in the field, this is work we cannot simply sub-contract.”

Rising demand for metals used in batteries is driving the development of cobalt projects in the DRC, while lithium, nickel, graphite and manganese projects are developing in Zambia. – Patrick Golden, Bertling

In terms of the African projects Bertling has in the pipeline, Golden said: “We have tendered as a logistics services provider for mine expansion projects in DRC, tendered for a demobilisation and mobilisation project for moving mining equipment from Zambia to Ghana, and two separate mining resupply projects in Ghana.”

Bertling has also bid for a logistics services contract covering all capital equipment and other goods to and from a mine in Mozambique, for which it is awaiting the outcome.

Still, despite promising signs, working in Africa is not without its risks. Golden drew attention to Verisk Maplecroft’s 2019 resource nationalisation index (RNI), which considers issues such as regulatory climate, increasing tax pressures and changing contractual terms in 30 countries, including 21 major producers of oil, gas and minerals.

‘Extreme risk’

RNI ranked the DRC top of the ‘extreme risk’ category with Tanzania third, Zimbabwe fifth, and Eswatini (formerly Swaziland) in seventh position.

“The market risk is inherent which makes the taking of opportunities fraught with challenges for all stakeholders,” Golden went on. “Approval of partners, suppliers and support is prioritised through stringent due diligence procedures. This is backed up by continuous management of the relationships with clients and with suppliers. Independent third party audits are carried out in order to identify any unmitigated risks, and to test the levels of governance and compliance,” he added.

Philippe Somers, ceo of ACE 54 – a Dubai-headquartered company that enables niche and medium-sized international project forwarders to participate in African door-to-door tenders – believes that the impact of Covid-19 on its business has “not been too bad”.

According to Somers, Covid19 has demonstrated that the early stages of a deal can be carried out remotely. “You do not need to travel to find a guy who is not interested in your business,” said Somers. “Traditionally we have to meet and travel a lot. If you need to close a deal, people still need to meet. I still believe in face to face.”

In terms of project logistics activity in Nigeria, for instance, Somers said that the impact of Covid-19 was immediately felt in the upstream energy sector. But, “eventually everything will still happen. Nigeria needs the investment and the companies need the business.” He noted that work has been delayed rather than cancelled.

Furthermore, ACE 54 continues to receive enquiries for solar and other renewable power generation projects in the West Africa region, he added.

It is still too early to predict how quickly business might return to normal. The key will be the extent of any second wave of Covid-19 later this year. If well controlled, then business could be back to normal in 12 to 18 months. Promisingly, Somers said that unlike the oil and gas sector, the mining business in West Africa has held up relatively well. “I am optimistic that mining can recover faster than oil or gas.”

We recently bid on a mining project in Chile for which only 5-10 percent of the cargo would come from overseas; usually high-tech parts come from the Far East – Alberto Morante, Bertling

Bertling has tendered to supply logistics services for a number of mining projects in Africa.

Americas business

In the Americas, meanwhile, the mining sector has been a welcome source of logistics business for Bertling in recent years. It is currently executing various projects across the region. Among them is a gold mining contract in the Dominican Republic, which runs for several years, covering contract logistics and resupply services for mining equipment, mining spare parts and materials from the USA and other worldwide locations.

Bertling has similar contracts with thermal coal mines in Colombia, which started in 2003 and 2006 respectively and are still running. In Chile, Bertling has been active for two years at a major copper mining project, said Morante. “This is a highly modularised project with lots of over-dimensional loads. We are responsible for the full logistics scope of international and domestic transports, heavy pieces, structures, pipes, etc.”

Among various trends emerging in the region, he highlighted the growth of local sourcing, and the importance of having a strong local presence to support these operations – particularly in Chile, Peru and Colombia.

“We have experienced an increasing trend of mining equipment being produced locally in the related country, for example, steel production in Chile or Peru. This is good for the local economy. Nevertheless, this leads to increased demands for local/inland logistics services.

“For instance, we recently bid on a mining project in Chile for which only 5-10 percent of the cargo would come from overseas; usually high-tech parts come from the Far East,” Morante said.

He added that some companies move their equipment around from mine to mine (for instance from Africa and Australia to South America) and require end-to-end logistics supervision but, in general, Bertling’s role as a logistics service provider for mining projects in the Americas is changing.

“There are stronger demands for inland logistics services, handling large volumes of cargo (resupply, but also ad hoc) and a stronger demand for IT solutions and digital processes, which are just starting to kick-off in the mining sector,” Morante said.

This article has been taken from the August/September 2020 edition of HLPFI.