Export Forum offers insights for mining suppliers
Speakers addressed opportunities in South America, Africa, Mongolia and the U.S. Southwest
The Northern Ontario Exports Forum held June 27th in Sudbury attracted a sold out crowd of mining suppliers anxious to learn about export opportunities around the world. Organized by ONEDC, an economic development group representing the five major cities in the region, the forum featured an impressive list of speakers and panelists who shared their knowledge of mining markets in the U.S., South America, Africa and Asia.
In a breakout session on Mongolia and Australia, for example, speakers Ryan McEachern, managing director of the Mining Suppliers Trade Association of Canada, Will Gove, international business development manager for Minecat, and Neil Robinson, a trade commissioner with Global Affairs Canada, advised local suppliers about the opportunities and how to take advantage of them.
“Oyu Tolgoi is not the only story in Mongolia,” stated McEachern. “There are 103 active projects in the country. Twenty-six per cent are operating, 45 per cent are in the advanced stage and 29 per cent are early stage. That’s a healthy pipeline.
“Fifty-nine companies are active in the region, 77 per cent of the projects are open pit and 12 per cent are underground.”
Oyu Tolgoi, one of the underground projects, has between 6,000 and 7,000 people employed on an orebody the size of Manhattan, said McEachern.
The chances of winning business, however, are often dependent on having a Mongolian partner. But “you can’t just hang your hat with a company,” cautioned McEachern. “You need to show that they’re providing value in the relationship.”
It will also help to have a presence in Khanbogd, 40 kilometres from the minesite, rather than in the country’s capital of Ulan Bator, 12 hours away by road, and to demonstrate that your product or service will shorten timelines for mine commissioning.
Oyu Tolgoi, majority owned by Turquoise Hill Resources, a subsidiary of Rio Tinto, is a 60-year project with the potential to outstrip any of our lifetimes,” said Robinson. “Anyone looking at that market has to be thinking not only about what it takes to get in now, but long term, what does that opportunity look like.”
Ninety per cent of the workforce at Oyu Tolgoi is Mongolian, added Robinson.
“If you’re an expert for Rio Tinto, you’re the best of the best and you’re not there forever. It’s about getting in there and getting the locals trained up. They get trained very fast and they do an exceptional job.”
Will Gove noted that most of the expats working at the site are Aussies like himself, “and interestingly enough, they’ve chosen Australian mining methods, Australian know-how and Australian equipment. I was fortunate to go underground and it looked like Australia. That means that as Canadian suppliers, you need to understand your differentiation points over how Australians do business.
“For example, Australians like to bolt and screen with jumbos, whereas Canadians use a bolting machine, so if you’re knocking on the door and you have the latest and greatest bolting machine, good luck.”
Among the Northern Ontario suppliers that have made inroads into Mongolia with Oyu Tolgoi are North Bay’s Redpath Group, Fuller Industrial, Miller Technology and MacLean Engineering.
Canadian mining suppliers interested in doing business in Australia need to take into consideration the fact that 90 per cent of the country’s underground mines are accessed via declines, said Gove.
“What I found from my experience in Canada is that Canadian manufacturers have rightfully built and designed their equipment and services for shaft operated mines.
“In decline mines, the equipment is usually bigger. For example, underground haulage trucks in Australia are a minimum 65 tonnes. I don’t think you will see a 65-tonne haulage truck underground in Canada.”
Speed is another issue because of the longer distances travelled via ramp access, said Gove. Rubber tire equipment in Australian mines need to offer speeds of 30 kilometres per hour as a minimum.
“Australia is a much easier jurisdiction to sell into than Mongolia, but know that Australia has been mining as long as Canada. I would suggest to Canadian mining equipment manufacturers to take your egos and hang them at the door. A lot of entrepreneurs and equipment manufacturers in Canada rightly believe their products are the best in the world, and why wouldn’t you, but when you show up in a mature market like Australia, be prepared to have significant and deep product differentiation. Otherwise, you’ll flounder in the market.
“Also, be prepared not to do business on the golf course…generally speaking, Australians are very business oriented.
They’re very serious about you showing ROI on your products and services. In Canada, it’s much more relationship oriented.”
One big plus for Northern Ontario suppliers is that there’s very little equipment manufacturing in Australia – not like in Sudbury, said Gove.
The breakout session on Africa with panelists Noam Sugarman, a trade and investment specialist with the Ministry of Northern Development and Mines, Wayne Floreani, vice-president of MineAfrica Inc., Carlos Miranda, a trade commissioner with Global Affairs Canada, and Eric Boucher, CEO of 48eNord International, highlighted the challenges and risks of doing business on the continent.
Black empowerment rules requiring 26 per cent or more ownership of companies doing business in South Africa together with power and water shortages impact on the attractiveness of doing business in the country. Threats of expropriation of agricultural land without compensation could also have implications for mining.
In neighbouring Zimbabwe, the country’s long serving despot Robert Mugabe is gone and there’s a new president, Emmerson Mnangagwa, but he was the target of a failed assassination attempt in June.
The mineral-rich Democratic Republic of the Congo recently changed its mining code, hiking royalties, taxes and mining company obligations, and following a battle with the Tanzanian government over taxes and an export ban on concentrates, Barrick Gold subsidiary Acacia Mining is considering a fire sale to a Chinese company.
Mining suppliers interested in targeting Africa need to understand that there are 54 countries on the continent, noted Floreani, “so be specific.”
Francophone West Africa offers opportunities for French-speaking Quebec and Northern Ontario suppliers, and other countries such as Ghana and Botswana achieved respectable rankings in the Fraser Institute’s 2017 ranking of jurisdictions for mining attractiveness.
Victor de la Cruz, general manager of Minsur’s San Rafael tin mine in Peru identified environmental sustainability, safety, advanced technology and price as the main factors influencing procurement at his mine.
“We like working not only with companies that have offices in Lima, but with companies that will work with us at the minesite at 4,000-metre altitude,” added de la Cruz. “Another important fact is that companies in Peru make their budgets in August and September, so Canadian companies should try to get us their information before that. Otherwise, they’re going to miss the boat.”
Also addressing opportunities in South America was Bill Shaver, COO of INV Metals, a Canadian company focused on developing its Loma Largo gold project. Sandwiched between Colombia and Peru, Ecuador has excellent transportation and power infrastructure, uses the U.S. dollar as its currency and is receptive to mining, said Shaver, pointing out that it’s a resource-rich jurisdiction that has been largely overlooked.
Additional breakout sessions focused on Chile, Colombia, Argentina and Arizona.
A good starting point for mining suppliers interested in exploring export opportunities would be to attend and take advantage of some of the upcoming international mining shows, said the MSTA’s McEachern, who will be leading Canadian missions to ExpoMina in Peru, China Mining in Tianjin, the Congreso Internacional Minero in Hermosilla, Mexico, the International Mining and Machinery Exhibition in Kolkata and Bauma in Munich, Germany. For dates and further information, go to mstacanada.ca.