Logistics service for the mining industry is much more than just delivering consumables
By Simon Walker, European Editor
Today, the situation is often rather dif-ferent. Mines are still being discovered and developed in remote places, but the operating philosophy has changed. On the one hand, mining companies are no longer willing to invest in community infrastructure to support mines that may have a lifetime of less than 15 or 20 years. On the other, miners and their families have higher expectations in respect of the social amenities, school-ing, medical care and entertainment than are often available in the conventionally perceived ‘mining town.’
The solution: fly in-fly out (FIFO), which clearly has cost implications for the mining company in terms of air trav-el, but saves on capital investment in long-term infrastructure. For the miner, home remains in the populated parts of Western Australia, Queensland or Alberta, with alternating periods of work at the mine and relaxation in the family environment. Recent statistics suggest that nearly half of Australia’s mining workforce now operates on a FIFO basis, a change-around that has brought big opportunities for companies to offer services ranging from complete camp management to supplies handling and transport, often over long distances in difficult conditions.
Today, the logistics business is firmly established in the mining psyche. This is no longer merely shipping supplies and equipment—such as dinner plates and complete steam pumping engines from the U.K. to Peru or Mexico—but the pro-vision of a complete range of services on a long-term contract basis.
Camps to Suit the Situation
The image of the grizzled prospector or grubstake miner sitting outside the log cabin he hewed from the virgin timber around his camp may be an enduring one, but bears little relationship to the standard of camp facilities available to— and expected by—exploration and min-ing workforces today. A high standard of comfort and cleanliness is required, albeit tempered by realism in relation to individual site circumstances, and if this is not met, the shortage of skilled labor in many major mining countries means that the workforce may be all too willing to move elsewhere. If for no other reason than keeping a stable workforce, then, companies have to provide not only suit-able accommodation, but also good-qual-ity service to go with it.
The design of exploration and mining camps has progressed a long way in recent years, as expectations have increased. True, early-stage prospecting camps may still be rudimentary, but fun-damental standards are now much high-er than ever before, even in tented accommodation. The level of provision of facilities all depends, of course, on the stage to which a project has progressed: there is little point in kitting out a home-from-home camp if the only task in hand is to take grab samples during first-stage prospecting. Indeed, a project at this stage may be better supplied from the relative comfort and security of a local community, rather than having to rely on its own facilities. It just depends on the location and the geography, as well as the budget.
Progress a project a stage further, however, and the need for easier access to work sites for geologists and drill crews becomes more pressing. There is, after all, little sense in incurring long travel times every day between accommodation and drill pad, especially when time is money and investors are eager to see assay results. Even so, luxury is hardly the aim here, although clean facilities for catering and off-time hours are essential, as is the provision of a communications system that can allow geologists to trans-mit field data quickly and securely back to the project engineering office.
Pile more people into a project, and the need for a fully serviced camp becomes increasingly important. Costs are obviously greater, but then the oppor-tunity for the prospect to become a re-source is higher as well. Construction, on the other hand, brings its own chal-lenges, since much of the laborforce used—either for assembling equipment, or for developing infrastructure such as ports, roads and railways—will only be on site temporarily. In some cases, it may be more cost-effective to transfer camp use from construction to operation staff accommodation as needs change, while in others, separate facilities may be deemed more appropriate.
One major difference is that accom-modation for permanent staff is usually allocated to the individual, so that per-sonal belongings can be left securely even when he or she is off-roster. Accommodation for contractors’ staff, on the other hand, is more often allocated on a needs basis, so an individual return-ing from time off may well not have the same room as on the previous visit. Contractor accommodation is also typi-cally less well-equipped, reflecting both the temporary nature of construction con-tracting, and the need for mining compa-nies to provide a standard of site accom-modation that will help retain key per-sonnel. With high staff turnover rates typ-ical of FIFO operations, it behooves com-panies to look after their people.
One option for companies who are in need of temporary housing for construc-tion staff is to block-rent from an existing supplier. This will, of course, only be pos-sible where accommodation facilities already exist, although in areas where a number of major minerals-based devel-opment projects are running, this type of infrastructure may indeed be available.
As an example, in June 2011 Rio Tinto took a 12-month contract with the Western Australian accommodation oper-ator, Fleetwood Pty Ltd., for a minimum of 350 rooms at its Searipple village at Karratha, with a rolling option to extend the term for further six-month periods. With more than 1,500 rooms, Searipple is one of the largest accommodation vil-lages in the state, and was built to serv-ice construction personnel working on both the Pilbara iron ore projects and off-shore oil and gas developments.
Fleetwood claims to be one of Aust-ralia’s largest specialist manufactured accommodation providers, and has undertaken full design-and-construct contracts for camps for up to 2,000 people. Mining-sector companies in its client list include Alcoa, BHP Billiton, Fortescue, Karara Mining, Rio Tinto, Sino Iron Ore and Worsley Alumina, as well as EPCM contractors such as Bechtel.
Operating world-wide, the ATCO group offers mine and construction camp buildings within its extensive port-folio of structures. Among the projects undertaken by its Australian subsidiary, ATCO Structures & Logistics Pty Ltd., have been a 20,000-person work-hous-ing complex in the United Arab Emirates and a 600-person mining camp for Xstrata Nickel’s Koniambo nickel project in New Caledonia.
The company’s Koniambo contract was not its first in New Caledonia, how-ever, since in 2002, Inco (now Vale Inco) awarded it a contract to design, manu-facture and install a 2,500-person camp for the Goro project. ATCO notes the site was remote and did not have services such as power, water and electricity, while the potential for regular heavy rain was a key factor in designing and in-stalling the facility.
ATCO built about 400 modular units and more than 200 knockdown units at its plants in Australia, with the units shipped to New Caledonia and installed by local contractors. Capable of being expanded to house 3,600 people, the camp was designed for the construction workforce, with sleeping, dining, recre-ation, medical, laundry and administra-tion facilities.
One of Vale Inco’s other main projects has been the development of its Long Harbour nickel-processing plant and port to handle the output from Voisey’s Bay in Newfoundland. The company awarded the contract for the supply of its accom-modation for the project to the Canadian subsidiary of Norway’s Malthus AS. Malthus Canada reported at the end of 2011 that the first part of the camp, con-sisting of 800 rooms and associated common-use areas, was then in use, with the full 1,050-person capability sched-uled to be operational by spring this year. In 2010, Vale Inco contracted catering and site services for the camp to ESS, a subsidiary of the Compass Group, for a three-year period. The contract included establishing the camp, with Malthus Canada acting as a subcontractor for sup-plying the actual buildings.
Camp Management Services
Having the structures for a mining or exploration camp supplied and built is just one aspect of camp operation, with many companies preferring to contractout the day-to-day management as well. E&MJ sought the views of one gold miner, Randgold Resources, to find out what its experience has been.
Randgold Resources has producing operations in Mali and Côte d’Ivoire and is currently developing the Kibali project in northeastern DRC in joint venture with AngloGold Ashanti. The company’s group supply manager, Ken Green, explained that construction of an 800-person camp at Kibali is now under way. When asked about the length of time needed to design, find a supplier and commission a camp like that, he said a six-month lead time was needed. “Always learn from past experience,” he said. “We have used flat-pack prefab accommodation which is cheaper and quicker to erect—and is also more flexible.”
Looking at the benefits of having an outside contractor to supply mine camp services, Green said: “We are a mining company who believes in ‘partnerships’ with the best people qualified to do the various aspects of operation. We link up with the best logistics company in the region, the best possible trucking compa-ny, the best possible camp management company, and so on. We stick to our own knitting and contract out to specialists.”
This approach includes security, he added. “Security is not our specialty so we contract to a company conversant with the environment and society we are going to be operating in. We expect the countries we work in to provide the nor-mal social safety (policing) to ensure our ongoing operations, so we ensure that we have a security service that is solely geared toward access control and the protection of our assets.”
At the moment, Ghana-based All-terrain Service Group (ATS) is the sup-plier of catering and camp-cleaning services at Kibali. The company has pro-vided catering and hospitality services in Africa since 1996, and today operates in Burkina Faso, Côte d’ Ivoire, Ghana, Liberia, Mali, Nigeria, Sierra Leone, Tanzania, Zambia and DRC. Its mining-sector client base includes Newmont, Gold Fields, Kinross Gold, Barrick, First Quantum Minerals, African Barrick Gold, AngloGold Ashanti, Sierra Rutile and Severstal, with the company claim-ing to provide catering for more than 30,000 people a day.
Aside from catering, ATS’s services include housekeeping, facilities manage-ment, maintenance, communications and community relations. Garden main-tenance is also an important aspect for some projects, not only for aesthetic pur-poses but also as a means of supplying local fresh produce.
Shanghai-based Aden Services is also moving into Africa, having established a core business area for its remote project management services in the Far East. Having recently opened new offices in both South Africa and Guinea, in March Aden won a contract from Dubai-domi-ciled Africa Middle East Resources to provide full camp management and pro-curement services at five locations in Guinea. Privately held AMER is reported-ly evaluating bauxite, iron ore and gold opportunities in the country.
Other new contracts for Aden include the provision of furniture and camp equipment for a new 200-person camp being built by Hunnu Resources in Mongolia. Aden is also providing general assistance for setting up the new camp as well as supervision for an existing facility. Now owned by Thailand’s Banpu, Hunnu is evaluating coal resources in Mongolia.
In the Philippines, late last year Aden received a new contract from Sagittarius Mines to provide services at the Tampakan copper-gold project. The con-tract scope covers foodservice, cleaning and housekeeping, laundry, maintenance and services such as reception, land-scaping, pest control, waste management and first-aid facilities for the project’s 150-person camp. Aden is also providing Gold Fields with facility management and procurement services at its 100-per-son camp at the Far Southeast project in the country.
Other mining-sector companies that use, or have used, Aden’s remote-site services include BHP Billiton (Mt. Nimba, Guinea), Anvil Mining (DRC), CGA Mining (Philippines), Eldorado Gold (China), Rio Tinto (Mozambique) and Ivanhoe Mines at Oyu Tolgoi in Mongolia.
Bringing in the Heavies
With mining projects being established in ever-more remote places, actually supply-ing heavy machinery to site can be a major challenge. Air-cargo is one option, although this clearly has substantial cost implications if a large tonnage has to be transported. From an historical perspec-tive, it is almost unbelievable now that in the early 1930s the Bulolo goldfield in Papua New Guinea was opened up entirely by air transport, with complete dredges being flown in in pieces to be reassembled on site.
According to author Michael Water-house, the heaviest single item airlifted weighed somewhat over 3.75 mt, above the nameplate capacity of the largest aircraft then available and only made possible by reducing the amount of fuel on board. During the 1930s, the airlift moved nearly 40,000 mt of cargo from Lae to Bulolo, including the compo-nents for eight dredges and involving over 14,000 individual journeys. The mine-orientated operation was by far the biggest in the world; in 1936, for example, three-times more air cargo was moved in PNG than in the whole of the U.S.
Clearly, the tonnages involved in con-structing and supplying today’s mining projects, not to mention the size of the equipment involved, makes air transport a last-choice option in most cases. Seafreight and either rail or road trans-port are the mainstays of modern mining projects, as the U.S.-based mining logistics arm of Transera International points out.
The company reports it has moved more than 20,000 mt of mining equip-ment, including SAG and ball mills, from suppliers in Europe, Australia and North America to a gold-mine development project in Zacatecas state, Mexico. The company initially provided the EPCM contractor with sourcing and route survey support, before being awarded the over-all logistics contract for the project. Transera says that it has had full respon-sibility for all aspects of the equipment transport, including arranging shipping and ensuring that the correct documen-tation is in place. Its initial contract involved handling more than $200 mil-lion worth of materials, with a further $100 million add-on to cover the supply of crushing and mill-liner equipment for an expansion project at the mine.
Another project undertaken by the company was the movement of over 800 mt of mining equipment, including excavators, haul trucks and dozers, from Areva’s McLean Lake uranium mine in northern Saskatchewan to the port of Cotonou in Benin, west Africa. The collection of the equipment from the mine was time-critical, Transera notes, because of the differences in road-loading capacities between winter and after the Spring thaw, while the machines’ previous use in uranium min-ing meant that additional documenta-tion was needed.
In the event, the equipment was successfully moved from Canada to Galveston, Texas, from where it was shipped to Cotonou for onward transport to another Areva operation in Niger.
Meanwhile, the projects division of U.S.-based Agility Project Logistics recently reported on one contract that it had received, for the transport of ball-mill equipment from sources in South Africa and Spain to a mine in Arizona. Comprising nearly 1,400 mt of compo-nents, including large-diameter mill shell sections, the task involved trans-port over a total distance of some 23,000 km by ship and road, taking 75 days to complete.
Moving Machinery by Sea...
Ship transport continues to be the pre-dominant method for long-distance equipment deliveries, with a number of companies offering heavy-lift vessels that can carry large components, either on deck or as below-deck cargo. E&MJ asked one company involved in this busi-ness, Germany-based BBC Chartering & Logistic GmbH & Co. KG, for its percep-tions of current trends.
“We are seeing strong activity in the mining sector as investments are driven by high mineral prices,” said the com-pany’s spokesman Raymond Fisch. “Shipping solutions are needed to sup-port mining projects in places such as Latin America, Africa and Australia. In general, mining-related cargo involves the shipping of bulk minerals that have been produced, mining equipment and other cargo relating to materials handling— such as conveyor systems, harbor cranes, and railway equipment.”
In Western Australia, BBC Charter-ing’s services have been used for most major mining developments or upgrades in the Pilbara region over the last years. In Latin America, the company has been involved as a carrier for mining projects that include Pascua Lama and Casarones in Chile, and it operates regular services between the equipment-manufacturing markets in the U.S. Gulf, Europe, the Mediterranean and Asia and Latin America’s east and west coasts, with ves-sels that have a minimum lifting capaci-ty of 160 mt.
Looking at the company’s client pro-file, Fisch told E&MJ that there has been a trend for principals to outsource logis-tics to project freight forwarders, who in turn undertake the logistical planning for equipment transport. It is usually the project freight forwarder who will decide on the carriers who are best suited to deliver specific tasks, he said. “We have also experienced a greater level of scruti-ny by principals over carrier selection,” he added. “Project carriers often have to pre-qualify in order to tender for busi-ness, and show that they can manage the transportation without compromising on occupational health, safety and environ-mental issues.”
BBC Chartering currently has more than 140 vessels in its portfolio, and operates the largest fleet in the market with lifting capacities of up to 800 mt. Having selected a suitable vessel for a specific task, the company also provides appropriate lifting solutions, develops stowage and lashing concepts, handles the cargo, and arranges the materials and paperwork needed to ensure that the transport process meets its client’s demands, Fisch said.
...and by Road and Air
Mining machines tend to be big, so need specialist equipment to move them. With its headquarters in The Netherlands, Mammoet offers heavy lifting and transport services on a world-wide basis.
The Alberta oil-sands industry provid-ed two of the company’s recent commis-sions. The first involved transporting a 500 mt Hitachi hydraulic excavator over a distance of 50 km, a task that required the removal of the machine’s cab (for height constraints) and bucket, but not much else. Mammoet used a double 24-line trailer configuration, with one pull and two push tractors, and had to con-tend with a number of bridges along the route that required careful checking on the load distribution.
The second contract, which Mammoet describes as being ‘typical for the oil-sands industry,’ involved moving a 170-mt Liebherr T 282B hauler, less its dump body, between Syncrude’s Aurora and Base mines.
Meanwhile, in the Dominican Re-public, Mammoet had the contract to transport four autoclaves from the port at Samana to the Pueblo Viejo gold mine, currently being developed by Barrick Gold and Goldcorp. Weighing 795 mt each, the autoclaves were carried on trailers powered by up to six prime mover vehicles, giving each unit a weight of 1,200 mt and an overall length of 135 m. The 123 km-long route to the mine included a number of U-turns, as well as gradients of up to 13%.
Eighty years ago, a 3-mt cargo was about the limit for air freight. Today, the mining world has the opportunity to move loads of up to 120 mt by air, through the fleet of Antonov AN-124-100 aircraft operated through U.K.-based Ruslan International. However, mining and mineral processing machin-ery often comes in shapes and sizes that do not fit most standard cargo aircraft, such as the world’s workhorse, the 20 mt-capacity C-130.
In August 2011, Hybrid Air Vehicles announced a development project with Canada’s Discovery Air Innovations aimed at bringing into service a heavy-lift version of an airship that could pro-vide a new transport option for supply-ing remote mining and exploration sites. Speaking to E&MJ in March, the company’s business development direc-tor, Hardy Giesler, said that initial inter-est has been focusing on its design for a vehicle with a 50-mt payload capaci-ty. Other versions include 20- and 200-mt carriers, as well concepts for a 1,000-mt craft.
Given that the ‘Ice Road Truckers’ are in business to supply remote northern mine sites, yet can only operate for a lim-ited period each year, the concept of a cost-effective, year-round airlift capabili-ty is indeed appealing. And, unlike con-ventional aircraft, the HAV does not need established ground infrastructure, such as a runway.
With the U.S. military scheduled to deploy the first long-endurance (21-day) surveillance version of the technology, ordered at a project cost of more than $500 million, later this year, the compa-ny is on track to have its first heavy-lift vehicle launched in 2014, according to Geisler. A move that could indeed mark a step-change in mine-site logistics.