Construction management as agent in open-pit mining applications

The project involved a large open-pit mine in South Africa employing contract mining methods for all aspects of open-pit mining. The major challenges which were faced during this assignment were:

●  Ensure on-time extraction of first ore.

●  Resolve claims which emanated from mine designs.

●  Improve contract miners unit rates and complex contract agreement.

●  Set project up to withstand depressed mineral prices.

Following eight months into the contract, it became evident that unless the status qou was drastically changed, extraction of first ore may be delayed with up to six months, which would have knock-on implications on transport allocations and affect the projects’ revenue stream. Following appointment, Tacmin experts carried out mineability reviews on the applicable mine designs and contractors’ production performance and commenced with:

●  A re-design of the pit and ramping structure which gave cause to shorter haul distances.

●  Using the contractors existing fleet and determined capable productions based upon the re-designs.

●  Compiled new production schedules and mine plans.

●  Assumed the role of Client’s Representative and managed contractor in terms of the agreement and production schedule.

Results – As opposed to a six month delay, first ore was extracted and loaded onto trains one month later than scheduled. The Contractor’s production improved two-fold with the same fleet with no change in on-site management, and mining costs were reduced considerably due to the re-design and improved production.

Given the nature of the geological structure, the most optimal drill and blast results were achieved on a 10 meter bench height, yet the contractors tendered price was based upon a bench height of 15 meter. Differences in opinion between the Client and Contractor lasted for several months and following appointment, Tacmin commenced with:

●  A reconciliation of all mining volumes claimed from start of contract based upon a restructured bill of quantities.

●  Aforesaid bill of quantities which were revised to contain every rock type in accordance with the geological structure.

●  Above said exercise which gave cause to an over claim due to the volume imbalances caused by unit rates for compounded rock types.

●  Reconciliation of tender based upon the re-design which gave cause to a decreased project value.

Results – Following the reconciliation of the volumes which gave cause to the volume split in the rock types, it became evident that the drill and blast unit rate difference had little effect. Furthermore, because of the above said the Client’s Representative was in a position to put in a counterclaim and the dispute was resolved.

Following in-depth owner operator versus contract mining assessment by Tacmin it was resolved that the contract be put out to tender as the initial contract period was coming to a close. Tacmin expertise embarked upon a five year mine design and following completion commenced with:

●  Compilation of enquiry documents - in case of contract mining.

●  Compilation of enquiry documents for equipment suppliers - in case of owner mining.

●  Invited contract miners, equipment and explosive suppliers to tender for a five year contract.

●  Compilation of a shadow-bid, i.e. tender the aforementioned enquiry from fist principles.

●  Following close of tender, adjudicated all prospective tenderers and compared owner mining with contractor mining.

Results – Since the mine designs and enquiry documents were compiled by construction management expertise, and the fact that the contract miners competed with owner mining methods, gave cause to contract miners submitting tenders which were considerably competitive of nature. Aforesaid of which unit rates from the lowest tenderers, were more competitive than the previous contract. Following appointment of the contractor, Tacmin’s contract mining expertise, using their vast base of contract mining agreements, assisted the Client to compile a contract agreement of international standards.

During the annual LOM and reserves estimate for 2015 which formed part of Tacmin’s scope of work under the same assignment, Tacmin expertise conducted in-depth pit optimisation exercises and numerous case scenarios which amongst others contained mineral price sensitivity analysis. Aforesaid which gave cause to:

●  A mine design with medium term mine plan and production schedule that requires relatively low waste stripping which would expose the required ore tonnages for a period

of three years.

●  Issuing of a variation order to the contractor which contained a production schedule with reduced mining volumes.

●  ​​​​​​​Re-negotiation of contract mining units rates in respect of the new production schedule and quantity bill.

Results – Aforesaid which gave cause to a reduction of 75% in contract mining cost whilst ore production levels were maintained as before.