Whilst attending the recent Africa Down Under conference I met Ben Berrigan, Vice President, Business Development for DRA Taggart part of the engineering firm DRA Global. We enjoyed an interesting half an hour chatting about a multitude of subjects including, of course, the parlous state of the mining industry at present.

One comment in particular that stuck in my mind was when Ben said that when he looked at all the other businesses with booths at the conference, he "didn't see competitors, he saw potential partners". It struck me that this was indeed an enlightened attitude and one likely to provide a greater chance of survival in a highly competitive market than simply trying to be the last man standing.

He went on to say that there are some things that they know that they do very well, but others things that others can do better. By sharing a project and partnering with someone who does a great job of the things that they do less well, they create win-win outcomes. The client wins because they get the best possible job in all areas by those best qualified to do them. The consultants each get at least a share of the work in those areas that they are best qualified to perform in and the reputation of the "team" is enhanced by the successful outcome, hopefully leading to further work.

To some extent the mining industry has imposed this type of partnering on consultants for some time. As a client I have, on several occasions, selected consultants to work on a study based on their excellence in a particular area of study and I see other study managers doing the same thing.

There are undoubtedly consultants, such as Wardell Armstrong who I represent in Australia, who have the capability to manage all aspects of a study having assembled a strong team with expertise in every area of a study. However, much of the work that Wardell undertakes represents only a portion of a particular study or project. That portion may be different for each particular study, for example for one study it could be the resource statement, another hydrogeology and others geotechnical, mining, metallurgical or environmental and social.

The point however, is that they have a mindset of partnering just as Ben was advocating. Of course in most instances they were only asked to quote on and undertake a particular portion of the work but they readily accept this as part of their business model.

In the short period of time that I have been associated with Wardell Armstrong they have demonstrated their preparedness to partner with other consultants and at short notice too.

A few weeks ago a friend of mine Dan O'Toole, Managing Director of Pitt & Sherry a Tasmanian-based multidisciplinary consultancy, contacted me to ask if Wardell Armstrong would be interested in partnering with them to submit a proposal for a portion of the work, on a project in Uzbekistan. For a variety of reasons the time frame for submission of the proposal was extremely short (five days).

Wardell quickly agreed to participate and completed the required input into the proposal within the allocated period.

Again it was the attitude shown by Dan that caught my attention. His approach was that whilst they could do much of the work, they recognised that the did not have the necessary skills in some areas but that Wardell did, and they also needed assistance with fieldwork and Wardell has an office in Almaty Kazakhstan, that could provide support for the project.

Dan's view was that it was better for them to have an opportunity to secure a part of a project rather than none at all. By partnering with Wardell Armstrong he gave his company a chance of securing work that otherwise they would have been unable to tender on.

I think that Dan's logic is impeccable and I believe that it is the way that businesses need to think and act into the future if they are to survive and prosper.

One is seeing the development of partnering occurring in many areas of industry and commerce. Only today Boeing announced a partnership with the Commercial Aircraft Corporation of China (Comac) whereby 737’s built in the US will be assembled and painted in a Chinese factory. It appears that as part of the deal the Chinese will also be buying 300 Boeing aircraft worth $38bn. To my mind this shows an adaptation by Boeing to the shift in economic power around the globe and a strong desire to survive in an ever-changing market.

Meanwhile I note that the head of Boeing's largest union has criticised the move as has Donald Trump, saying that it will cost US jobs. I would strongly suggest that those two gentlemen have their heads in the past and are unable or unwilling to imagine the future and adapt accordingly. Far from costing US jobs it is, at least in my opinion, a strategy most likely to ensure that Boeing and the jobs that it provides are secured into the future.

So the next time that you run into someone in the same business as yourself, don't see a competitor and try to make a hasty retreat, but see a potential partner and spend time getting to know them and the skills that they might bring to a partnership.

References

DRA Global: http://draglobal.com/

Wardell Armstrong: http://www.wardell-armstrong.com/

Pitt & Sherry: http://www.pittsh.com.au/

Boeing Story: http://www.bbc.com/news/business-34344067

I had contemplated a number of topics for this week's blog including networking, trust and recognition but in light of this week's changes at the helm of our country, I thought that I would take a tentative dabble into the world of politics. The other topics will have to wait for another time.

Journalists and other commentators often talk about the "business" of running a country. I believe that this is a reasonable analogy. The country has a revenue in the form of taxes, operating costs ranging from politicians and bureaucrats salaries to welfare payments and the cost of running the armed forces and federal police. It has capital assets encompassing such things as buildings, vehicles and military hardware. Even the passing of legislation that governs the way that the country and its citizens behave could be considered as the company policies and procedures. It also has "shareholders" as each citizen of 18 years or older has the right to vote and therefore change the "board" of the country.

With such strong parallels with business, it is perhaps surprising that there was such astonishment and even outcry that the Prime Minister should be ousted by his party mid-term. Should it really be that amazing?

Whilst it may not happen all the time, there are certainly plenty of instances where the board of a company either sacks the managing director or vigorously suggests that it is time for them to step down. This normally occurs when the MD is considered by the board not to have achieved the goals or outcomes that have been set for the company or if they are considered to be damaging the company’s "brand".

I therefore see what happened on Monday as being no different to what happens in business. The "board", being the Liberal Party, decided that Tony Abbott was damaging their brand and that he should be replaced by someone who appears to be more in tune with the "shareholders" values with regard to transparency and engagement. Certainly in my opinion, Turnbull is more of a statesman than Abbott ever was.

What really struck me though was the effusive and even affectionate way in which Bill Shorten spoke about Tony Abbott in Parliament after he had been deposed. It almost sounded as if he was describing a different person to the one that he equally vociferously attacked in the Parliament in the weeks and months before his demise.

To me this highlighted that politics has become more about playing the man than the ball. In my view this diminishes the quality of political debate because it focuses on an individual’s personality rather than the idea they are championing.

I remember when I was at secondary school, taking part in debating competitions and whilst these debates were very structured in their format, the focus was always on advocating for, or rebutting an idea or proposition. It would never have occurred to us to have attacked the personality of a member of the opposing team.

Many parliamentarians I'm sure, would have engaged in similar competitions or been members of debating societies whilst at university. So why is it, that when they get into Parliament they appear to change the focus from advocating ideas to attacking members of the other party?

I certainly believe that the media has contributed to the change of focus but perhaps we get the media and hence political performance that we deserve.

As I indicated in an earlier blog, we as consumers of the media, focus on outrage rather than facts. The media is a competitive business and whether it is print, broadcast or online media, they are all competing for our attention. So they give us what we desire, sensationalism, gossip and innuendo.

In order to have their voices heard, politicians play to the voracious media by way of leaks and backgrounding or open attacks on opponent’s character.

I agree that there are instances of politicians abusing entitlements that the media should be covering as they are definitely in the public (shareholders) interests, such as the Bronwyn Bishop Helicopter affair. The media should rightly be highlighting these abuses of position and power, but for a large part the debate over policy is drowned out by the innuendo and outrage over a politician’s character rather than their ideas. This I believe, diminishes the quality of political debate. Yes there are times when you wonder what possessed someone to say something or act in a particular way, but do those words or does that action diminish the value of the idea that they may be advocating?

Contributing to a general lowering of the quality of political discourse in my opinion, is the rise of the micro-party, representing minority views in the community but hampering the effective passing of legislation.

Whilst I believe that in a democratic society every view needs to be heard and considered. That does not mean that those views necessarily need to be acted on if the majority view is opposed. However, this appears to be what is happening in our political system at present, where governments need to get sufficient members of the cross benches on-side in order to get legislation passed. This inevitably leads to concessions being made to those minority views. I believe that this leads to poorer rather than better outcomes as it always involves a compromise or the re-direction of funds to that particular parliamentarians pet cause regardless of its merits or benefit to the broader Australian community. 

Irrespective of one's political views, I believe that if we as a nation elect a government to run the country, they should be allowed to do so unimpeded by the need to pander to minority interest groups. If at the end of three years, we collectively don't like what they have achieved, then we have the opportunity to vote them out and vote in the other party to see what they can do.

Which brings me to my final concern. The term of an Australian government is, in my opinion, not long enough to allow governments to focus on long-term strategic planning for the country rather than short-term strategic planning to ensure that they get re-elected in three years’ time.

Every business needs to have a strategic plan. Whether it is the country or a business we need to know where we are going. We should certainly review the strategic plan on a regular basis to ensure that it still takes account of the current conditions, but someone needs to set the vision and ensure that we as a nation are working towards it.

Perhaps if we could get back to serious political debate that focuses on the issues rather than the personalities there might be an opportunity for politicians to agree on some core strategies that both sides of the political debate can agree on as being in the best interest of the country. Unfortunately I think that I might be waiting a long time for that day to arrive!

Photo Credits

https://upload.wikimedia.org/wikipedia/commons/4/4f/Opposition_Leader_Tony_Abbott_%2816%29_-_Flickr_-_MystifyMe_Concert_Photography%E2%84%A2.jpg

https://upload.wikimedia.org/wikipedia/commons/c/ca/Malcolm_Turnbull_2014.jpg

This was the first time that I had attended ADU and so I had no baseline from which to judge attendance. However, my impression was that it was poorly attended, an opinion that was endorsed when speaking to someone that I knew who was a regular attendee. He told me that it was far quieter than previous years and that both delegate and booth numbers seemed to be down.

I managed to download the booth details and conference agenda from 2014 and analysed this together with the information from the 2015 conference which showed the following statistics for resource companies:

Four companies doubled up in a booth as a cost-cutting measure.

In his opening remarks Bill Repard, Executive Chairman, Paydirt Media, the conference organisers, claimed a "record number of delegations", presumably this was because Zimbabwe was represented for the first time! He chose his words carefully when talking about the total number of delegates and said that it was "around 1000". I have no way of validating this number, but I do know that the conference auditorium held 340 people and at no time did I see it full, even in the opening session. I would estimate that for most sessions, it was 50 to the 60% occupied and at times less.

Whilst I was aware that the conference was split between two hotels, the Pan Pacific and the Novotel, on opposite sides of Hill Street, it was not apparent from any of the signage, exactly where the conference was being held. Admittedly this information was contained in a leaflet in the "show bag" but most delegates leave sifting through the contents of the bag until after they have got their bearings.

With a full price tickets for delegates being $1750; a $200 discount was available to those booking early, the conference is cheaper to attend than Diggers & Dealers, although I would suggest that this does not necessarily make it better value for money. To reach into the “show bag” and pull out a flyer inviting me to sign up to receive a DVD of the conference presentations at a cost of $160 was surprising to say the least. That piece of paper went straight in the bin. I trust that this does not become a trend. At other conferences that I have attended in the past, conference papers were provided as part of the ticket price either on DVD or via download from the conference website.

Mr Repard should remember that listed companies are required to lodge their presentations with the ASX, which is where I will be getting copies from and I'm sure that most of the other entities presenting would be happy to provide a copy electronically if anyone so wished.

Having read Dryblowers pre-conference piece on Monday 31 August, I was interested to see what the tone of the conference was. Blower had suggested that many African countries were a bit miffed at mining companies who had come into their country promising much and then failing to deliver projects due to the slump in commodity prices.

It was therefore a little surprising to listen to one country after another presents themselves as the “best place in Africa” to come and explore and mine. Phrases like "multi-party democracy", "stable", "simplified", "revised mining legislation", "elimination of corruption" and "Extractive Industry Transparency Initiative (EITI)" were widely bandied around.

My takeaway from all of these attempts to lure explorers and miners, is that Africa "gets it". Perhaps it is the downturn in commodity prices that has impacted on the number of mining and exploration companies choosing Africa as a destination, it is apparent that all of these countries understand that they are competing globally for investment in the mining sector and without the kind of reforms of which they spoke they will find it increasingly harder to attract investment to their country.

Several of the countries presenting made mention of artisan miners in their revised legislation and how the legislation provided for this type of activity. But it was the Hon Fred Moyo MP, the Minister of Mines & Mining Development, Republic of Zimbabwe, who made it clear, to me at least, why accommodating these people is important. He explained that the issue of small scale miners, often termed "illegal miners" was one that they had to deal with. He argued that if one million people undertake “illegal mining" in order to survive, then the legislation has to recognise this and accommodate them in some way.

On the theme of legislation, Otsile Matlou of ENSAfrica, a lawyer with a great sense of humour, gave an entertaining and insightful presentation on the regulatory framework in Africa and the move towards an integrated structure.

He made the point that the shape of Africa; as in country borders, is determined by its colonial past and therefore its mineral regulation is similarly defined by its colonial history.

Otsile also noted that the Africa Mining Vision (AMV) is actually about development rather than mining, mining is seen as a catalyst for development and therefore a reason to encourage it.

This reinforced the message from our Foreign Minister, Julie Bishop in her presentation to open the last day of the conference and underlined by many of the companies giving presentations throughout the conference.

Tanya Plibasek, the Shadow Minister for Foreign Affairs, whilst partially endorsing mining as an enabler of development appeared to be more interested in political points scoring by highlighting the aid that has been withdrawn from Africa by the current government as well as firing a few shots across the bow of the industry about environmental impact and corruption. She brought to mind a teacher telling the kids to play nicely in the playground and warning them of the consequences if they did not.

I certainly think that at events such as this, politics should be left at the door and both parties should be focused on the positives of Australia's engagement with Africa.

It is a fact that most mining and exploration companies operating in Africa, indeed anywhere in the world, now take corporate social responsibility (CSR) very seriously and are genuinely enhancing the communities in which they operate. Perhaps the most impassioned commentary on CSR was given by Tim Carstens, MD of Base Resources, who stated that he had banned the term "CSR" in their company because it sounds like an obligation. He said that they saw it as a core part of their business and treated as an investment. So like any other investment they look at cost benefit to ensure that the best use is made of the money that they invest. Tim said that they are looking to leave a legacy so that when the Kwale mine closes in about 13 years’ time they don't leave a void and a memory of "how good things used to be". There was certainly sincerity in his voice whilst he was speaking on this topic.

Base have certainly put an emphasis on employing Kenyans on the project with 94% of their employees being nationals. The expatriates currently number 42 but Base have a target to reduce this to 15 in the longer term. But Tim pointed out that the employment issue is actually more complex than simply employing Kenyan’s, it is about employing local Kenyan’s, people who come from the province in which the mine is located. In this regard, 62% of their workforce are “locals”.

John Welbourne, MD of Resolute Mining had a similar message about community engagement and support on the first day of the conference.

Resolute are looking at connecting their Syama goldmine in Mali to the grid and as part of that are looking to connect communities along the route to their power line because of the benefits that this will bring to those communities.

One of the positives that I took away from the conference was a couple of conversations that I had with recruiters, who both indicated that business was picking up. One in particular mentioned that he was receiving an increasing number of briefs to find Study and Project managers, suggesting that there are certainly some in the industry that believe that we are at or near the bottom of the cycle and will be shortly moving on an upward trajectory and they are therefore getting ready to be amongst the first movers.

The commodity of the moment appeared to be graphite, with several companies presenting on their "outstanding" project with the largest flake size, highest carbon content and biggest tonnage etc. Only Alan Mulligan, MD of Walkabout Resources was bold enough to suggest that the graphite price will fall as a surplus of supply comes on stream. Interestingly enough there was an article in yesterday's Miningnews.net titled, "Weighing up graphite's future", which pondered the same issues and came to the same conclusion.

In terms of standout presentations, I was certainly impressed by Colin Barnett's knowledge of the West Australian mining industry and his apparent ability to speak off the cuff. He may well have referred to a few notes but it all seemed to flow naturally and regardless of which side of politics you sit, he is a great advocate for the state and for the mining industry.

John Welbourne, gave an excellent and high energy presentation on Resolute's activities in Africa and made the point that by 2040, Africa will have a working population of 1.1 billion people, which is more than China or India. A great reason to be operating there.

Base Resources MD, Tim Carstens gave a similarly energetic and passionate report on their Kwale heavy mineral project in Kenya and his views on the social aspects of operating in Africa, as mentioned earlier.

Cliff Lawrenson, Minemakers MD gave a very eloquent, punchy and short presentation on the company's Baobab Phosphate Project in Senegal and Lindsay Reed did a similarly focused and brief report on their Cabinda Phosphate Project in Angola.

I will caveat my next statement by saying that I worked for Minemakers for almost 7 years. Apart from gold; which in most currencies other than the US dollar is doing pretty well, phosphate is the standout commodity at present having enjoyed 12 months of stable pricing whilst nearly every other commodity has fallen. The problem is that companies working in the phosphate space are lumped in with all other resource companies and are therefore "on the nose" with investors. In reality these companies should be the standouts of the sector, given the commodities stable price and the projections for world population growth.

Jayne Baird, VP Exploration Africa and Atlantic Margins, for Woodside Energy Ltd, provided an intriguing presentation on Woodside’s targeting methods, explaining how they effectively re-trace time to find analogue targets along the continental margins. Certainly an interesting presentation for the technically minded amongst us.

Most of us are aware of Africa’s enormous mineral endowment and are probably aware of oil in Nigeria and Angola, but the full extent of Africa’s oil and gas resources, both known and potential, is truly staggering, hence Woodside’s interest in the continent.

Finally I must mention James Durrant, Study Manager for Danakali Ltd who gave a very impassioned presentation on the companies Colluli Potash Project in Eritrea.

James read from a written speech; something which I have found hard to do with good flow and any real sense of conviction. He certainly wore his heart on his sleeve and managed to get the emphasis in exactly the right places so that his a passion for the project was very apparent.

I suppose the question for me is whether my attendance was worthwhile? Well it will certainly take several months until I can provide a definitive answer on that from a financial perspective. I know exactly how much work I have to generate for Wardell Armstrong or myself in order to recoup the cost of attending.

In terms of gaining a sense of the level of mining industry activity in Africa and the receptiveness of the host nations to exploration and mining within their borders, it certainly provided a great insight.

Will I be back next year?  I can't give an answer on that just yet.


References:

https://www.africadownunderconference.com/


http://foreignminister.gov.au/speeches/Pages/2015/jb_sp_150904.aspx



http://www.tanyaplibersek.com/speech_africa_down_under_conference_tuesday_2_september_2015



http://www.resolute-ltd.com.au/


http://www.baseresources.com.au/



http://www.woodside.com.au/Pages/home.aspx



http://www.minemakers.com.au/



http://www.minbos.com/



http://www.danakali.com.au/