The Problem

The resources extraction industry is steadily moving to the developing world, where it has caused and therefore encountered a myriad of problems: these include:

  • opaque transfer pricing, which has in turn fuelled corruption
  • avoidance of local taxes
  • poor enforcement of environmental laws
  • increased investment risk
  • low levels of mechanisation and IT investment.

These have contributed to low worker level of skill, unacceptable safety records, unnecessarily low asset utilisation and damage to expensive equipment. See below:

Problems in the extractive sector

Problems in the extractive sector (click to enlarge)

IT investment in the capital intensive extractive industries is particularly counter-intuitive: According to the research consultancy IDC, the average mine or oil company sent $80 per person to capita while a bank spends $8,000 – or one hundred-fold more than mines or oil companies.

The graph below illustrates how the mining sector lags other industries in IT investment:

Information technology spend by industry (Source The Economist)

Information technology spend by industry (Source The Economist) – click to enlarge

The combination of under-trained workers using multi-million dollar capital equipment, mature low yielding mines and some of the most difficult operating conditions in the world have contrived to make African mines, unpleasant, unsafe and in the gold sector’s case – uneconomic in the long term, using current production techniques.

The most pressing problems that Acqumine’s solutions will address are:

  • Safety – over 45,000 miners have died since 1984 in Africa;
  • Underground rockfalls caused 96 of the 202 South African mine deaths in 2005. This problem costs $500 million per annum in SA’s mines alone;
  • Low skill, productivity and remuneration levels – 29% of mine workers have less than Grade 5 education and 57% earn less than $200 per month;
  • Excessive equipment maintenance and wear & tear costs – which together comprise 20% of total mining costs – or $3 billion per year;
  • Low equipment utilization rates – are less than 30% on PRIMARY fleets;
  • Fuel theft – 5 – 10% of fuel is stolen from South African mines or $250 million pa

Unsafe rollover situation
Fire hazards
Unsafe practices

Find out more about Acqumine’s solution…