Business

Mining's second wind

2020-01-28 18:12

Trevor Arran, division executive of mining, metals, new and related industries, joined the Industrial Development Corporation (IDC) five months ago. With a wealth of knowledge in the industry gathered from a 30-plus-year career, he’s eager to be part of the rejuvenation of the sector.

“There’s always been this debate: Is mining a sunset or a sunrise industry?

“I think as technology improves certain things that weren’t mined before or weren’t found before are being progressively looked at again, and things that were considered economically not viable are now becoming opportunities. The industry is finding its second wind and the South African industry is catching it.”

Arran, who is a geologist by training, brings vast experience in the sector to the developmental finance organisation. He began his training at Anglo American in 1986, travelling up the ranks through that company’s well-regarded training programmes, and has worked in a number of disciplines including gold, coal and diamonds.

“In summary, I went from mining to stock broking and investment banking in 1994.”

During that time he worked in equities, research and on a number of global deals including the BHP Billiton merger, Xstrata’s initial public offering, Anglo American’s listing in London and the unbundling of Iscor in 2001, in which the IDC played a key role.

Arran was then enticed to join Kumba Resources in 2002 and spent four years as part of its executive management team. During this time he was involved in the unbundling of Kumba Resources and was part of the team that created one of the biggest success stories in the sector – the creation of Exxaro Resources in 2005, which continues to grow from strength to strength.

Having turned around Exxaro’s titanium minerals business and helping create the globally integrated, New York Stock Exchange-listed Tronox, Arran managed the global mining and beneficiation business before leaving to work as a consultant.

“Joining the IDC has been fantastic. It really was something that came along at the right time.

“From a South African perspective, I felt that it was something I wanted to do. My initial perceptions and understanding of the IDC have been proven true. I think they are a fantastic group of people, a really experienced group of men and women across the spectrum.”

Though it might seem like a big shift from corporate to developmental finance, Arran says there are many similarities, but with a different focus and drive.

“One of the key differences is that the private sector has a more singular focus, with profit and returns being a primary driver. We also have profit and returns as a driver, but we have key developmental aspects that are a vital part of our business too. These include undertakings such as job sustainability, job creation, as well as empowerment of youth, women and disabled people.

“There’s also a focus on development in communities that haven’t seen much developmental funding in the past.”

Arran joined the IDC last year during a time of change, with a new CEO coming into the organisation.

“There’s been a change in the management team over the last year and I think the IDC is continuing to evolve and change, and I think what we’ll see in the next few years is a different, long-term, sustainable path that the organisation wants to embark on, from both a South African and a continental perspective because we’ve got a significant role to play.”

Arran says that although South Africa’s mining has gone through massive times of growth for many decades, as technology, experience and expertise change, our industry needs to adapt to build up its competitive advantage again.

He says that one of the industry’s biggest challenges is attracting young talent.

“The new generation [Generation X, those born after 1995] doesn’t particularly want to get involved in the so-called dirty industry, putting on overalls and boots and living in the middle of nowhere. But mining is evolving.”

Arran acknowledges that the days of finding big tier-one resources that would yield 30 to 40 years’ worth of life, which would be cheap and easy to mine, have passed us by in the South African context. However, he says, the rest of Africa remains relatively unexplored.

“This is being replaced by high-value, smaller deposits that carry different sets of economics with them and we at the IDC want to be part of the resurrection of the mining business, supporting and evolving with new mining techniques.”

Arran says the IDC wants to invest in projects that are sustainable and environmentally friendly.

The bottom line is that we want to be part of an integrated, holistic solution that doesn’t necessarily just look at mining as the only investment.

“We want to look at a system that supports other industries and supports a future beyond a purely extractive type of business.

“The IDC has a helicopter view of industry and industrialisation in South Africa. So we are looking to integrate key sectors such as agriculture, energy, chemical inputs, tourism and manufacturing with mining. This is why the team and I look closely at the beneficiation or upgrading of the raw materials we extract.

“We are realistic in that we can’t turn every single mineral into a beneficiated product, but we can add value along the entire value chain.”

Another way in which Arran would like to see value being added is through partnerships, both technically and financially, especially public/private collaboration.

“Together we can all get a bigger bang for our buck. [Partnership] reduces the risk and brings together expertise from different people.

“For example, a mining project could also have a renewable energy aspect to it which provides some – or the majority, in some cases – of the energy requirements of that particular operation.”

Arran is optimistic about the role he and his team can continue to play in the sector. However, he says: “We certainly are not naive enough to downplay the significant challenges that we have in the South African mining industry.

“There are challenges around policy certainty and regulation, but we believe that these things can be worked with and around. I think our competitiveness from a South African perspective is a huge issue. The IDC is a catalyst for the kind of evolution and change we need to face all our challenges.”

Arran himself will be an agent of change, using his extensive network from his broad experience to get different people around the table to create value and opportunities for the sector and beyond.

So what should potential young miners know?

“My advice for the young people is that mining is an industry just like any other that is in transition. There are many challenges and significant opportunities. One of the key things, for a young professional, is that mining can provide you with significant opportunities to grow and develop and do different things.

“For example, one of the key new horizons in mining is the advent of machine learning and artificial intelligence (AI). Mining has moved in leaps and bounds in terms of AI and there is an opportunity to blend New World learnings using the digital platform with Old World dust and dirt technology. So things like driverless machines, driverless trucks, machine learning and process optimisation result in work being done safer, smarter, sustainably and better.

“These days you can live and work in a mining community that’s very different to what it was 30 years ago – you have connectivity, you have access to all sorts of things. The concept of not living where you work is also a buzzword in mining.”


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May 31 2020