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MINING WEEKLY, 6 Jun 2014: Mining contract to increase in 2015

By: Mia Breytenbach

There have been significant delays for several mining projects currently under way in Mozambique, owing to challenges facing the industry, including licensing, relocation, transport and infrastructure challenges.

Consequently, South African black-owned hospitality services and facilities management company Tsebo Outsourcing Group estimates that a significant number of contracts for mining majors and subcontractors will be awarded only in the first quarter of 2015.

Nevertheless, Tsebo Outsourcing Group marketing director Royce van der Zwan expects some contracts that were previously delayed, owing to late decision processes, to be awarded.

He also expects these projects to get under way in the third and fourth quarters of this year, following the exponential growth of Mozambique’s oil and gas industry, especially as capital projects and developments in Cabo Delgado province are expected to increase in 2015.

“Tsebo Outsourcing is prequalified as a contractor with all the major mining companies, so we are ready to start working as soon as they issue the contracts,” says Van der Zwan.

Further, to target its growing Mozambique mining clientele, as well as the offshore oil and gas industry, Tsebo Outsourcing has transferred some of its skilled managers to Mozambique, including those with experience in the North African and Middle Eastern oil rig industries.

This breadth of experience can be leveraged by Tsebo’s business operations in Cabo Delgado, says Tsebo Group affiliate catering company Servco COO Tim Makin.

“We understand the needs, we understand the terminology and, as we operate 36 rigs, we have a complete understanding of the industry’s requirements,” he emphasises, noting that the com- pany this month sent staff members to offshore oil and gas rigs in Bahrain for training to ensure that they can manage the needs of Mozambique’s nascent oil and gas industry.

Meanwhile, US-based independent oil and gas exploration and production company Anadarko Petroleum, operating in Cabo Delgado’s Rovuma basin, is one of the companies currently undertaking a liquefied natural gas (LNG) development project in Mozambique.

Since 2010, the company and its partners have drilled more than 20 deep-water wells in the country’s Offshore Area 1 block, and have discovered between 45-trillion and 70-trillion cubic feet of recoverable natural gas.

The company states on its website that these types of significant natural gas discoveries and prospective LNG projects represent a “transformational opportunity” for Mozambique to become a major LNG exporter. Anadarko adds that this activ- ity “has the potential to generate substantial revenues for government, long-term foreign investment, infrastructure [build] and other social improvements, as well as direct and induced employment opportunities”.

Growth Potential
Although there has been slower market growth for Tsebo Outsourcing in recent months, the company has been registering continuous in-contract growth, owing to its effective focus on intensifying partnerships and increasing collaboration, says Van der Zwan.

Further, the group notes that there has been increased demand from Mozambique’s mining and oil and gas industries for service providers that can deliver a full range of noncore soft services.

“Because clients in these indus- tries understand the isolated nature of their business and because the service needs of their employees increase, more services are required,” Makin says, explaining that Tsebo had added laundry, janitorial, housekeeping, logistics and other noncore soft services to its offering to provide full turnkey solutions for clients.

These additional services stem from the consolidation of Tsebo’s operations, which the company undertook to better support the needs of the countries developing mining and offshore gas industries, Makin adds, noting that the ser- vices have been well received by the mining industry.

He adds that Servco currently services six of the nine mining majors in Mozambique’s mining and oil and gas industries, and notes that one of Servco’s biggest ongoing contracts, signed in 2011, was with a Brazilian mining major, in Tete province. The contract involves providing a broad range of services and managing several on-site camps that house senior executives and general workforce members.

Makin further emphasises the importance of Tsebo’s relationship with the mining major, as it enhances the client’s required levels of expertise and profes- sionalism with regards to mining health and safety regulations.

Meeting Industry Needs
As the mining industry and, therefore, the market in Mozambique matures, a key industry driver remains the development and management of necessary infra- structure, in which Tsebo Out-sourcing plays a significant role, as the group helps to manage a stable infrastructure base, Van der Zwan points out.

Further, he notes that clients, particularly foreign global majors, have expressed their need for “a local player in Mozambique with an understanding of the country’s environment, workforce, supply chain solutions, government support and local legislation”.

While Tsebo Outsourcing previously highlighted the establishment of basic artisan skills and the promotion of small, medium-sized and microenterprise development as critical factors for its business, Makin also notes that Servco is continuing with establishing local supply chains this year by expanding its corporate social responsibility projects in Tete, which include assisting a supplier with effective business management.

Further, as the group regards Mozambique as one of the pillars of business development in Africa, the group is committed to supporting the basic infrastructure that enables Africa to develop – socially and economically.

Edited by: Samantha Moolman