Meet Glencore's Contractor in Zambia and the Congo
Air-conditioned cabs and automation? Underground in Africa, in Glencore's largest copper mines, high-tech ideals come up against a harsh, unnatural environment
Forget about air-conditioned cabs, remote-controlled haul trucks and ships that load themselves. On the ground in Africa, at Glencore's mines in Zambia and the DRC, equipment looks very different to the newest innovations in Western Australia.
The biggest players in underground mine machinery are Sandvik and Atlas Copco, two Swedish groups that boast about their edge in big data and “cobotics” (collaborative robots). Then there is Resemin, a little-known Peruvian firm that has been picking-off customers in recent years, thanks to a very different philosophy.
When rivals go high-tech, Resemin goes low: its rigs have no computerisation, almost no electronics and open cabins, making them easy to use and cheap to maintain, but anachronistic in an era of WiFi and digitisation.
“I took my chance in '89,” says founder James Valenzuela, listening to Wagner in his office in Lima, occasionally interrupted by the sound of car horns from the street below. Having studied engineering he was selling spare parts for foreign companies, but hyperinflation gripped Peru in the 80's and there were widespread shortages.
Valenzuela realised he could build the same equipment, then simplify it. “There was a lack of everything,” he says, “but of course, when you have a scenario like that, also there are some opportunities.”
Three decades later and Resemin's machines, including jumbos, bolters and drills, are turning in dozens of countries, from India and Iran to Bolivia and Argentina. Valenzuela, who says he is “twisted to mechanical engineering”, also got into contracting after Swiss trading giant Glencore asked him to operate his equipment at their mines in Africa. Other clients include Hindustan Zinc, owned by controversial conglomerate Vedanta.
Resemin's flagship machine? The Muki. Named after a dwarf from Andean folklore that lives underground, mining ferociously, it is the smallest drill rig on the market, getting into tiny spaces.
Resemin's staff has risen from 20 to 1,850 in little over a decade and for the first time the company is selling into Canada and Australia, where many operations
specify closed cab and the newest gizmos.
“Canadians and Australians bleed yellow (Atlas) or orange (Sandvik),” one mining engineer says, “so even when they have jobs in developing countries with unskilled national labour, they will stick with what they know and pay the price for it.”
Valenzuela is sceptical that all high-tech solutions are designed with the customer in mind. “Underground mining is a mess,” he says. “It is the worst environment for machines. If you include a lot of electronics, you have stopped machines, a lot of failures. But I am not dogmatic. It's a balance, you need to keep a balance.”
There is much to be said for low-tech design: French auto giant Citroen first built its reputation out of deliberately simple cars that were easy to maintain, so they could be bought by farmers living down tracks far from the nearest garage. Ferdinand Porsche, one of the world's most celebrated car designers, was another critic of over-engineering: the perfect racing car, Porsche believed, would break down as soon as it crossed the finishing line.
The alternative is to lock-in customers: in a not-too-subtle variation of the Gillette business model, more than 40 per cent of Atlas Copco's revenue comes from spare parts and servicing (Sandvik does not break-out equivalent figures).
“They don't make money off selling you a jumbo for a million bucks,” says a Canadian engineer. “They make money off selling you a cotter pin, which they've designed to a custom size so you have to buy it from them for 160 bucks.”
Is there a darker edge to the differing philosophies? There is one area where over-engineering is widely seen as permissible, and that is in safety. To boost margins, are large mining groups cutting corners in the world's poorest countries?
Valenzuela turns passionate, Wagner's horns and symbols crashing in the background. He rejects the idea that everyone in a mine should be dressed-up like an astronaut. “Air-conditioned cabins? Believe me, it is unsafe that the guy is inside the air-conditioning and the others are outside... The operator needs to be in contact with everything.”
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