Enterprising & Successful

Self-starters share secrets to success in the South African mining sector

- Ilan Solomons

There are many ways for entrepreneurs to enter the mining industry, including as project developers, service providers and product suppliers – all of which hold great opportunities and challenges, states mining investment advisory company MX Mining Capital Advisors director Dr Mike Seeger.

The fundamentals for being an entrepreneur in mining project development, he says, are the same as for all other operators, which is to ensure they have a viable business case with a market for their products or services. For mining projects, this includes having all permitting in place, a strong team, a completed definitive feasibility study, a buyer for the commodities, an environmental management plan and social sustainability, all leading to “attractive” returns for investors.

“When I co-founded mining contracting company Injula Mining Operations, in 2004, the ways of raising capital for the venture were very different to now,” Seeger tells Mining Weekly.

Injula mined 1.5-million tons of thermal coal a year for six years on behalf of coal miner Anglo Coal for State-owned power utility Eskom with an opencast mining fleet and a staff and workforce complement of 185 people. In addition to contract mining, the company developed the Kangala coal exploration project, in Mpumalanga, which led to the establishment of coal miner Universal Coal.

Seeger says, 10 to 15 years ago, mines only looked at raising debt and equity finance through banks and shareholders respectively. However, he notes, in the current economic climate, these avenues are largely unavailable and alternative models need to be sought. These include offtake finance, streaming and royalty finance and vendor financing from mining and processing contractors.