"At the beginning of 2020, AK Drilling was working with more producers than juniors (a 70/30 percentage split), but this has been inverted, and currently our portfolio consists of 60% juniors and 40% producers."
To what extent did the health crisis in 2020 impact AK Drilling?
2020 was a challenging year, but AK Drilling is built on strong foundations, so we managed to resist the crisis well. In fact, positives can be taken from the Covid-19 pandemic as it has brought us closer to clients, strengthened our fundamentals and reinforced our knowledge. I am grateful to our team for their commitment and to our company on a corporate level for its fast reaction to the crisis. The crisis has also shown us that we have the necessary tools to work remotely. Field workers at AK Drilling are mostly young and at low risk to the virus, which helped.
What are some of the standout projects you have worked on in Peru and internationally in the last 12 months, and how has your client base evolved in that timeframe?
At the beginning of 2020, AK Drilling was working with more producers than juniors (a 70/30 percentage split), but this has been inverted, and currently (as of February 2021) our portfolio consists of 60% juniors and 40% producers. This is not because we have lost work with producers, but because junior participation has really picked up in the last six months. We have worked with many of the juniors active in Peru, and we are currently operate with 95% of the active juniors in the country.
For the producers, we have continued to work with the likes of Antamina, Gold Fields and Las Bambas, who have all been aggressive in their plans for brownfields exploration to replace reserves, a trend that should increase in 2021.
To what do you attribute the increased exploration activity for juniors in Peru?
High metals prices have certainly been a catalyst, but I believe it is more than that. When mining was reactivated in July 2020, I spoke with one of our principal junior clients who related that the intentions of the authorities were starting to align with the mining sector, and the cumbersome bureaucracy that has plagued the industry was starting to be streamlined to expedite drilling permits. Obviously, there is still work to be done, but it is a step in the right direction.
Do you think there is a risk that drilling could be forced to stop during the second wave of Covid-19?
The mining sector in Peru was reactivated in Q3 2020, and both the industry and the government have learned a lot since then. We have been successful in establishing the right protocols so that the workers that go to the mines are protected. If the protocols are followed, there should not be a need to stop activities again in future waves of the pandemic. Our main concern is the economy, the lack of intensive care (UCI) beds and slow vaccine roll out. However, from the standpoint of a drilling contractor, we have seen optimism return to the sector, and I believe the government realizes the importance of what we are doing as an industry for the Peruvian economy.
Can you give us examples of the latest technology utilized by AK Drilling, and how it improves safety, efficiency and productivity?
AK Drilling focuses on compact drilling equipment that is easy to use. In collaboration with IDS, our technology branch in Chile, we have been developing technologies such as horizontal drilling, deep-pit drilling and automated diamond drilling. The aim of this is to improve efficiency and productivity, whilst maintaining the highest standards. In this respect, the human element of drilling is important. Remote work has accelerated during the pandemic and this is a good thing, but with certain activities, a level of skilled human intervention is necessary to maintain quality control and ensure safety.
Considering the current context where the movement of people is restricted, what is AK Drilling’s strategy for staying close to its customers in the next 12 months?
I actually think this has been strengthened during the pandemic. We are constantly in contact with clients, on the phone or via video calls. A big part of this is trust that has been built up over years, and favoring long-term relationships over spot contracts. It is important to stay close to a diverse range of clients where straightforward interactions and transparency make a difference, especially in times where you cannot meet face to face.