"We have seen significant demand for equipment in the past year. Mining companies require more support as they have been ramping up production, riding on the high commodity prices."
Tractafric operates in 10 African countries as the official Caterpillar dealer. What have been the main developments over the past year?
We have seen significant demand for equipment in the past year. Mining companies require more support as they have been ramping up production, riding on the high commodity prices. In particular, the gold space has been exceptionally active, even though prices have slightly tumbled lately. Personally, I joined Tractafric a year ago, but I spent the past two decades working with the mining industry on behalf of equipment suppliers in both East and West Africa.
How is the higher price of consumables and raw materials reverberating in the equipment sector?
Inflation has been consequential on all sectors of the economy, and equipment suppliers like us sit at the frontline of upward cost pressures for both equipment and spare parts. The additional and even more challenging layer to the cost problem is the limited availability of parts and components, due not only to logistics challenges – which have played a big part – but mostly to reduced production capacity struggling to keep up with post-Covid, pent-up demand. We live in a most unique scenario never experienced in the past 20 years whereby demand is exceedingly high while supply is scarce. This situation has brought significant tension into the markets but thankfully there are some signs of improvement in the short and medium term.
How can the mining industry better face these challenges?
The mining industry could learn to bring more efficiency into their operations by adopting technology. The sector is not known for being ultra-efficient and there is ample room to change that. In a bull market, mining companies are ready to invest, but when the economics change, they tend to downsize and pull out of investments. I think they could do better at investing in technology that will help to increase their productivity, such as guidance technologies, maintenance optimization or safety devices to prevent operators from falling asleep, as a preventative measure to reduce downtime and avoid injuries. With a small capital investment, mining companies can drive up efficiencies by 10-15% within their equipment. Technology takes time to implement, and it requires a cultural shift in the organization, but it can go a long way to offset future pricing challenges.
How do you observe the African uptake of innovative technologies like electric machinery or automated devices?
Africa has been on the back foot of adopting technologies related to carbon emissions reduction, but this is beginning to change. We are seeing a new wave of demand for such technologies, like cleaner engines with reduced fuel consumption, and, I dare say, electrically powered mining equipment. CAT is at the forefront of electrification in the equipment sector and just a few weeks ago it launched its first ever 100% electric underground loader. This is a game-changer and a step beyond the hybrid equipment it has offered so far. Automation is very big globally, and we see it also coming to Africa. Some West African underground mines run on a completely autonomous system. We are still some years behind other places like North America, and automation is still not the top priority of African miners, but I reckon in the next five to ten years we will see that trend change.
What are the main growth opportunities for Tractafric?
First, we have a huge opportunity with existing customers, especially in the gold space, to support them in their expansion plans not just with equipment but also with services; more and more, customers want their dealers to be at the site and work shoulder to shoulder, beyond simply supplying equipment. That is because miners want to drive efficiency and make the most out of their machines by achieving a lower cost per ton or securing a longer lifespan for their existing equipment.
The second growth pillar is to follow new opportunities in the greater Central African region – in countries like Gabon, Cameroon, and Congo (Brazzaville) - which have not seen much activity in the past but are now attracting considerable attention. World-class deposits in these countries are being looked at with fresh and keen eyes, and some are already at feasibility or pre-feasibility studies.
Do you have a final message?
Mining is a very exciting industry to be in, especially in Africa, and especially at this time, so I am very optimistic about the future despite all challenges that we may confront now.