INTERVIEW: Africa's downstream ambitions require technical, legislative roadmap: VBKOM execs

South African engineering and project management firm VBKOM announced its expansion into the Australian mining sector in February, representing its second such move after opening its Canada branch in Northern Ontario in 2024.

Executive Director Eduan Pieterse was one of the first experts recruited when VBKOM was founded in South Africa in 2008 to initially service Africa. While VBKOM has worked for major miners, Pieterse sees an opportunity to cater to explorers as drilling is booming.

Platts, part of S&P Global Energy, spoke to Pieterse and Henk Ludik -- directors of VBKOM's new Australian arm -- in Kalgoorlie, Australia, where they were attending the Diggers and Dealers Mining Forum in August. This interview has been edited for clarity.

Platts: Why expand to Australia now, given the company is already 18 years old?

Eduan Pieterse: We are a technical mining consultancy operating out of Africa for 18 years, servicing mining companies in Africa, but we have identified the need to expand, and we are busy creating capacity and putting feet down in Australia and Canada. We are strong on the front end -- geology, mining engineering and metallurgy.

For a lot of the Australian miners that have assets in Africa, if we have a presence here in Western Australia but have the thickest capacity in Africa, we can serve those clients on both fronts -- in the boardroom in Perth with our local presence, and by addressing the practicalities of their projects in Africa without requiring them to navigate those challenges as well.

Operating from a South African cost base will provide an astute Australian miner with an alternative consultancy and a [different] commercial cost structure. The exchange rate differential between Australia and South Africa is substantial. That should translate into a bit of leverage for both parties, and we believe this will provide a competitive alternative, especially for discerning junior or smaller miners who need to [carefully consider] where to invest.

When we looked at Australia, we saw the size of the opportunity to support development and the appetite for development among the junior and mid-tier miners, but we were surprised by the actual skill shortage within the industry and how rapidly highly skilled people move between companies.

For junior miners, securing the capabilities has become such a challenge that incentive packages around share options and whatever else have become eye-watering, even for some shareholders. The opportunity for us there is to support these junior miners with the skill base they require on a "switch on, switch off" basis, as and when needed, without the eye-watering price attached to locking in those skills.

In Australia, we are specifically looking at junior and maybe mid-tier miners, although the irony is we pretty much cut our teeth with the tier 1 companies like BHP Group Ltd. and South32 Ltd., who appreciate our technical depth. The junior mining market is much more nimble. You need to [address] the needs and be much quicker with your decision-making without having to go through all the details, and we are quite comfortable doing that.

Platts: How does this compare to Canada?

Eduan Pieterse: Australian junior miners want to move fast. They do not want to sit on their money or [or spend excessive time] studying assets. They want to get to the answers quickly, which is a lot different from what we have seen in Canada.

Henk Ludik: The Canadians are very cautious -- very conservative and very risk-aware. They tend to sit on their projects and on their decisions longer. They tend to study it a little bit more, and unfortunately, I do think some of their policies, specifically around First Nations and consultations, tend to protract some of the projects, not being able to move as quickly. So the capital is locked in.

That is where the Australian market is taking the lead. It is slowly starting to turn in provinces like Ontario, which has promulgated the Building More Mines Act, acknowledging that they need to move faster and streamline the consultative processes. British Columbia is very much slanted to very deep consultations and being inclusive, but it does tend to slow the decision-making.

Platts: What are some of the biggest challenges you see in Africa, where VBKOM started off?

Eduan Pieterse: In Africa, there are technical complexities, and the margin for error is very, very small. There are many challenges in Africa that we have been helping mining companies navigate, which we call "decision support." The Australian mining community appreciates technical consultancies that understand the complexity, but we are able to translate that into the investment narrative and help boards articulate the technical complexities and the road forward, at a cost base that is slightly lower than that of tier 1 consultancies.

Nationalization and security of deposits, jurisdictional challenges and country risk ... those will always be there. Africa is richly endowed with a vast basket of minerals, and Australian miners have the grit and the appetite to operate there. We have experienced some of those challenges, with some run-ins in some of the northern sovereigns, including in Northern Africa, where the nationalization agenda has been brought forward, with military elements. One of our other services is the ability to translate the enterprise risk, portfolio risk and the technical risk in an integrated manner to boards.

Henk Ludik: Generally, with a new commodity, whether it is rare earths or lithium, African countries are pushing harder for in-country beneficiation, and they do not necessarily understand the complexity associated with that. The beneficiation, for instance, on rare earths is exceptionally complex. It is a skill that very few countries actually have. To set up that beneficiation in-country at this point, given the skill base and the governance, legislation, etc., just does not make sense.

That is a hurdle and is going to remain a talking point for the next 15 years or so. Having operated in Africa for 18 years and delivered north of 1,500 projects, we understand how to engage with both our customers -- the miners -- and governments to bridge that hurdle to show them that if you want beneficiation, the answer is it is not going to happen today, but if we want to get there, [we could] show them the road map that [they] will have to follow from a technical and legislative perspective.

We have seen very positive test cases recently in places like Malawi, which does not have a long history of mining, but has recently discovered tremendous rare earth and heavy mineral sands deposits. We know that the mining skills are not in place today, and the government would like to use as many local skills as possible, but policy frameworks are not in place yet either.

[Establishing] suppliers, supply chain skills and supporting infrastructure like power, water and roads ... [is] going to take capital and time, and we are willing to help support that development, but it is certainly not something that is going to happen overnight.