African Mining Projects: an Executive Interview with Tim Carstens, Managing Director at Base Resources
Base Resources is an Australian based, African focused, mineral sands producer and developer with a track record of project delivery and operational performance. The Company operates the established Kwale Operation in Kenya and is developing the Toliara Project in Madagascar. Base Resources is an ASX and AIM listed company.
AP: Hi Tim, I appreciate you have a busy schedule so thank you very much for taking the time to meet us. Would you share with us your vision for Base in the next few months and next few years?
Tim: The objective has always been to build a meaningful company the right way from the bottom up, and that's still the case. We see ourselves becoming a multi-operation company with a pipeline of project opportunities that will deliver a high level of quality earnings that is acceptable to our shareholders. We set ourselves the target of being the first thought-of mining company when people are considering truly successful resource development in Africa. That sort of principle shapes everything we do, and it's kind of an enlightened self-interest approach if you like. Because we understand that if people see us that way, Governments will invite us in, communities will invite us in, the best employees will seek us out, and that's very much the philosophy that guides how we go about what we do. It's a vision that permeates every corner of our organization.
AP: To be the first?
Tim: Not necessarily the first, but the first thought of and to be the company that people are thinking about and talking about in the way we go about what we do.
AP: How does this translate in the short term?
Tim: In the immediate term, it's obviously optimising our Kwale operation, looking to extend the life of this operation as the single biggest value lever we have now that we've got it humming.
Secondly, with our foot on what we think is the best-undeveloped mineral sand asset in the world, it is continuing to progress our Toliara project in Madagascar, following the ‘Base Way'.
But also keeping us alive to opportunities out there to, I guess, see what comes next. We've got a multi-level sort of approach to it. Obviously, we think Toliara is the best way to unlock value, but we can also see other opportunities that could certainly add to the portfolio over time.
AP: The ‘Base Way' is an expression that I've heard quite often, working with you guys. How would you define it?
Tim: In several terms, the ‘Base Way' as we call it, is kind of our overarching core ideology. It's what we believe in, in the way that we design our organisation, in the way we expect people to behave, in the way we work and interact with each other.
It's built around four basic elements – the first is the potential of people, the second is the power of the team, the third is the value of resources and the fourth is absolute integrity. There's obviously a whole lot of descriptive material under that explains what we mean, but fundamentally, it's a strong belief in those four things and the way we harness all that together into the ‘Base Way' ideology. So, it really is a badge for our culture.
AP: Tim, you've been with the company for 11 years, so this might be a bit of a tricky question, but what has been the highlight for you during this time?
Tim: I think the highlight for me thus far is being in the position to capitalise on what was a really successful development at Kwale, and the business model we've been able to refine around that. Capitalising on that and taking the next big step into our second asset. You know, it's one thing to develop a mine and a mining operation, it's another thing entirely to transition into a second asset and not take your eye off the ball. This and the fact that the ‘Base Way' really has become the fabric of our organisation, is enormously satisfying.
AP: You have an asset that you capitalised on and you have a project that you're developing. Do you see synergies in between operating a project in Kenya and developing a project in Madagascar?
Tim: There are many, many synergies. Starting at a very practical level, the processing facilities at Toliara are going to be very similar, in many ways, to what we have at Kwale, so the ability to refine what we did at Kwale, itself a very successful operation, to take those learnings into what we're doing at Toliara, is enormously valuable.
The whole team who helped bring Kwale into being are still with the organisation, and quite a few of the expats who were trained up there, have been seconded from Kwale, replaced by Kenyan employees and are now working on the Toliara project. So, we've got strong institutional knowledge about what made Kwale a success.
The second thing is quite a refined business model for operations in Africa, particularly around early training and development, and how we develop the skills we need in areas where those skills aren't already there. It was a bit different in Kenya, while there was a high educational standard, there was no history of mining, so we had to develop those skills. In Madagascar, it's almost the opposite, where there are a couple of large mining operations that have been running in the country for some time. So, we have been able to secure some of the mining skills, but the general level of education is lower, consequently, we've had to do a lot of grassroots training.
We're still two and a half years away from operations there and we've already started all the training programs for operational skills. We have around 25 apprentices who we have selected in Madagascar that are going to go work in Kenya for the next couple of years, completing their qualifications, but also understanding how we do what we do, in the ‘Base Way' so to speak.
In short, a lot of synergy there, being able to take people to Kenya to understand what we do and how it's being done and also being able to bring out the team from Kenya. We are now starting to bring some Kenyans out to Madagascar. It represents a huge opportunity for them and us. The Government of Kenya is quite excited about the fact that Kenya is now exporting mining expertise.
There are also some good learnings from the Kwale experience. A good example is our labour recruitment system which actively biases employment opportunities to people around the mine site. It has a multiplier effect, first, it ensures that you're maximizing local employment by only progressively stepping out when you can't find those skills immediately around the mine site. The other thing it does is managing influx, which is always a problem with a mining project when you suddenly get what seems like this big economic centre of gravity coming into an area. With our approach, you are eligible to be prioritised for employment only if you are actually from that area as signed off by the local administration,
In Kenya, for example, we've got around 1,000 people employed at the operation. Right now, 98% of those employed are Kenyan and almost 70% are from Kwale County. Now in the context of never having had a mine in Kwale County, it's not a bad effort, that represents 700 jobs. When you consider the multiplier effect, which in Kenya is about 5 to 1, you are now talking about a very significant number of jobs getting created.
These have been some of the learnings, there are several others, such as the way we engage with governments. It's a whole business model that has been refined around Kwale.
AP: What type of programs and initiatives do you have to attract local workers and women, as this is often an issue in these areas?
Tim: Yes, it is definitively one of the challenges when you're building a mining operation. The primary focus for us is maximising local employment. That has to be the overarching objective. Then trying to maximise the opportunities for women within that requires a slightly more difficult focus. We have been reasonably successful in Kenya, where the latest statistics are about 18% female workforce. In Madagascar, we are at about 28% of female employment. We are being reasonably successful in that. Where we try hard is at the graduate and trainee intake level, where we set our target at 30% intake and about 33% of current intakes are female.
The other thing we do is to create greater opportunities for women in our procurement chain. We are currently conducting research in Kenya on this, and I think some of the learnings out of that will become useful as we progress Toliara.
Regarding programs and initiatives to attract local workers, as mentioned above we have several traineeships underway. The best part of 1,000 people have been selected for traineeships out of about 5,5000 people that were registered. We have gone under a transparent, fair and efficient process to establish this, with Globe 24-7 being heavily involved in it.
Also mentioned earlier, we have an apprenticeship program to Kenya, we've completed the first round of full-cycle training for heavy equipment operators, where we took some 20-odd people from absolutely no background in heavy machinery, ran them through an aptitude and training program through our CAT simulator, then we got those people into machinery, working on community projects, and now these people are qualified and quite competent driving this heavy equipment. We do have quite a few things going at the moment.
AP: What I find stunning is, so you take people of no previous experience, you train them, employ them and there you are with an LTI at zero. How do you explain that?
Tim: A lot of focus! Safety has become such an ingrained part of our culture. In Kenya, we haven't had a lost-time injury since February 2014, and we haven't had a medically treated injury for about 2.5 years now. So, it is a critical part of the culture of the organisation, and we don't step in any direction unless we're comfortable with the safety aspect and that we're on top of all of the cultural aspects.
Our safety approach is one that's not overly systematised – we have a system, but we don't rely on the system to keep us safe, that's absolutely a personal obligation of me to keep myself safe, and those around me. We use the system to help us do that, but we all take accountability for safety.
AP: Still, how do you go from no safety culture to zero LTI?
Tim: It is an exercise in constant reinforcement. When people see the extent of the training they get, to begin with, they say "hang on a minute, this is different". Then anybody in the organisation is authorised to stop any activity if they believe it is unsafe. It's a phrase that a lot of us use, and you'll hear it in other organisations, but you have to do it rigorously. All of us are always on alert. We are just constantly reinforcing this, at all levels. There's no magic to it, it's just the right mindset in the organisation and constant discipline around reinforcement.
We are also aware that we are just one step from that all tumbling down again, all it takes is just one event to unravel that. We're not so overconfident that we think we are not that close to having a problem, we're always on alert and thinking about it.
AP: So, people feel comfortable reporting incidents?
Tim: That's one of the first things that most people think, and it's also something that we're very alert to. Nobody here has ever worked somewhere that has this kind of record. Are we missing something here in terms of the culture we've created? We are so alive to that, but I just don't think it's there. You know, we certainly question ourselves on things like that.
AP: In terms of working in an African environment and looking at your experience, do you see any specific people challenges linked to this specific environment?
Tim: One of the biggest challenges you'll always have with a mining project, particularly in Africa is that you can never employ enough people! Everyone wants a job. When you come in with a mining project, you create huge expectations, and everyone thinks they're going to be one of those employed. Managing these expectations is one of the biggest challenges.
I think that one of the biggest traps that people sometimes fall into is that it's always easier on the way into an area to overpromise about what this will mean to people. It's the path to least resistance. Certainly, from my experience, a community's expectation starts high, and they just get higher. You must take the harder road and manage expectations around jobs from the start.
Another key issue is finding the basic level of skills and education that you need when you're in a remote or less developed part of a country. That's why 2.5 years out we are investing in training programs to get the skills we need by the time we are ready to go.
The biggest risk is if there is project delay, frustration sets in, people may become a bit cynical about it. But the reality is if you want the skills you need, you have to start this early. Getting a project up and running is a process that requires time.
AP: Do you think being an Australian company presents some more opportunities or challenges to operate in the African environment, or do you think it has nothing to do with that?
Tim: I believe it's absolutely an advantage. Australia does have a very good reputation in Africa, with African Governments, with communities, concerning its performance in mining. It is regarded as being the pre-eminent mining expert.
We have certainly found we have been welcomed with open arms as an Australian company in Kenya and now in Madagascar, as they see us as utterly credible as an Australian company. In fact, when we were looking at branding in-country, we were very strongly advised to play up our Australian base.
The other thing that helps is the Western Australian Department of Mines and Petroleum running support programs and training programs for Governments.
You know, we wear our Australian brand as a badge of honour in Africa.
AP: I don't want to take too much time, I think we've passed the half an hour mark, do you want to say a word about how you see the market for mineral sands in the coming years and how this is coming to fit with your predictions?
Tim: Our acquisition of Toliara was informed by a very clear view that we are heading into a structural short supply of mineral sand products. There is a need for new supply, and we want to put ourselves at the front of the queue for that next supply development with the right asset, and we think we are there.
About Globe 24-7
Globe 24-7 (Globe) has been conducting human resources consulting and search assignments for local and international mining, power and energy companies around the world for over a decade. Globe has offices in the major markets of the world to ensure consulting assignments and search campaigns are effectively managed at both site and corporate locations and has grown internationally to now service small, mid-tier and large-scale companies through its project recruitment, search, HR consulting and HR Systems divisions.