To meet these challenges, outsourcing has become an effective tool In such circumstances which not only help In reduction In cost but also help in adopting better mining practices with advance technology without much involvement of capital cost. In the last three decades, improvements in mining technology, equipment, processes, procedures, and workforce education and training have resulted In greater safety and health. The mine management should consider that while outsourcing the work the agency selected for outsourcing should also be concerned about the safety & health issues of the persons engaged by them in mines.
In the early days, cost or headcount reduction was the most common reasons to outsource. In today’s world the drivers are often more strategic and focus on carrying out core value-adding activities in-house where an organization can best utilize its own core competencies.
Here are some common reasons for opting outsourcing by the industry: Reduce and control operating costs Improve company focus Gain access to world class capabilities Free internal resources for other purposes A function is time consuming to manage or is out of control Insufficient resources are available internally Share risks with a partner company One of the key concerns for the development of the mines in India has been the quantum of capital required which is the determinant of expected returns and the viability of the project.
The capital costs for mining projects typically include costs of land, capital equipment and infrastructure to support mining and logistics. Project costs also include capitalized expenses for clearances and approvals that help the mining project take off. Thus, the owner of the mine to focus on alternative investments such as, Contract mining (outsourcing), it is fast catching up in India as he preferred mode for development and operations of mines. This mode of hiring contract mining companies for overburden removal and even mineral winning.
There are a number of new projects being planned through contract routes. Even the traditional mining companies like, the Coal India Limited & many Us have been contracting out their mining operations. In few cases, the contract mining company to use their own equipment to carry on mining activities, which reduces the capital expenditure requirement of the mine owner. In a total outsourcing mode, the owners contract out all the processes including statutory approvals and clearances, and acquisition, mine development and operations.
Other mode is that of equipment leasing, which reduces the initial capital cost substituting the same by a mining project to have substantially lower cash outflows at the beginning of the project and help match the revenues with the costs when the mine starts the production of coal. In recent case of Arioso Minerals Development Company Ltd (MOOD), a state-owned listed mining company, which owns about 206 million tone of iron ore reserves, opting for outsourcing for mining operations of its iron ore reserves, manganese and dolomite, all of which goes into steel making.
