"Competition between local contractors has become very tight, and flexibility and pricing have become even more crucial."
What have been the main projects driving growth at Quantum LC in the past two years?
2019 was a challenging year for Quantum LC because of contracts scarcity, and also because there were delayed payments for the few contracts available. Fortunately, by the end of the year, we secured a contract for the AngloGold Ashanti Obuasi mine. As part of the redevelopment plan at the underground mine, our role is to help integrate the process plant that extracts the gold. This contract has become the lifeblood of the company, and we have a chance of being there for the life of the mine if we perform well.
Could you share more details into Quantum’s recent JV partnerships?
One of the important decisions we took as Quantum LC was to enter into a JV partnership with WBHO, a South African civil works and earthworks service provider, for whom we had previously worked as a subcontractor, renting equipment and providing personnel for them. Late in 2019, we decided to combine our strengths in a JV company called WBHO/QuantumLC JV Ltd.
We also entered into a JV with a Portuguese company, Mota-Engil, and together we tendered for a project at AngloGold Ashanti’s Iduapriem mine in Tarkwa. My view is that the mining industry in Ghana must empower local contractors to execute most of the contracts. It is only with a strong foundation of robust local companies that an industry can flourish. The oil and gas industry in Ghana is enforcing a 30% local talent policy, and I believe similar requirements will be extended to mining in the not-too-distant future.
Quantum LC offers a wide range of services - from equipment rentals, to drilling, blasting, haulage, construction of tailings dams and training of personnel. Why is it necessary for a contractor to cover such a wide spectrum of services?
Our industry has become so competitive that contractors cannot afford to be picky. Contracts do not come up regularly, which is why it is not advisable to focus solely on the provision of one service. Competition between local contractors has become very tight, and flexibility and pricing have become even more crucial. This is why Quantum LC covers everything from drilling, to blasting, haulage and construction of tailings dams. We need to keep cash flow running because we take loans to purchase equipment and we cannot let our equipment sit idle and not generate income.
Could you comment on the banking system and the access to capital for private entities like Quantum?
We are privileged to have the support of various banks in the region that finance our equipment purchases by using our equipment as collateral. However, borrowing costs are much higher in Ghana than in most countries in the world. This makes us not competitive to foreign contractors who are able to source cheaper funds and ultimately you end up working to pay the banks, and, by the time the loan is paid off, the useful-life of equipment is nearly exhausted.
What is your final message to our audience?
My dream has always been to own a mine and I understand that in life, we go from crawling to walking, and then to running. My business journey so far has moved from selling mining equipment to offering mining contract services, and hopefully it will eventually lead to the dream of owning a mine. If we look at Ghanaian mining operations, it is the locals who perform most of the work, with a ratio of 20 or more locals to one expat. Ghanaians occupy top positions, so why can’t we operate and manage a mine ourselves? We deserve to take ownership of our own resources and set an example in the industry. By building synergies in the industry, and with the support of the government, this is an achievable dream. If investors share in our dream, we invite them to get involved.