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Mining & Resources

Base Resources talks about developments with their Kwale project

10 Feb 2016, by Informa Insights

Colin Bwye, Executive Director, Operations & Development, Base Resources, will be addressing the annual Mineral Sands Conference in Melbourne next month.
Base Resources Logo
In the lead up to the event we were delighted to have the opportunity for this exclusive Q&A with Colin, to discuss Base Resources developments and the outlook for 2016.

Informa: We last met at the 2014 Mineral Sands Conference, where you spoke about moving the Kwale Mineral Sands project in to production, following the first product shipment – What has been the main area of focus for Base over the last 2 years?

Colin: Our main focus has been consolidating the transition from project execution to operating the asset with particular emphasis on achieving design throughput rates and product recoveries. There has been considerable effort in this area such that we are now largely achieving or exceeding design. There is still a little work to do on zircon and this is our current focus. In order to achieve all of this, there have been substantial resources applied to training at all levels of the business. This training is also aimed at facilitating a steady and sustainable transition from expatriates to nationals as well as improving our capability for strategic growth. Community engagement to ensure an ongoing mutually beneficial relationship and enduring broad based economic uplift is also central to our business model and focus.

Informa: With Kwale fully operational, from your perspective what have been the big lessons leant from the project?  

Colin: From a project delivery perspective, it is essential to have a solid system of project management that, in the early days of studies and feasibilities, creates value by enabling creative high level thinking to identify and select development options and, in the execution phases, delivers this value through disciplined methodology and clear scope definition of the selected option. This is obviously easier said than done and relies on a number of things that starts with getting the right people involved with appropriate experience and who stay with the project through the development to provide the requisite continuity. The emphasis on effective systems and the selection of the right people is just as important during the operational phase. Having good people and a cohesive team that have the license, means and clear accountability to deliver is without a doubt been the major success factor. Given that the Kwale project has been the first world class mine Kenya has seen, it has created a huge amount of interest within the country. Expectations vary widely amongst these stakeholders and this has to be managed carefully throughout the process in a manner than enables the operation to deliver according to objectives. This requires a lot of resource and effort to be applied in this area (and a lot more than you might expect in Australia for example). Recognizing this early in a project has been important.

Informa: With higher exploration costs and increased difficulty to access funds, 2015 was a challenging time for explorers and operators. How are Base Resources approaching financing in such tough condition?

Base Resouces 2
We are in the fortunate position that the Kwale project was financed at a time when business conditions were a lot better than they are now. Having said that, we have more recently successfully completed a restructuring of our debt facility to reschedule our principal repayments in a manner better suited to the current market environment. Seeking financing for new ventures is certainly harder now, however it is still possible for the solid opportunities that stand up economically and, given Base’s track record in project development, we like to think we would be able to do this successfully again.

Informa: From an operations perspective, what are the biggest challenges in getting mineral sands project into production? How did Base Resources approach some of these challenges?

Firstly, it’s all about making sure that the project is economically robust enough to justify bringing into production. This is as much about targeting the requisite investment returns as about ensuring that cash flows are adequate during lean years.

In terms of bringing a project into project into production the importance of disciplined project development cannot be understated. During the delivery phase, this includes solid scope definition at an appropriate level of detail, the ability to minimize and manage change appropriately and effectively monitor progress. This was a particular challenge for us in the early days and after recruiting the right people (particularly in the owners team) this improved substantially and contributed to the result we achieved.

Involving operational people during the design and delivery phases is important to help ensure that the plant can be successfully operationalized in a timely and cost effective manner. We had good operational people involved, however next time I would increase this involvement earlier. Striking the balance between removing project people early enough (limits costs) and ensuring that the quality on commissioning is not compromised is also critical challenge only achieved by having clear scope and monitoring delivery to this.

Informa: The outlook for the global mineral sands industry remains challenging in the near term. In your opinion, what are the factors influencing the current market?

Colin: Demand for mineral sands products remains steady and we expect moderate demand growth for the coming few years. The main challenges in the current market are largely stemming from the supply side. Large inventories in the supply chain were built from about mid 2012 as production rates of most products have exceeded the lower than anticipated medium term consumption rates (partly contributed by major new projects and capacity coming on line post 2012). It has taken considerable time for the supply side to respond. Unfortunately prices have declined sharply as a result of the over-supply and it is mostly the highest cost producers who are now being forced out of the market. Rates of production are now more aligned to rates of consumption but a recovery in pricing to more sustainable levels is now dependent on how quickly the excess inventory levels in the chain can be drawn down. The extent of any such recovery of course will then depend on how the supply side responds to an improvement in pricing – although it is expected that prices would need to reach levels that provide reasonable margins before substantial supply begins to re-enter the market.

Informa: You will be speaking at the 16th annual Mineral Sands Conference in Melbourne this March, what are the conversations that you are looking forward to having with your peers? 

Colin: These occasions are always good to gain an updated perspective on all aspects of the industry, learn from others and to explore mutual opportunities.

 Visit the website to see full details about the conference program at

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