Ensuring against loss of profit is critical - Eikos

Logistical delays can cost mines a fortune in lost profits if start-up dates are missed – and while mines will normally take out insurance cover for general losses, they balk at including advanced loss of profits (ALOP) as it is perceived as being too expensive. The mining industry, by its very nature, is dependent on the transport sector, Eikos Risk Applications managing director Hugh Reimers told FTW. “Mining sites are often situated in remote locations and South African mines import a lot of their plant and equipment. With the logistical challenges faced in the country, there are often delays which lead to a loss of turnover every day until the equipment arrives,” said Reimers He believes, however, that there is some room for optimism. “Transnet is making huge strides in areas such as the replacement of damaged rails, a major contributing factor to derailments. Furthermore, Transnet Port Terminals is spending R33 billion over the next seven years on upgrading and expanding South Africa’s ports, something the mines are very happy about,” he said. Road transport, however, continues to be a costly endeavour for South African mining houses, and there appears to be no respite on the horizon, he added. “Rising fuel prices and toll fees add further to their logistics costs.” He said that it was “imperative” that mining houses review their supply chain solutions. “Part of this optimisation must be to ensure that at every stage, the correct risk management and insurance covers are in place. And that includes, crucially, cover for advanced loss of profits,” said Reimers. INSERT & CAPTION It is imperative that mining houses review their supply chain solutions ― and that includes risk management and insurance cover. – Hugh Reimers