Master Drilling maintains eye on growth as strategy gains traction

JOHANNESBURG (miningweekly.com) – JSE-listed Master Drilling continued to pursue its geographic, commodity and business diversification strategy throughout 2015, with gains expected to start being realised in the coming year.

The company had set the platform with the acquisition of a Sweden-based company and its Chilean subsidiary, an expansion into Columbia and Ecuador, a step into the US and gaining traction in the deployment of several new potentially game-changing technologies.

“Growth has been accelerated in line with our strategy of entering two new geographies a year,” Master Drilling CEO Danie Pretorius said on Thursday.

The group, which was now exploring the US and Canadian markets, had expanded its potential in Europe after the December acquisition of 40% of raisebore drilling operator Bergteamet Raiseboring Europė for €5-million and the subsequent 100% €4-million acquisition of a subsidiary of Bergteamet Latin America.

Bergteamet’s dominant market share in Sweden, Norway, Finland and Ireland would provide a launchpad for Master Drilling to diversify into the European market. The group also had plans to enter Turkey and Iran.

While Pretorius believed Chile, Brazil and Peru could be negatively impacted by China’s economic deceleration, Mexico was expected to benefit from improving economic conditions in the US, which received 80% of Mexico’s exports, and underlined Master Drilling’s business case for using Mexico as an entry point into the US.

“We established operations in the US in September 2015. In this region, we have not targeted any specific sector, but will go where the opportunities are,” he said.

In Latin America, Master Drilling continued to build on its existing structure and focus on improving efficiencies, with geographical expansions achieved in Ecuador and Colombia.

“In 2016, we expect to see added benefits from our geographical expansions,” Pretorius said.

“The US operations are expected to contribute towards the group’s geographical footprint. Latin America is expected to continue on a steady course. Operations in South Africa will be monitored closely as the country’s mining industry is currently under tough economic pressure.”

Meanwhile, Master Drilling continued to minimise its weighted reliance on commodities by expanding into the civil, construction and hydro-energy sectors.

“We have, for example, built up expertise in sinking inclined tunnels for hydro-energy schemes. With the growing emphasis on renewable energy globally, we are well positioned for further growth in this sector,” he explained.

In terms of technology optimisation and development, the company was in the process of commissioning the RD8 raisebore machine at the refined-copper producer Palabora Copper’s R9.3-billion Lift II project, in Limpopo.

The company also recently unveiled the design of its blind shaft boring concept – a mechanised system for shaft sinking in hard-rock conditions.

The system, designed in 2015 and expected to be licensed for manufacturing in 2016, would be available for implementation early in 2018 and was expected to create access for man and materials and establish ventilation shafts of up to 14 m in diameter and 2 000 m deep in hard-rock applications.

Master Drilling would also continue its efforts in the optimisation and increased profitability and people capacity and development elements of its four-pillar strategy.

The group increased training capacity and embarked on succession planning to create management depth for future growth and would, going forward, further expand its central procurement functions, identify specific cost management projects, undertake commercial management process enhancements and ensure its equipment use was maintained at the “right levels” to “serve opportunities” as they arose.

The group would also review its training systems and resources, increase focus on management skills development in each region, speed up succession planning and deploy incentive schemes for all levels of employees.