Contracts and Tenders: A vital component

The excitement of an early prospector’s ‘Eureka’ moment after unearthing a nugget of gold or finding a gloryhole was undoubtedly followed by the realisation that the hard work was only just beginning.

Modern mining hasn’t changed much in that regard. But today, the initial euphoria of a significant find is also tempered by the attendant ongoing administrative hoops which need to be jumped through.

At the upper end of the scale there are the state and territory governments, gatekeepers and scrutineers of all mineral and energy resources, with the power to initiate exploration contracts. Along the scale are the ongoing deals enacted to keep a mine in motion, the tenders, re-tenders and contractual deals that pepper the life of a mining operation and, if not well-considered, can be an obstacle to progress.

Whether making a direct application for a new mine or submitting (or inviting) a competitive tender for one component of a working operation, navigating the plethora of steps involved can, excuse the pun, be a minefield. Yet each step of the contracts and tenders process is a vital component in ensuring that outcomes are not merely viable but productive for all concerned at every stage of an operation

With mining contracts representing in excess of $3 billion per annum in Australia, engaging contractors who have the capability to deliver the technical, operational, safety and financial services required is critical. The most successful commercial contracts are undoubtedly those formulated with clear understanding of mutually agreed expectations and outcomes, arrived at through the robust scrutiny of all parties involved.

To ensure healthy, productive contracts which respect all parties’ roles and responsibilities prior to commencement means enacting due diligence which is both timely – and ongoing.

So, while it is gratifying to see both miners and contractors grasping the importance of relational contracting, engaging an impartial, external party to oversee contracts and tenders is a valuable investment in time, productivity and in preserving relationships with contractors.

With mining exploration set for a post-COVID boost, now is a good time to explore the benefits of engaging the services of an external advisory company. Contact us to discuss how to utilise our extensive knowledge of all facets of the mining industry and expertise in conducting due diligence for contract and tender valuations.

Contact MEC Advisory:
Ph: 07 3832 0301