The success of Günzel Drilling demonstrates the importance of local expertise.
KG: Günzel Drilling has been in operation for 10 years. The founder, Arno Günzel, was at that time consulting geologist and required core drilling contractors to test a broken and abrasive rock formation. As he could not find a willing drilling contractor to do the work at reasonable rates, he decided to procure a core rig and conduct the drilling work himself, permitting immediate control over sample quality and cost. The successful conclusion of the drilling program enticed other exploration companies to contract Arno for their own core drilling programs.
During the uranium boom of 2007, Arno formalized the drilling business by separating drilling operations from geological consulting work and procuring additional equipment and rigs. Since then, the company has grown from strength to strength, so that today, 10 years later, Günzel Drilling is a firmly established core-drilling contractor.
We currently own seven rigs; two custom-made rigs for very rugged terrain and five standard Atlas Copco rigs. The custom-made rigs have been of particular good service to us as they allow us to take operations to drill positions extremely hard to reach.
Have these competitive advantages enabled you to prosper under current market conditions?
KG: Most of the Namibian exploration drilling companies might tell you that 2013 was a very slow year with many rigs standing idle, but we have never been so busy. I think what sets Günzel Drilling apart is our non-negotiable work philosophy of providing the best possible geological sample at realistic rates and I am sure that each of our clients will confirm this. The basic principle here is to understand the demands of the individual project and then to run it with the appropriate equipment and suitably experienced staff.
The fact that we are a family business is a major ingredient to our success. The notion of looking after each other and working together towards our future is embraced by all employees throughout the ranks. For example, in 2009 when the market crashed and many exploration projects were shelved, we kept all our people on our payroll. As result, the company can pride itself of negligible employee turnover and, as consequence, experienced and thoroughly trained staff.
Can you provide some examples of projects that you are particularly proud of?
KG: We have drilled for most minerals in various formations: iron ore, manganese, rare earths and metals, coal, gold, copper and uranium, and, as every project comes with its unique challenges, we are proud of all of our projects. We recently were awarded a contract in Gabon by a client we previously worked for in Namibia. This project in particular demanded thorough preparation to meet any arising challenges resulting from logistic and supply requirements. Although we obviously had to adjust to the very different West African culture, operations went very well and we concluded the project in time and with success. This experience has encouraged us to look at other markets beyond Namibia, although we will be careful to avoid saturated markets or politically unstable countries.
What is your assessment of the efficacy of Namibia’s environmental regulatory framework?
KG: As a core drilling company our environmental impact is well manageable with reasonable cost implications. However, for junior exploration companies doing green fields exploration, the situation is very different. The required scoping meetings bear a heavy burden on the administration and the scheduled time frames allocated for a project. While community involvement and enforcement of environmental responsibility is essential to sustainable development, I would imagine this could be achieved with a lesser burden on the investing company. On the other hand, for projects matured to more advanced and mining stages I consider the Namibian legislation appropriate.
Considering the importance of understanding the culture, why do you think that international mining companies opt for international contractors rather than local companies?
KG: I think international mining and exploration companies use foreign drilling contractors because they know these drillers and have worked with them before in other countries, or have at least heard of them. It is just more convenient to use a familiar service provider with drill contracts often already awarded abroad. Namibian drilling companies are well able to compete with international companies in terms of quality of service, safety standards, environmental requirements and above all, the intimate knowledge of Namibian cultural issues. For us, local competition is tough and the profit margin after securing a contract is low.
If we were to speak to you in three years, where would we find Günzel Drilling?
KG: We do not expect to expand significantly in the near future, partly because the industry is so fickle and partly because we want to retain excellent quality control. In three years I see us doing further work in Gabon and elsewhere in Africa.
Given the skilled labor shortage in Namibia, would you like to see a more centralized approach to training people in the mining sector?
KG: The only recruiting challenge we experience is in finding reliable heavy-duty truck drivers. Where it comes to drillers and supporting staff we have no real problem as we do all of our training in-house. The Namibian authorities are in the process of introducing a training levy with the objective of financing more formal training sanctioned by government. While formal training and education is always good to a nation’s development, we hope that the authorities will work closely with those companies that conduct in-house training so that the curriculum developed is relevant and practical, avoiding that such levy will turn out to be just another tax burden.
As a Namibian company, do you have a message for the delegates attending Indaba?
KG: Namibia is a good country to invest in, and, provided that the investing company secured a high-grade deposit, the company will have the opportunity for long-term prosperity in this country. To the lasting advantage of the investor and Namibia, sincere long-term economic and social investment into our beautiful country will take the investing company’s projects a long way towards success.
This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Official Mining in Africa Country Investment Guide, will be launched next February 2014, as the only official publication providing country-specific information at Africa’s top mining event, the 2014 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.