Business Case Study on wrong procurement strategies: Procurement Strategies in Geophysical Exploration

This case study analyzes the procurement strategies of a mining company that aimed to discover psilomelane (an ore of manganese) in the Mansa area of Zambia. The company faced significant challenges due to inadequate equipment choices and a lack of comprehensive understanding regarding the mineral’s magnetic characteristics. As a result, the project ultimately failed to achieve its objectives. This study highlights the importance of informed procurement decisions, utilizing existing data, and timely equipment acquisition to improve the likelihood of project success in geophysical exploration.

Drone Magnetometer equipment

Introduction

Background

Geophysical exploration is crucial for identifying and characterizing mineral deposits. In this case, the mining company focused on locating psilomelane, a mineral known for its weak magnetic contrast. Initial research suggested the presence of psilomelane in mine dumps, but the company’s procurement strategies fell short, leading to project failure.

Objectives

The objectives of this case study are to:

1. Analyze the procurement decisions made during the project.
2. Highlight the consequences of inadequate equipment selection.
3. Provide recommendations for future projects in geophysical exploration.

Analysis of Procurement Decisions

Project Initiation

The company initiated its project with the intention of discovering psilomelane deposits in the Mansa area, which is geologically rich and known for its mineral resources. However, the following key decisions undermined their efforts:

Step 1: Inadequate Equipment Procurement

• Choice of Magnetometers: The company opted for proton precision magnetometers, which are characterized by low sensitivity (0.15 nT) and resolution (0.01 nT). This equipment was unsuitable for detecting the weak magnetic signals associated with psilomelane.
• Impact on Data Quality: The low sensitivity resulted in poorly resolved magnetic data. The exploration team struggled to differentiate between weak psilomelane signals and stronger geological features, leading to confusion and erroneous interpretations.

Low resolution proton precision magnetometer (Sensitivity — 0.15 nT @ 1 Hz
Resolution — 0.01 nT)

High Resolution Potassium Magnetometers (Sensitivity: 0.0002 nT @ 1 Hz
Resolution: 0.0001 nT)

References:

Proton Precision Magnetometer: https://www.gemsys.ca/versatile-proton-magnetometer-gradiometer/

Potassium Magnetometer: https://www.gemsys.ca/ultra-high-sensitivity-potassium/

Step 2: Ignoring Existing Data

Despite having access to aeromagnetic data, the company chose to invest in drone magnetometers that also exhibited low sensitivity. This decision reflected a lack of strategic thinking regarding data utilization:

• Lost Opportunity: By ignoring existing aeromagnetic resources, the company failed to gain insights that could have informed their exploration strategy and equipment selection.

Step 3: Late Addition of Handheld Susceptibility Meters

In the later phases of the project, the company acquired handheld susceptibility meters in an attempt to understand the magnetic characteristics of the ore:

• Delayed Implementation: If the company had introduced these meters earlier, they could have assessed the magnetic properties of psilomelane from the mine dumps. This information could have led to a more informed procurement strategy, including the purchase of high-resolution magnetometers like potassium magnetometers.

Consequences of Poor Procurement Strategies

1. Project Failure: The culmination of these procurement missteps led to a failure in discovering psilomelane, wasting both time and resources.
2. Financial Losses: The investments made in inadequate equipment, coupled with missed opportunities to leverage existing data, resulted in significant financial losses for the company.
3. Damage to Reputation: Repeated project failures due to poor decision-making can tarnish a company’s reputation within the industry, affecting future business opportunities.

Lessons Learned

1. Conduct Thorough Preliminary Research: Understanding the target mineral’s geological and magnetic properties is critical before making procurement decisions.
2. Utilize Existing Resources: Leveraging available data, such as aeromagnetic studies, can enhance the effectiveness of equipment selection and exploration strategies.
3. Ensure Timely Equipment Acquisition: Procuring appropriate tools at the right stage of the project is vital for collecting high-quality data and achieving successful outcomes.
4. Adopt Iterative Decision-Making: A flexible procurement strategy allows for adjustments based on initial findings, helping to avoid costly mistakes.

Recommendations

• Utilize Low-Investment Equipment for Preliminary Analysis: Companies should consider acquiring low-investment equipment such as handheld susceptibility meters early in the project. These tools can provide valuable preliminary data about the magnetic characteristics of the target minerals without incurring high costs. This initial data can help guide the specifications needed for high-capital equipment, ensuring that investments align with the project’s requirements.
• Explore Less Expensive Options: In the context of investing in high-capital drone magnetic magnetometers (~ INR 1.5 crore), companies should explore more affordable alternatives. Given that aeromagnetic data was already available for the Mansa area, there was no need to invest in drone magnetometers, which often come with high costs and operational complexities. Utilizing existing aeromagnetic data can provide valuable insights and save significant resources.
• Conduct Comprehensive Feasibility Studies: Before starting new projects, companies should conduct thorough feasibility studies to assess the potential success of mineral exploration efforts. These studies should include an analysis of the necessary equipment specifications to maximize data quality.
• Train Personnel on Data Utilization: Equip team members with the skills and knowledge to effectively use available data resources in decision-making processes. Understanding the data obtained from low-investment tools can help refine the criteria for selecting high-capital equipment.

Conclusion

This case study illustrates the significant impact of procurement strategies on the success of geophysical exploration projects. The company’s experience in Mansa, Zambia, underscores the necessity of informed decision-making, strategic use of existing data, and timely acquisition of suitable equipment. By addressing these issues, future projects can enhance their likelihood of success and achieve desired outcomes in mineral exploration.