Apex Minerals Australia Mining Can Be an Case Study
- Length: 7 pages
- Sources: 10
- Subject: Business - Management
- Type: Case Study
- Paper: #26877044
Excerpt from Case Study :
Apex Minerals, Australia
Mining can be an iffy science due to the fact that indicators of the ore, whichever ore happens to be the focus of the endeavor, can be misled. If this is the case then a mine may have to be abandoned or shafts excavated in new areas around the original to uncover what is known to be there. If the ore is coal, then it is probably plentiful in a specific area, but more precious ores may be more elusive. Gold mining is one of the types.
Gold mining does occur on the micro-level of a single miner panning or digging for gold in an area that is known to contain ore. Claim are made, and the individual miners and their families work the claim or claims until there is nothing else to be had there easily. Then the miners move on to other areas. But, this is not the way it is done in most areas. Small mining claims are an artifact of the past for the most part because the need for gold in industry and as a precious metal far outstrips what these types of miners can produce. Because of this, large corporations are the main producers of gold, and they can dig hundreds of thousands of ounces out of the ground every year.
In Australia, one of the largest ore producers is Apex Minerals NL which has been in operation for more than a decade. The main property of the ownership group is the Wiluna mine and they have other operations located around West Australia. However, production has been off for the last two years, and shareholders have not been happy. Miners have also felt the brunt of poor management as they were not paid for a couple of months in late 2011. Because of this crisis, shareholders replaced the CEO, but that may not have been enough to save the company. This paper is a critical analysis of the systems thinking that has either gone right or wrong for Apex Minerals, how the different sub-systems interact with one another, and solutions to the issues that present themselves.
Overview of the organization and the change provided
Apex Minerals is an Australian company involved in the securing and trading of minerals, primarily gold. The company is involved in large mining projects which require a great deal of machinery and personnel, and a large amount of capital. They have three main mining projects currently in operation with the Wiluna, Gidgee, and Youani mines. The company web site says that
"Wiluna is a world class goldfield having produced approximately 4 million ounces of gold during its history. It is located 1,000 kilometers northeast of Perth and comprises mining leases covering approximately 50 square kilometers, as well as miscellaneous licenses. The operation has access to the Goldfields Gas Pipeline and includes gold resources totaling over 1 million ounces" (Apex Minerals NL, 2012).
This goldfield was purchased by the company in 2007, and operations began in 2009. The capital to purchase the mine came from pre-open spending funds which raised U.S. $20 million for the purchase of land and equipment. The Youanmi project has so far yielded 951,000 ounces of gold and is being developed, while the Gidgee gold project was sold and yielded U.S. $15.5 million in needed extra capital for the company (Apex Minerals NL, 2012).
The issue with the company has been profitability. The Wiluna mine is the flagship of the operation (Showers, 2011), and it has not been producing the capacity that the company needs to make it a viable investment. The company claims that where four million ounces has already been mined, that there are at least another million in the ground waiting extraction (Apex Minerals NL, 2012). Investors are skeptical regarding the claims of the company (Tasker, 2012), so the company just hired a new CEO who has turned other faltering minerals giants around before. According to an article in Australian Business by Sarah-Jane Trasker, the company hired Ed Eshuys to run the company. "Mr. Eshuys, a former right-hand man to Joe Gutnick and former boss of goldminer St. Barbara, moved quickly to allay fears of unpaid wages at the operation and outlined his aggressive plan to see the Wiluna mine increase production and break even" (Trasker, 2012). This has solidified the shareholders behind the company for the time being, but Mr. Eshuys has a short leash. The company has not fully utilized it mine properties and both employees and shareholders are sceptical that the management can turn it around.
Systems Thinking Explained
Systems theory has been in use as a means of studying organizations and organisms for more than a century (Laszlo & Krippner, 1998), and the theory has been applied to many different disciplines. One of these is in the area of cognition and is termed Systems Thinking (Aronson, 1998). Aronson (1998) defined the practice by saying that;
"Systems thinking & #8230; focuses on how the thing being studied interacts with the other constituents of the system -- a set of elements that interact to produce behavior -- of which it is a part. This means that instead of isolating smaller and smaller parts of the system being studied, systems thinking works by expanding its view to take in larger and larger interactions as an issue is being studied."
This style of thinking follows a deductive reasoning approach in which a known is agreed to and an argument is satisfied based on producing further known quantitie4s until an agreement can be reached. Systems thinking starts from an original point and from that point looks at how that interaction has affected a wider circle of natural elements. For example, a stone thrown into a pond causes ripples that expand toward it edges. Because of the ripple, insects take off from the meniscus of the surface and a frog misses the opportunity for a meal. This can go on until the water is again calm and the interactions begin again at some other point.
However, systems thinking does not have to be an expansion in that way. Within the system of an organization, there are many different sub-systems. These can be called departments, regions, or employees (if the company is small). Each of these sub-systems interacts with one another, hopefully in harmony, and have positive or negative effects on the entire organization. This means that the interacting sub-systems can either positively or negatively affect the others within the large system.
Sub-Systems within the Organization
Within Apex Minerals, there are two mines projects that are ongoing, a corporate office in Perth and employees who are out in the field always searching for new gold fields. The mine at Wiluna is the premier operation, and is considered the star that is going to make the company profitable again. The Youanmi field "covers 40 kilometers of strike of the Youanmi shear zone & #8230; and also has significant exploration upside" (Apex Minerals NL, 2012). The corporate office consists of the directors and executives of the company. The exploration teams are in the field where "Apex is undertaking extensive surface and underground exploration & #8230; programs have resulted in the rapid and substantial expansion of previous resources" (Apex Minerals NL, 2012). The final group is that of the shareholders of the company who have voted to have Eshuys take over as CEO, but who are not convinced that the operation can be turned around (Phillips, 2012).
Interaction between sub-systems within the organization evaluated
The organization as a whole has tried to capitalize in the success of the Wiluna mines (it is, at the moment supposed to be producing 80,000 ounces per annum (Apex Minerals NL, 2012)), but this success has not been what the shareholders or the employees have been promised. The corporate office has been promising that with Wiluna and Youanmi operating (and the promise of another mine at Wison) the company will be a steady producer of 100,000 to 150,000 ounces of gold per annum (Apex Minerals NL, 2012), but this has not been the case. In order for the company to meet its obligations and with the gold price at its current level, the operations must yield no less than 60,000 ounces per annum which it has not been able to maintain. The corporate officers had to react to a no-confidence vote from the shareholders and recall the former CEO, Mark Ashley, because of the outcry from shareholders and employees (Tasker, 2012). The shareholders were not happy with the management of the mine because it was not producing the dividends that they were promised, and the employees at the two mines were not happy because they were not getting paid for a short period of time. Since many of the miners were also shareholders in the company, the two groups have some amount of interaction. The geologists in the field have also not been able to find new resources for the company, and the Gidgee operation was becoming too expensive to…