You can find the PDF here.
In explaining the abnormal charges from previous years there is the following explanation:
Fuel Misappropriation
Our best estimate for misappropriated fuel of $18.0 million was recorded in 2012 within the aggregated income statement. This estimate has been based on extrapolation procedures and has therefore involved the use of estimates. We have taken a number of measures to mitigate the risk of further such losses occurring, such as employing a specialized in-house fuel consumption control team. The investigation is ongoing, however in 2013 there have been no developments which have led to an amendment to our original estimate.
Wholesale fuel prices are less than $1000 per tonne. Even by the time you get it to Sierra Leone the price is likely to be less than $1500 per tonne.
The amount of fuel stolen is likely to be over 10 thousand tonnes.
A quite large tanker truck contains 35 tonnes of fuel.
So this is 285 tanker trucks. Probably more as I have rounded down the amount of fuel and up the size of a tanker truck.
One per working day.
I wonder how they didn't notice them driving away.
John
7 comments:
Having worked in mining in West Africa, I can say that yes, this on the high side, but not totally unusual.
It's not just a matter of someone walking up and taking fuel from the site. It gets stolen and watered down all the way along the supply chain.
Some gets stolen at the port, some gets stolen whilst being trucked to site, some gets stolen from on-site storage, some gets stolen from vehicles that have been fueled up.
I work for a mining company as well. We've taken over 2 mines in former communist and undeveloped regions of the world. There is a huge cultural difference.
It's not uncommon for large pieces of equipment, spare parts, fuel, consumables, etc. to go missing. These guys are entrenched and creative. It took us 3 years to root out the bad apples and corruption before getting the mine procurement and operations up to Western standards.
We underestimated how difficult this would be but at all times we knew it was an issue. It would be difficult to know if African Minerals' claims were legit without performing a little due diligence at site. You'd want to take a look at the site layout, security (controlled entrance and exit for everyone), workforce (if large swaths of employees are related, chances are they didn't get there on merit), vendors and procurement processes. It's not as easy as it seems.
And, bribes work wonders, my African hands tell me.
Nice context in Fortescue's 2008 public environmental report, when they were just finishing off Cloudbreak with 27mtpa: http://www.fmgl.com.au/UserDir/FMGReports/Documents/2008_Public_Environmental_Report63.pdf Fuel consumption was 74 million litres, which I make out to be about 62,000 tons of diesel. Hard to do direct comparison, but 10,000 tons looks a lot in that context.
Not all the fuel was misappropiated in one year ..."a certain portion of this amount ($18m) relates to prior periods but it was impractical to apply retospective restatement" - page 87 of the management discussion as per your link.
"I wonder how they didn't notice them driving away." Who's 'they'?
If I was stealing fuel from a mining company, I'd be half-filling tankers, then cutting the person who measured the tanks at the other end into the deal.
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