What is the best way to manage the contract management process in the mining industry?
Mining is a major and multifaceted large-scale undertaking! All of the stages of mining require a multitude of contracts and all of these need to be orchestrated and executed so that everything flows together.
In the Exploration stage not only are there contracts that must be agreed upon that pertain to geological analysis for determining whether there is enough evidence of sufficient deposits to support moving ahead, enormous amounts of capital need to be raised to do so. Contracts relating to investments also need to be agreed upon.
During the Mine-Site Design and Planning and Construction Stages major infrastructure needs to be built, major mining and capital equipment needs to be purchased and large-scale civil engineering work needs to be completed. Contracts need to be agreed upon, signed and executed in relation to all of this.
When moving to the Production Stage contract management becomes even more critical! There may be hundreds of different contractors working in different capacities. All the relationships between these different organizations and workers need to be co-ordinated. This is mainly done through contracts. In addition, documents need to be drawn up that outline the rules of engagement for ensuring safety for workers and protecting the environment and more.
In the Closure and Reclamation Stage, agreements need to be made with the relevant authorities about the methods for closing the site, disassembling the facilities and returning the land to its original state that ensure public health and safety, minimize environmental effects, remove dangerous waste etc.
So if you’re a negotiator or contract manager working in the mining industry, how do you control this extensive process? You presumably have a relatively large team working on different aspects of the mining venture’s company contracts. This team has different levels of authority to make decisions and there is a procedure for obtaining the required approvals for each contract. Your priorities as General Counsel, Legal Counsel, Commercial Manager or Contract Manager -- as negotiators, reviewers, approver or signer -- in this field may include ensuring the following:
- All stakeholders in the mining venture have easy access to all contracts that relate to them. This is to ensure they can refer to these agreements and details of what is required of them when required and also for ease of communication. This will ensure the correct work gets done and that time is not wasted due to miscommunications;
- All material conversations are recorded so if there is confusion about what has been agreed these can easily be referred to and issues can easily be resolved; and
- All approvals are obtained and the correct processes and procedures for obtaining approvals are followed.
Effective contract management software could greatly assist you in this process. The software system should have the following features / capabilities:
- Provides a secure environment to house your sensitive documents and data;
- Allows you to configure workflows that set rules for who in your team has specific levels of authority for altering specific agreements;
- Allows you to configure automated workflows;
- Allows for all communications between the internal contract management team and external contractor or stakeholder team to be captured in an easily decipherable way so that if anything needs to be referred to it can easily be found. Also if you are asked to produce documents for a regulator, litigation or dispute, finding these communications does not take up an enormous amount of time;
- Allows you attach maps of the mining site so these can be easily referred to and the correct map is readily available when referring to each specific contract; and
- Allows for specific terms relating to things such as the price of the relevant metals or product being mined to be easily changed as required.
A good contract lifecycle management software that has all these features will go a long way to ensure that working as a negotiator and/or contract manager in the mining industry does not become a minefield!
What do you think? What other features would you like from a contract management system to assist you with managing all the contracts related to mining?