Juan Barraza Osorio
General Manager
GDA Servicios Mineros
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Insight

Regular Innovations Needed to Avoid Drilling Pitfalls,

Wed, 10/21/2015 - 15:33

Although the mining industry has no future without exploration and drilling, drilling companies are currently fighting for survival and success. Against this backdrop, GDA Servicios Mineros (GDA) stands out as it has managed to overcome adversity and regain its strength in troubled times. Juan Barraza Osorio, General Manager of GDA Servicios Mineros, describes how his company sought to stand out in a crowded marketplace with an innovative service offering. “Drilling companies commonly charged their customers additional fees for each additional service, ranging from water usage, tools, extra materials, and drill relocation. During the mining boom, we took a different approach by offering all our services for a pre-established, fixed price,” he explains. This meant that GDA would be taking on full responsibility for all of its customers’ needs. But despite the extra workload, Osorio said GDA pioneered a business model that has now been applied by almost every one of its competitors. This success did not, however, completely shield GDA from the problems beleaguering drilling firms. In 2011, GDA had a run of bad business over a period of six months, resulting in the company having to consider closing its doors. GDA’s owners, a Chilean consortium named Guiñez Engineering, gave Osorio an ultimatum: turn the situation around in 30 days or be shut down. Under pressure, Osorio visited each team member in person, from drill operators to administrative assistants, telling them the reality GDA faced and asking for their commitment. The links to Guiñez Engineering have proved crucial to GDA at key times. Through Guiñez Engineering’s network, GDA was able to not only offer drilling, but also topography and geophysics, greatly expanding its service portfolio.

“We purchased topographic equipment that allowed us to carry out 3D surveys within mines,” recalls Osorio. “Just one of these machines allows us to do the same amount of work in one day as the previous technology would have done in seven to ten days.” In 2013, GDA was also one of the first companies in Mexico to implement a new system for reusing water during drilling operations. It tested the process with a Chilean company and devised ways to improve it. Osorio explains that this new water management system has also helped GDA to reduce its additives costs by more than 50%, dropping from US$7 to US$3 spent on additives per meter drilled.

It is apparent that GDA’s survival and success has largely depended on the leadership’s ongoing desire to never be just another drilling company. Right after obtaining its first drilling contract with Coeur Mining in the Palmarejo project, GDA acquired two more drills, allowing it to expand both its ongoing projects and its business practices. The punctilious Osorio collected vital information from each project, such as the reactions drills had to precise formations, and the varying standards of drill bit performance. He states that this proactive approach gave him more control over his equipment, allowing for improved efficiency. “Back then, Mexico saw a high volume of mining projects, but did not have enough drilling companies to cope with the demand. The companies which did exist held a monopoly, allowing them to dictate the rules of the game, and charge their clients for their own inefficiencies,” says Osorio. He adds that standing up to this monopoly and breaking the norm by offering carefully targeted, meticulously researched drilling proposals allowed GDA to secure its reputation in the industry.

Nowadays, it has parlayed this reputation into working with products from recognized brands such as Ingetrol and Coreboss. This reputation may see GDA held in high regard but this does not make up for a lack of clients. The mining downturn has seen Osorio cast his net further afield as he looks to expand operations outside of Chihuahua and Sonora but this is easier said than done. “Crisis is an opportunity for creativity,” says Osorio. “But we still run into the traditional problems associated with offering mining services namely, physical isolation and a limited customer base. Also, in the current global market, every company is looking for ways to reduce operational costs. GDA will have to continue doing what it does best: provide innovative services to the mining sector.” GDA’s mission to ensure that its brand is recognized throughout Mexico has led the company to defy the typical models of the drilling market and inspired its competitors to follow suit.