The market

From your company point of view, where is the coal industry in the current cycle? Has it peaked and will we start to gradually return to lower prices and mine shutdowns, or is there still some upside left in the current market? What are your forecasts: immediate, a year from now and longer term?

It appears that the coal industry has peaked and as production increases it seems inevitable that lower prices will result. However, absent economic circumstances, such as the Asian crisis and exceptionally strong US dollar of the late 90s, means prices will not return to historical lows.

How has the recovery of the coal market over the past few years changed your business?

Marston’s coal-related work has grown significantly in the last few years in response to the coal market recovery.

What percentage of your consulting work is done for locally owned companies versus offshore? What are the top three foreign locations for your company?

In 2005, approximately 60% of Marston’s revenue was derived from work performed in the United States.

Another 20% of Marston’s revenue came from Canada, with the remaining 20% at locations around the world, primarily in Australia, Indonesia, and South Africa during 2005, with additional projects in Russia, China, Colombia, Venezuela, Mexico, Malaysia and the United Kingdom.

Several consulting companies have moved into other technology areas including coal mine methane, coal gasification and others. Please comment on which varied areas your company has moved into and the future growth areas for consultants.

Marston has moved into web-based economic and resource data management for mining companies and for clients interested in coal markets, transportation and pricing. Marston continues to expand its capabilities and services on all of the major mining software packages.

Marston has also substantially expanded its consulting and technical expertise relative to non-coal mining efforts led by oil sands, precious and base metals as well as industrial minerals. Future growth areas for consultants include all services related to coal supply and cost studies and international power and mining projects.

Demand for full-service technical due diligence and “qualified persons” should also grow with increased mining project financings by public companies.

Skills crisis

The skills crisis is a major issue affecting the coal mining industry and is increasingly the subject of corporate level remarks. How has your company been affected/benefited from the skills crisis?

Work in exploration and geological services has increased significantly in the last two years. Company-wide, Marston has hired several entry- and junior-level geologists and engineers who are participating in field work and other internal training programs.

There has also been a marked increase in requests for long-term onsite or on-demand engineering services, which we are providing for clients from all offices. This work provides excellent opportunities for increasing junior and intermediate staff experience on field and development projects.

What are the key factors determining why and how consultants are used?

This depends greatly on the potential client and project or issue. General engineering and geological tasks are primarily budget-driven. Higher value/risk work such as due diligence, expert witness, bankable studies, etc require greater experience, specialist skills, tools, reputation and professional certification.

For this work, budget remains a key issue, but the successful outcome of the project objective is the overriding factor. Marston’s key factors for success are to provide clients with the highest quality consulting services that are based on industry and project experience supported by detailed engineering, geologic and economic analyses.

General

How, if at all, has the issue of “sustainable mining” and corporate governance impacted on your business? And what impact has it had on your clients?

Clients increasingly demand a formal risk assessment process and analysis incorporated into mine planning and feasibility reports. Marston has a risk assessment specialist and in-house risk assessment training programs.

Marston also provides web-based environmental and resource data management services to allow mining companies to more effectively communicate key information related to “sustainable mining” issues internally and externally.

Today, effective communications of the mining project planning process, project plans, and key decisions to stakeholders are essential to a proactive approach to sustainable mining issues.

What trends/shifts are emerging in the consulting work clients are seeking from your company?

New coal-fired power projects in the US and abroad require long-term fuel supply and contract strategies. Consulting work is growing in this area as these projects begin to investigate the risk inherent in long-term market trends and changes in coal markets and transportation systems.

In addition to a market analysis and trading perspective, projects interested in long-term fuel supply should understand the primary cost drivers of natural suppliers and transportation systems.

Marston is greatly experienced in evaluating the risk of coal mines and coal supply chains from an engineering and coal business perspective.

On-demand and data management services should also continue to grow. Marston consultants and technical staff include engineers and geologists who are skilled in nearly every major geological and mine planning package available.

Marston personnel are providing onsite training as part of geological and mine planning project teams, and are organising mining company data into web-based systems that allow rapid communications of production, land, environmental, reserve and other critical information to management and users company-wide.

These services are growing as clients demand more rapid access to the large amounts of data and engineering and economic analyses crucial for informed, effective decision making.

On the mining front, what are the top three major technical factors emerging for underground coal miners?

For underground mining operations, the major issues are:

Environmentally/legislative related subsidence rights, including potential court rulings on affecting property rights of mineral owners, and ground water hydrology issues;

Deeper and thinner coal seams in...click here to read on.