In July, Industrea subsidiary Huddy’s Mining Services landed a $30 million per annum contract to operate the Baralaba open cut mine near Moura, which covers not only the provision of equipment, operators, maintenance, services and support, but also blasting and drilling work.

The mine is a joint venture between Cockatoo Coal (62.5%) and Republic Coal (37.5%), with a Cockatoo spokesperson saying the contract was off to a good start since Huddy’s took over from previous contract holder Roche Mining but that it was too early to provide more comment.

Given that Baralaba intends to double production, Industrea managing director and chief executive Robin Levison is expecting the Huddy’s services business to grow in the Bowen Basin.

The subsidiary already has contracts with Rio Tinto, including for the supply of heavy earthmoving equipment to the Blair Athol open cut mine near Clermont.

Levison added that Industrea had effectively written up to $70 million per annum of multi-year contracts with both Rio and Cockatoo over the past four months, and the level of enquiries had risen quite considerably.

He commented on emerging trends in the mining services sector in the wake of tougher credit markets.

“What we have seen in both the Bowen and the Hunter Valley is that some of the opportunity that has come to our mining services businesses has been due to the tightness of the relative capital availabilities of some of the companies there,” he said.

“Miners are looking to outsource rather than acquire new capital equipment and this is boosting Huddy’s fleet utilisation rate towards levels seen in early 2009.”

Levison said Industrea had seen some of the smaller independent resource owners, like Cockatoo, deliberately move away from a tier-one services provider to a tier two.

He sees such factors as the level of overhead, flexibility and process as being behind this shift.

“Having Huddy’s Mining Services positioned as a top tier-two operator is exactly the right place to be.

“This means we still have enough capital so that if a client needs new equipment we can buy it, but we are flexible enough and have a small enough corporate overhead that it doesn’t weigh on a smaller resource owner.”

But Industrea’s biggest involvement in the Bowen lies with its collision avoidance systems used by Anglo Coal Australia and BMA’s surface coal operations, with the original trial at the Blackwater mine five years ago.

Anglo American is rolling out Industrea’s collision avoidance gear in South Africa, while BHP Billiton not only uses it in that country, but has also started using the technology in its South American operations.

Looking at the underground coal equipment business in the Bowen, Industrea’s custom-made chock carriers for Moranbah North had the mine moving up to 12 of the 1750-tonne Joy roof supports a day, with the mine constrained by the number of vehicles it could have underground.

Levison said the installation of the roof supports went well and the machinery performed to expectation.

Aside from chock carriers, the company has seen strong Bowen Basin growth in its sales of subsidiary PJ Berriman’s people carriers.

Over to China, Industrea has seen steady sales growth in its directional drilling and gas drainage equipment, and Levison expects this equipment to have wider demand in the future.

“We certainly see opportunities for gas drainage all over the world because what is happening everywhere is that the low fruit, or the open cut coal, is fast disappearing, and as those seams go underground, certainly in China and Russia and Australia, they hit gas,” he said.

Levison said Chinese coal companies appreciated Industrea’s methodology of draining gas with the highest velocity.

“They are not only draining it just for safety, but they are also draining it to use for energy generation and obviously want the gas at the highest velocity possible.”

Referencing official Chinese government statements and production figures, Levison said China was currently producing about 2.5 billion tonnes of coal and within seven years wanted to reach 3.5Bt.

“If you put that in the context of Australia, which in total exported 300 million tonnes of coal last year, you realise just how significant that is.

“Look at Macarthur Coal: up to six months ago they were saying they had never exported any coal to China and all of a sudden they have a strong business there.”

Industrea is growing its sideline in distributing other Australian-made products into China, through its Beijing-based subsidiary Wadam Industries, which is now exclusively supplying Marathon’s rubber-liner insertion machines and RL run flat tyre inserts along with Filter Technology Australia’s filtration systems and Hydco drill rigs.

“It is getting busier over there. Our staff have gone from five people to close to 30 and our new product support centre is generating increased revenue in supplying equipment spares, training and maintenance,” Levison said of Wadam.

Overall, Industrea has inked product agreements in China exceeding $36 million during the current financial year.

While the company weathered the tough credit-crunched March quarter with help from its Chinese sales, Levison noted that lending conditions in Australia were still tight despite Australia’s economic gains since the March lows.

“We have developed a very strong relationship with our banking syndicate, but my understanding of it is that it is still tough and you are still seeing some businesses unfortunately falter, because they have hit a speed bump and just can’t get the financing that is required to allow them to right themselves,” he said.

“Certainly the indication from some of the enquiries we are getting is that even some of the bigger companies, while they have the capital available, they are using it for acquisitions and repairing their balance sheets rather than buying machinery.

“The only exception for that seems to be the safety products, which are basically non-discretionary items.

“I guess it’s obvious if you have an underground mine and you strike gas, until you drain the gas to a safe level you can’t mine it. So if you have got demand for your coal, you’re not going to stop mining.”