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?
Considering the continuing strength in worldwide economic growth and coal’s favoured cost position compared to other energy alternatives, Norwest does not believe a significant downturn will occur in the coal industry short term. On the longer-term horizon, some softening of the coal markets is likely to occur as short-term supply and transportation bottlenecks are resolved. Foreign competition, particularly for domestic customers near major eastern and Gulf ports, will likely continue to make entry into the domestic marketplace.
How has the recovery of the coal market over the past few years changed your business?
The industry is currently in an expansion mode, as compared to the rationalisation mode of the past several years. Norwest’s clients are now requesting expanded “upfront” project development services ranging from raw exploration through all stages of feasibility study. This demand originates from a variety of client types – from project developers to finance houses.
Transactional support services supporting resource and operating company acquisitions have also grown as a result of the robust state of the coal industry.
What percentage of your consulting work is done for locally owned companies versus offshore? What are the top three foreign locations for your company?
Norwest serves a worldwide clientele. While the majority of our work originates in the US and Canada, our professionals have completed projects in virtually every major coal producing region of the world. Currently our business is growing most rapidly offshore in such regions as India, Mongolia, Africa and China.
Several consulting companies have moved into other technology areas including coal mine methane, coal gasification and others. Please comment on what varied areas your company has moved into and the future growth areas for consultants.
Norwest recently merged with Questa Engineering (an oil and gas and coalbed methane consultancy) and Applied Hydrology Associates to create one of the world’s most fully integrated energy, mining and environmental firms.
This allows us to expand our offerings beyond the traditional coal industry by serving oil, conventional gas and coalbed/coal mine methane developers and producers. The synergies between these energy sectors are many and varied, which have allowed Norwest to provide an integrated approach to our client’s challenges.
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?
The industry labour shortage has been a mixed blessing to consulting companies such as Norwest. As the industry has demanded an increasing level and volume of service from consultants, the consulting companies face similar recruiting challenges to meet this increased workload.
Norwest’s approach to this situation has been to closely manage and allocate resources to meet the short-term needs and expectations of our clients, while investing in recruiting and developing the personnel who will represent the long-term future of our company.
What are the key factors determining why and how consultants are used?
There are no general factors which apply. In many cases, it is a matter that the client needs additional support due to an already full workload of client staff.
But more often, consultants are brought in to provide specialist services for specific project or situations for which the client is not staffed.
This is particularly true in transactional engagements, where a project developer or financer may not permanently maintain staff capable of providing due diligence services. Another major driving force is the need for independent, third-party analysis. Particularly with the investment community, the consultant is expected to provide independent assessments and opinions that are not influenced by any long-term interest in a project.
This factor is also often of importance to mining company clients who may be faced with alternative opportunities for limited resources. Additionally, a considerable amount of offshore work derives from the need to apply well-developed expertise to developing areas of the world.
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?
Norwest has long recognised that to assure the long-term success of our industry, miners must be respected members of their community while producing the resources upon which the community relies. We must protect our natural environment and be trusted by the public.
The leading international mining companies consider the concept of sustainable development key to their success; thus, they integrate sustainability concepts into their operations and frequently demand the same of the work their consultants produce.
This has opened new opportunities for those consultants (such as Norwest) who are positioned to offer the integrated services demanded by the principles of sustainable development. One new area of business for Norwest, which combines the strengths of our mining and oil and gas groups, is carbon sequestration.
What trends/shifts are emerging in the consulting work clients are seeking from your company?
While technical competence was the hallmark of consultancies in the past, now clients are seeking equally effective business analysis and advice.
Publicly traded mining companies realise every major capital investment must be economically, not just technically, justified, both internally and to shareholders.
The increased involvement of equity investors has also increased the need for a thorough assessment of financial alternatives and opinions, which present reasonable and achievable financial performance.
Those with little experience in the mining business trust our technical opinions, but they demand we provide equally professional business opinions.
On the mining front, what are the top three major technical factors emerging for underground coal miners?
Foremost is the use of remote control and automated processes in the extractive operations. Manufacturers of both continuous miners and longwalls have made great advances in this area, but more must be accomplished.
A lack of experienced and qualified miners, the need...click here to read on.
