Roche Mining has made a $100 million claim against Macarthur over extra costs incurred at the Coppabella project that it says Macarthur is responsible for, but the coal company says the costs are attributable to Roche under the contract terms.

Talbot told media yesterday that the company was now phasing out contractors at Coppabella and had given notice that they do not intend to renew the Roche contract after it expires in 2008.

Although the problems with Roche have contributed to Macarthur’s decision to operate the mine themselves, Talbot said there were a variety of other factors influencing the decision.

“In the longer term we were always going to go to owner-operator anyway but the Roche issue is one we are very disappointed with and it further outlines to us the benefits of going to your own workforce,” Talbot said.

“When you look at an owner-operator position you can then afford to take a longer-term view on the equipment that you use … we will be using bigger equipment than the contractor has employed because he is limited to a five-year contract, so he takes a five-year view.”

Talbot said once the contractors were phased out, Macarthur would buy and use bigger and more efficient equipment, recruit and secure a well-trained workforce, and coordinate a well-managed team.

“If we can have management onsite that is more aligned to the company’s objectives, we can have a relatively low turnover and hopefully attract good management down the line,” he said.

“I think there is a general trend if you look right across the iron ore industry and the coal industry … in the last 10 years we have embraced major contractors with gusto and they’ve provided a certain service to support growth, but now that the Bowen Basin is getting deeper and there is a bit more pressure on selling prices than last year, you’ll find most companies will be re-examining their cost structures to see how they might be more competitive going forward.”

Talbot said the company’s first priority was to get Coppabella operating to the right cost structure and then they would turn the attention to the Moorvale mine.

In contrast to the situation with Roche, Talbot said Macarthur had a happy working relationship with the contractor at Moorvale – Leighton Contractors – and that no decisions had been made to extend or drop the arrangement as yet.

“Leighton will be working at Moorvale until 2008, which can be extended under mutual agreements … it may happen that they give us reasons why they should stay.”

Looking forward, Talbot said he expected more and more companies would consider a move into the owner-operator workforce.