Published in the June 2013 Australian Longwall Magazine

Prior to joining OGL Resources, he was a member of the Macarthur Coal Executive Leadership Group and responsible for mine operations at Coppabella, Moorvale. Allan was appointed as CEO of Middlemount Coal, where he was responsible for the development of the Middlemount mine. He spoke with Lou Caruana.

Australian Longwall: Coal mining companies have taken a battering on the sharemarket lately. Do you think things will improve this year?

Allan Fidock: I’ve heard a number of commentators suggest recently that small cap resource stocks have been oversold and I would include coal mining companies in this group.

On that basis alone and given the recent overall market improvement logic would suggest we should see support come back for coal mining companies but time will tell.

AL: What are your thoughts about developing coal projects in Queensland?

AF: There continues to be challenges to develop coal projects in Queensland but the reality is that this is the case everywhere.

Queensland has its advantages in the abundance of resource and a state government that is supportive of properly considered projects, but it is difficult.

Projects have to stack up economically for companies to take the time and expense to deliver and with prices coming back and overall capital market sentiment I think these external influences are making it tougher than it has historically been.

AL: Do you think Australian coal companies can be globally competitive given our high dollar and the cost of labour?

AF: I think in the main we can, the quality of our coal products and our mature relationships with existing markets has us well placed however I believe relief from a high dollar is still a way off so we have to be more cost effective in other key areas.

Labour cost is a difficult one given the cost framework that has developed over the past five or so years during the commodities boom, it’s hard to pull this back. I think the answer is improved productivity and efficiency within the existing framework.

There are improvements in process that can deliver efficiencies and this is the target area from what I am hearing.

AL: We all know that there have been some serious infrastructure problems in parts of Africa that have caused projects to be marked down there. How does Australian infrastructure plans stack up?

AF: We do stack up well against these developing countries. We have substantial and mature infrastructure in place and plans to build further capacity so we are well ahead in terms of delivery.

New capacity is expensive and that’s the issue all countries with developing coal basins face so staying cost competitive is the challenge.

AL: What are your plans for the Ebenezer project?

AF: Once we have raised the capital to acquire Ebenezer and Bremer View we have development plans that will enable product to be available for market within about 12 months.

Given we are recommissioning an old mine most of the infrastructure is already in place. When we are on ground it won’t take long for it to look like an active mine again.

Part of the process for recommissioning is developing a relationship with all the local stakeholders, we will be rolling out a communications process to ensure all the locals are aware of our plans and have the opportunity for comment and input.

AL: What is the advantage of having a coal mine so close to Brisbane? It must surely beat the dust in the Galilee Basin?

AF: This is one of the key strategic advantages to the project. Not only does this proximity to Brisbane give us an obvious advantage in terms of access to existing infrastructure and a lower transport cost but the quality of the product is far better than the Galilee Basin coals.

In addition we are close to a workforce that does not require any “fly-in/fly-out” arrangements and that’s an added bonus to us in terms of cost framework compared to other regions.

AL: I notice you recently joined the board of Carabella Resources. What attracted you to this company?

AF: Carabella has a couple of what I believe to be quality projects in the Bowen Basin, one which is planned to be in production within 12 months.

Both projects have strong fundamentals being the quality of the product and proximity to existing infrastructure.

These two points provide a great opportunity for development. I compare Carabella, and OGL Resources, as companies with the potential to emulate the success of Macarthur Coal which grew from a small independent operator to be the key supplier of PCI coal into the steel industry.

Macarthur was founded on a reasonable sized resource of high quality that persevered in an industry that made it difficult to get a start but once it was underway it became a key player and was ultimately bought out.

AL: Would you regard yourself as environmentally conscious?

AF: Definitely, while we (the coal industry) are not the flavour of the month for environmental groups we are heavily regulated in the way we operate with significant environmental conditions placed on approvals.

We accept that to operate we have to work within the applied approvals and we do, otherwise we are penalised or shut down, and rightly so.

AL: Do you think environmental concerns are taken into account enough by regulators when approving projects?

AF: As I said the industry is heavily regulated, primarily on environmental impact and its management. There is no doubt environmental concerns are considered in all approval, whether it is considered enough depends on your perspective.

From my perspective it is an exhaustive process that is continuing to grow in terms of consideration and reporting requirements for impacts within terms of reference for projects.

AL: You have headed up Macarthur Coal’s Middlemount mine, which was the company’s jewel in the crown and one of Queensland’s major open cut coal mines. Do you feel more comfortable at an open cut mine or underground?

AF: My preference is open cut given that’s where the bulk of my recent experience is, however I am comfortable with underground operations.

AL: Have you worked in any underground mines?

AF: Yes but only in the first 10 years of my experience in the industry, that was at Muswellbrook Coal Company during the ’80s.

AL: Do you think that longwall mining will be in more demand when some of BMA’s dragline operations reach maturity?

AF: It’s the logical next step once the economic hi-wall limit for existing open cut mines is reached, assuming the down-dip geology is suitable for underground longwall techniques.

AL: What kind of operation do you envisage at Ebenezer and Bremer view in terms of tonnes per annum and what style of mining?

AF: We are initialling targeting 1million tonnes per annum run-of-mine coal production producing approximately 600,000 tonnes per annum of product.

We plan to increase this to 1.5Mtpa product for the life of operations within the existing mining lease. For Bremer View I believe we will confirm a significant resource and reserve that will support a production output of up to 3Mtpa product.

This will require significant studies on economic feasibility and environmental impact but we have allowed a number of years for this work to be completed before understanding what is an appropriate operating level.

AL: Are you hopeful that the Queensland will give you some resolution on the project soon?

AF: Yes we are. The legal delay has been frustrating but as I said earlier we have been using this time to our advantage for when the result is known.

AL: What are the next steps for the project?

AF: For us it’s completing the acquisition of the tenements and getting on with developing the project.

We have been delayed for a significant time, which has allowed us the time to further derisk the mine recommissioning process and further advance transport and shiploading options to enable us to operate as an independent producer.

AL: Do you like watching league or rugby?

AF: I take it you would be a Maroons-Queensland Reds supporter. League is my game but I’m a Blues supporter having grown up in the Hunter Valley and followed the Newcastle Knights for many years.

AL: You should have no problem getting to Lang Park to watch a game given that you are so close to Brisbane.

AF: Lang Park is a great facility, one of my sons, who plays in the Tweed Heads Queensland Cup competition, gets along to many games and enjoys the atmosphere, I go with him when I can but he’s a league tragic.

AL: What do you like doing on weekends?

AF: Weekends is home time with the family, I enjoy eating out and watching sport. I’ve just had my 50th birthday and received a new set of golf clubs so I will attempt to get on the golf course and wear them in … if I can.