Published in the July 2008 Australia’s Mining Monthly

It was American retailer Sam Walton who declared: “Capital isn’t scarce; vision is.” The Wal-Mart empire was built on his ability to pick market trends.

Early in 2005, Robin Levison was pondering the future. The New Zealand-born chartered accountant had just taken over the reins at GPS Online, a Queensland company that had been almost mortally wounded when the tech-bubble burst in 2000.

Levison, who also had a strong background in investment banking and was well versed in mergers and acquisitions, initially signed on as a consultant. However, he soon found himself in the managing director’s chair.

A group of investors agreed to put money into the struggling company only on the condition that Levison take charge.

Within six months, he had mapped out a path based around energy or, more accurately, coal.

“I had wound down most of the construction and transport side of the business, which was the traditional revenue base for the company,” he said.

“I put a strategic plan to the board that I was going to move what was then GPS Online into the mining products and services sector.

“The overriding thought process that I had wasn’t that it was so much about mining products and services, it was actually about energy.

“I was very clear and I still am of the opinion that the world faces global energy shortages. My view was that it was all about coal.”

More than three years on, Levison’s change of direction has been vindicated. Today he heads a vibrant company that is carving a niche in the mining products and services sector, both locally and internationally.

“You could say that whether by good luck or good management, we are now in a sector that is very highly regarded,” he said. “Secondly, I still firmly believe there is an energy crisis globally.

“I’m a great believer in alternative energy sources, whether it is wind, wave or whatever, but in the short term, certainly for the next decade or so, the only thing that will fill the energy gap is coal.”

Now known as Industrea – GPS Online was dumped late in 2006 – the company has a market capitalisation nudging $500 million. It aims to break into the Australian Securities Exchange Top 200 within four years.

Industrea’s expansion has been driven by a combination of strategic acquisitions – it has made five – and substantial organic growth.

It bought Advanced Mining Technologies, which specialises in the design, manufacture and marketing of electronic equipment for the mining industry.

PJ Berriman, a manufacturer and repairer of underground coal mining equipment, was next to fall under the Industrea umbrella. To cover the heavier end of the underground coal sector, last July the company bought Mining Capital Equipment from Boart Longyear for about $10 million.

In September 2006, Industrea opened a doorway into China when it bought WADAM Industries, a company with an established track record in selling coal mining equipment to companies in the People’s Republic.

The acquisitions had plenty in common. All target the coal industry, with a primary focus on safety or improved productivity. Importantly, Industrea has been able to grow each business, adding value and expertise.

“Each of the companies we have acquired is significantly larger than when we bought them,” Levison said. “A large part of our growth is through the organic growth of the companies we’ve bought.

“For example, we bought AMT about three years ago and today that company would be five to six times bigger than when we bought it. That’s just through us putting capital and expertise into it.”

Levison has spent many an hour running the ruler over prospective acquisitions. He estimates he has had a high-level look at 70 companies and completed in-depth studies into more than a dozen.

Four months ago, Industrea made its biggest acquisition when it bought Mt Isa mining contractor Huddy’s for $250 million.

Established in 1982 by Graham and Linda Huddy, the company is the market leader in the Mt Isa region for opencut mining services, equipment hire and civil contracting services.

Apart from reducing its reliance on coal, Levison said Huddy’s delivered numerous benefits. It provided access to other metals, such as lead, zinc, copper silver and gold. It also would help smooth out Industrea’s sometimes lumpy cash flows.

Industrea will continue to look for opportunities in Australia, although Levison would not be drawn on whether that could mean looking beyond Queensland borders.

Mining services will remain the major focus but he is not averse to moving into other sectors if they fit the Industrea template.

However, Levison believes developing overseas markets offer the greatest potential. All are heavily reliant on coal as their primary source of energy.

He said China would remain Industrea’s growth engine. Last month the company revealed it had won a $5.7 million contract to supply two-directional drilling equipment and methane degasification systems to the Zhengzhou Coal Group.

Industrea recently made its first sales into Russia, a market Levison believes holds great potential because of its deep, gassy coal mines.

But the main focus at the moment is South America, a region that never figured in his early plans.

Industrea has just opened an office in Santiago, Chile, to market its opencut collision-avoidance equipment and systems, developed jointly with the CSIRO.

“The demand for those products is incredible,” he said. “Key clients like BHP [Billiton] and Anglo [American], who use these products in Australia, have placed orders in South America. We see that region as a very large growth market.”

In Indonesia, PT Inco, a subsidiary of Vale, the world’s second-biggest miner, signed a $1.9 million contract with Industrea to supply collision-avoidance equipment.

In Africa, Industrea is not too far away from completing its first deal. Then there’s India, the other awakening giant.

“To date, we’ve sold nothing in India, albeit there has been a lot of inquiry,” he said. “It’s my strong view that until you have the appropriate ability to service and support a product in a new country, it doesn’t benefit you to sell something in there out of expediency.

“The world is littered with rusting, parked-up mining equipment that a small company sold but then didn’t support. We’ve certainly seen that in China.”

Levison is uncertain how he will tackle the Indian market. It could be through an acquisition, or the company may first choose to establish a beachhead, as it has done in South America.

It seems the market is still digesting the Huddy’s deal. Levison declined to comment on analyst reports that the stock is undervalued but he does believe some investors are waiting on end-of-year financials.

After Industrea’s recent run of contracts, Ord Minnett placed a buy recommendation on the stock. According to its projections, revenue will jump from $65.5 million in 2007 to just over $350 million in 2010.

Earlier this year, Levison agreed to stay with the company for a further four years. His vision is to transform Industrea into a $1 billion company.