The global financial crisis led to the plug pulled on many contracts between major mining companies and big name consultant firms.
Redundancies became commonplace for mining sites around the country and it looked as though we were in for a long wait before a rosier picture was to emerge.
However, there was still some endeavour to be found among the gloom and a few small consultancy players chose to dip their toes in the stormy seas.
One such company, Xstract Group, emerged out of Brisbane 12 months ago with the plan of ignoring the GFC and getting on with the job at hand.
“We have probably been one of the most actively growing companies in mining consultancy through the GFC,” Xstract managing director and principal consultant Mark Noppe told Australia’s Mining Monthly.
“On average, we’ve hired two people a month since February last year so we will be pretty close on 25 staff from a start of two 12 months ago.”
Convinced that the GFC could not last forever, the company backed the experience of its growing team and looked for work.
“We looked around, based on our experience,” Noppe said. “Most of us have been in the consulting game for several years.”
“People were telling us that the workload was perhaps 40 per cent down on the previous year.
“We looked at that and considered in terms of experience, principals, and knowledge we probably stood a fair chance of winning 60 per cent of the work that was still out there.”
Glastonbury Mining Consultants is another fledgling mining consultancy to safely make it through the GFC storm.
With timing that director Andrew Glastonbury described as not being “terribly wonderful”, the company launched in August 2008.
Glastonbury told AMM that although his timing may have been off he was fortunate in that a lot of work he did manage to pick up was with people he had encountered previously throughout his career. Having worked in the industry for more than 25 years he had many contacts to utilise.
“Lots of the work I got was probably more word of mouth than necessarily lots of new clients I had never done any work for before,” Glastonbury said.
“But I think this year is going to be a bit more new client-based. I think there is a little more happening at the moment.”
Noppe agreed, indicating that although Xstract had some difficulty developing a plan at the beginning of 2009 the company only had one month that did not perform as it had forecast.
As July heralded the new financial year many companies were a bit nervous about how their bottom lines would hold out.
“Our colleagues in other consulting businesses have confirmed that last July was a bit of a holding your breath time,” Noppe said.
“In August, we saw some significant changes. Then around October we actually saw investment in companies and interest in preparing independent expert reports and information for IPOs started to materialise.”
Like Noppe, Glastonbury is highly optimistic about where the industry is currently positioned.
This optimism stems from the return to favour being enjoyed by junior companies with equity markets becoming freer and giving them more cash to access.
“To date I guess more of our business has been assisting with tenders for existing contractors or mine owners helping on the tendering and pricing side of things,” Glastonbury said.
“From what I have seen, I think 2010 will be more pre-feasibility and feasibility study-focused helping some of the new mining plays make the transition from exploration to becoming producers.”
Both companies refuted the idea that as they were smaller than some companies operating within the consultancy sphere they had less to offer.
Each backed their shared company values of expertise, experience and reputation to be important factors in what their clients were looking for.
“It comes down to the skills and expertise you can offer over the size of your company,” Glastonbury said.
“Part of it is that network of who you have done work for, who you have encountered over the years.
“People get to know your capabilities and what you are able to do.”
Noppe said that Xstract had successfully positioned itself to operate in the same space as some of those bigger, well-known brand names.
“We have certainly been hiring people who have worked in that space so we really are working in the same space with the same kind of people,” he said.
“What we have done is hire a lot of experienced people whereas I think a lot of the larger companies, with the growth phase, were basically hiring as many as they could and probably getting a bigger ratio of juniors to seniors.
“So in that way we can offer a lot of principal level experienced consulting.”
The big talk of both companies is matched by the record each has for working with big name operators within the industry.
Glastonbury has worked alongside such names as Western Mining Corporation, Macmahon Contractors and Pybar Mining Services.
Xstract is also making a strong mark on the industry to the point where it recently opened a new office in the busy mining precinct of West Perth in Western Australia.
“Interest has been fantastic with enquiries for work and from potential staff,” Noppe said.
Xstract also assisted private equity firm First Reserve Corporation with its due diligence and valuation of selected mining assets as part of the recently announced bond issue and capital raising participation for Glencore.
