Allied Mining is part of the Allied Group that also comprises Allied Coal (which owns and operates the Bellambi West longwall) and equipment hirer Allied Plant Services.

Of the group’s 1999 turnover of $220 million, Allied Mining and Allied Coal contributed around $70 million, or 33%.

Part of the Allied group was restructured in 1999 when the previous association with Hugh Gordon ended. Following a strategic rethink in July this year, Steve Baldwin, who joined the group three years ago, was appointed managing director of Allied Mining Australia – the contracting arm of the business. Baldwin is also managing director of Allied Coal.

Baldwin said the corporate restructure completed in 1999 had given the group the opportunity to take a fresh look at the structure. “It’s now a very clean structure,” he said. “There are no inter-relationships and no cross guarantees.”

The Allied group is one of a very few operators in Australia which both owns and operates a longwall operation as well as providing contract services to other owners. To date, the company has done major development work at MIM’s Oaky Creek complex, Anglo’s Moranbah North contract (when it was still Shell owned) and most recently at BHP’s Goonyella exploration project. Baldwin pointed out that in terms of the type of coal and the markets Allied does not compete with major clients BHP and Anglo.

“Most of our markets [for coal] are South America and Germany which particularly like south coast coal. We have a very solid boundary between the contracting business and the coal owning and operating business. I don’t have Allied Mining people operating in Allied Coal. We have separate enterprise agreements and separate management in place.”

While a contractor running a longwall is still the exception to the rule, Baldwin predicts that within two years full contract operations will become more common, with contractors not only doing development but cutting coal as well.

“I do see a development towards increasing use of contractors because of the evidence being generated. Take our development rates at Bellambi West for example. Other nearby pits are doing around 100m a week. We are up to 300% better.”

Allied has one advantage over many other contractors in that it can demonstrate excellent runs on the board with development, if rates at Bellambi West are any indication.

“When we took over the operation [in 1997] it was achieving 80-100m on development a week. We are now regularly achieving more than 350m and we’ve recently done 430m. The first thing is we introduced cut and flit.”

In addition, the mine is set to almost double its ROM output to 2.4Mt and is returning well in excess of 15% on the investment Allied has made to date. Having said that, it is fair to point out that Allied picked up Bellambi West at a reasonable price because the mine was seen as uneconomic business by previous owner Shell.

According to Baldwin, changes in management and management structure have been the single most important change at the mine.

“These changes have allowed our people to perform, we have quality people and they are delivering up excellent results. We demand good performance and we pay our people well for performance. We had strict seniority three years ago but we have managed the process through to get rid of seniority.

“Management and management structure remains the biggest single impediment to improving productivity in Australia,” he said. “The industrial relations side is a crutch management use to defend poor performance,” he said.

Probably the most revolutionary management change introduced at Bellambi has been to change the structure of who runs development shifts. Rather than having statutory positions running these sections, including a deputy and an under-manager, the person who now runs development shifts is more akin to the supervisory systems in operation in the United States.

“We wanted a project manager to run development who may or may not have a ticket. We wanted to hold him accountable and responsible for performance without having statutory defences to hide behind. He had to be a ‘man-manager’ and the most capable man-manager we found was an ex-president of the CFMEU. If there is any issue of a statutory nature the statutory manager assumes control but if it’s production related he’s got nothing to do with it.”

The mine has had no local industrial stoppages for three years and a new three year EBA was recently endorsed unanimously by the work force. Said Baldwin: “These results can only be achieved with the total commitment and cooperation of all employees.”

It is these same principles Allied will implement in its latest contract for gateroad development at Anglo’s Moranbah North longwall in central Queensland. See the related news story.

“Moranbah North is an important part of our business, with the contract running between 10-14 months depending on how rates go. It has been bid aggressively and from our point of view is achievable and will set new standards in the industry.”

Of the future, Baldwin said Allied would continue to look to acquire operations the rest of the industry has walked away from, though he said recent prices paid for coal mines have been too high.

“We will actively pursue the thinner seams. Australia has generally said anything sub-2m is uneconomic. We don’t subscribe to that point of view.”

Baldwin is also critical of what he sees as an attempt in Australia to engineer out management and industrial problems by buying overly technical mining equipment.

“I want something that’s simple, robust and reliable. If it comes with those three criteria as well as engineering innovation then I’m happy to look at it but don’t give me something with innovation without those things.”

Allied is also looking at growing its contracting business outside coal. Baldwin said the company would not take on the majors but hoped to pick up smaller niche contracts in the metalliferous sector.

Until early December West Bellambi’s safety performance was excellent with the underground completing 14 months lost time injury free. Tragically, on December 20, a miner was killed when a stone slab fell and two others were injured.