Australia’s Longwalls: Three years ago, respondents remarked on the growing role of consultants in strategic decisions in Australia's underground coal mining industry. How has the role / use of consultants changed over the last three years with the mining sector consolidation? How do you see roles developing in the future?
We continue to see a sustained use of consultants in all aspects of the resource sector. The role has developed to comply with new global corporate governance requirements and the shortage of skilled, experienced professional in the industry.
Clients are being more discerning about what the consultant is tasked to do in order to ensure an involvement adds maximum value to the client.
How competitive do you see consultancy rates vs costs for permanent employees? What are the key factors determining why consultants are used and how do you expect these factors to change in the future? How will these changes impact the way consultants do business and the nature of consulting?
The limited pool of experienced and qualified mining professionals is forcing the cost of employment and consulting costs up. Due to higher remuneration in the industry none of the “one man” consultants will be attracted back to full time employment at mines.
The use of consultants will become more widespread where an unbiased, independent professional evaluation of an investment decision on technical issue is required.
Consultants will be increasingly accountable for the value they add to the client’s decision on business.
AL: An emerging issue is the impact of increased professional indemnity insurance premiums on consultant’s ‘license to operate’. Some smaller companies have chosen to operate with no cover. What is your company position on this issue and how has it affected your company?
The cost of professional indemnity insurance (PII) continues to increase and the conditions under which cover is provided are becoming more stringent. Client’s expectations of the magnitude of cover required is often unrealistic and should be reviewed.
Finally, the client must pay for PII as this is an operating overhead cost for the consultant.
AL: Please comment on the impact on consultants of corporate governance protocols that mining companies are introducing.
Corporate governance protocols create significant opportunities for consultants but will also differentiate between full service consultancy companies and smaller “labour for hire” consultants.
The need for transparency combined with the shortage of skilled people to take on the burden of additional work resulting from corporate governance protocols can lead to opportunities for professional consulting services.
AL: How has the issue of ‘sustainable mining’ impacted on your business? And what impact has it had on your clients?
The concept of “sustainable mining” is not new and its impact has not changed significantly over the last few years. We find our clients address this issue and there are numerous environmental consultants who specialise in this issue.
AL: What has been your experience with regards to international vs Australian work? How do you see this trend going into the future?
There are significant opportunities in developing countries and in particular, China. Political and business risk continues to be a limiting factor for multi nationals to invest in resource projects in developing countries.
BOYD has recently opened an office in Beijing, China and business has developed rapidly. It is anticipated that there will be significant growth potential in this market.
Three years ago consultants expressed concerns about the industry’s ability to adequately replace the aging experience base. How has the industry shortage of experienced personnel impacted your business?
The shortage of experienced, skilled professionals has driven up remuneration costs across the industry, resulting in an increasingly tight market for human resources. In particular, in Australia this remains a significant barrier to growth. The cost of employment increases the pressure on billing rates which become more acute and margins will become tighter.
AL: As in corporate mining offices, many consultants active in the industry have not been operators for quite some time. What are the key measures available to consultants to remain current in industry? How do you view looming professional engineer registration impacting this?
The legislation of professional status needs to be considered carefully as the role of a consultant is usually not to “mine” or execute a task but to provide strategic guidance and analysis to the client. The need to retain “current experience” needs to be limited to the nature of studies performed.
Consultants often have a broader understanding and exposure to industry issues due to the variety of project undertaken. This should be viewed as an asset rather than a lack of experience.
What makes a good consultant is someone who is able to learn quickly and be open minded about the issue being evaluated.
AL: On the question of productivity gains, a recurrent theme in 2001 was regular shortfalls in longwall mine output compared with nameplate capacity. Today poor utilisation still dogs the industry: consulting company McAlpine B calculated a 9% drop in average utilization in 2003, to around 41%. In your opinion what, if anything, has changed? And where could mines better channel energy/resources?
The trend of lower utilisation in Australian mines is contrary to the trends over the last three years in South Africa. The Australian industry needs to seriously review the application of bord and pillar mining to resources which lie between the economic open cut resources and longwall resources. Geological and geotechnical uncertainty remains a significant constraint to underground longwall mining.
Further increases need to come from improvements in operational efficiency through process based management.
AL: The last few years have seen the use of more and more advanced technologies in mining. To name only a few: 3D seismic has had a huge impact in resolving structures ahead of mining; computer technology continues to have a major impact, from bringing real-time monitoring of mining closer to improving communications systems underground. From your point of view, which tools (existing or conceptual) hold the most promise, in terms of safety or productivity? And why?
Surface to in seam drilling at an affordable cost offers the greatest opportunity for improved geological definition.
Accurate and meaningful electronic performance monitoring of mining systems is a key to improved utilisation and productivity.
AL: Given remarkable progress in the existing ACARP funded longwall automation project, do you think we’re any closer to seeing an automated or partially automated longwall in the near future?
Why do we need a fully automated longwall and what benefit will there be by removing a few more people from the mine compliment?
Productivity remains the principle driver of profitability in the mining industry.
