The acquisition, announced in the latter part of June, follows a series of deals that have bolstered other Coffey consulting businesses. The Australian Stock Exchange-listed group expects to generate a net profit of $9.6-10 million this year on 22% higher revenues totaling $160 million.
“This (the BFP acquisition) is a key building block for us to launch Coffey Mining as a significant player in the mining technical services market within the Australia and Pacific region,” Coffey managing director Roger Olds said when the deal was announced.
Olds went a step further in an interview earlier this month with Australia’s Mining Monthly when he said he wanted Coffey Mining to be the sector leader and a major international player in the mining consulting business.
He said the combination of two smaller players in the mining consulting business created not only a larger entity, but stamped Coffey Mining as “having a real focus on their sector rather than being just a civil geotechnical firm that does some mining on the side”
“The turnover of Coffey Mining should approach about $20 million next year and that will not include our environmental approvals work through Enesar which will exceed $7 million,” Olds said. “Our aim is to be the market leader and develop an international mining business.
“Mining will represent about 20% of our consulting business and 10% of our total business in 2006.”
Olds said the resources market had always been a natural place for geotechnical and mining engineers to work as consultants. At present it was in a very strong phase due to increasing world demand for energy and minerals.
“At present most of our work is at the operational end helping miners operate more efficiently and safely, but we can service all parts of the needs of mining companies and there is a need across all parts of the sector,” Olds said.
Coffey Mining currently has about 50 full-time staff servicing clients. Asked whether increasing pressures on salary and recruitment costs caused by a shortage of experienced and skilled mining engineering and other professional personnel in the mining industry had the potential to impact Coffey’s post-BFP purchase profit forecasts, Olds said he was comfortable with the company’s projections.
“Our forecasts are fine,” he said. “In consulting increased costs have to be reflected by increased prices.”
Olds also indicated Coffey would maintain its aggressive stance on acquisitions, adding he felt the mining consulting sector was ripe for further change.
“There is ongoing consolidation in the consulting industry and Coffey has demonstrated both the financial capacity and organisational culture to successfully acquire other consulting companies,” he said. “It is a core part of the Coffey growth plan, but organic growth is equally important.
“The key factors for long term success in consulting for Coffey are to provide a high level of service to our clients and be known from boardroom to mine face as a company that provides innovation, and quality which is value adding to our clients. This stems from having the best people, but also the right culture and systems.
“Clearly the international market is much larger than Australia and our focus is to service this market and to gradually expand internationally to be a more dominant force.”
Coffey Mining business manager Dan O’Toole’ said there was a “real need for specialist services” in the mining industry, and more mining companies were outsourcing key functions previously covered in-house. The purchase of BFP enabled Coffey Mining to offer a greater breadth of service coverage to the mining industry.
“We now have increased capacity to take on large projects and provide a depth of technical support to mining operations,” he said.
“This is particularly important with the number of projects in the mining industry continuing to rise and delays occurring due to a lack of consultants.”
BFP had been operating successfully in Australia for the past 25 years and had a respected reputation and depth of experience. All BFP staff and principals would be integrated into the Coffey business.
BFP managing director Peter Fuller, said the company’s mining engineering and geotechnical experience had positioned the company as a leader in the development of practical mining solutions. “We have a successful track record of providing advice on mine layout, excavation design, and sequencing and planning around support to match ground conditions. Other areas of expertise include operator training in ground awareness, and basics of ground support selection and installation, and ground behaviour monitoring,” he said.
BFP also brought a depth of experience to Coffey Mining that enabled it to service projects from feasibility to mine closure.
Coffey plans to continue to expand the capability of the rock-testing facility established by BFP in Melbourne. The testing services now offered by the expanded Coffey Mining group also include on site ground control quality assurance tests, stress measurement and mine instrumentation.
“This testing ability will add another string to our bow in the mining sector and we will continue to grow this aspect of the business,” O’Toole said. “It is our plan to become the largest and the best Australian-owned mining consultancy which has a depth of experience from the mine face to the boardroom.”
Australia’s Minng Monthly
