Published in the August 2007 Australia’s Mining Monthly

However, the mining consulting industry has not just latched on to the coat tails of the mining and exploration juggernaut. It has always had an integral part to play and now its own substantial growth is mirroring that of the industry it provides diverse, wide-ranging high profile services to.

Few mining companies, from the major producers and global players such as BHP Billiton and Xstrata to the junior explorers and small hopefuls are not using consultants.

The miners, whatever their status, are having in-house resources stretched with the majors trying to juggle several active projects and cashed-up juniors pushing the limits to get feasibility studies done.

The small and medium-sized miners are often unable to maintain in-house capabilities, especially in engineering and technical support. Nor do they have the time to spend on the detailed technical work needed for exploration, resource estimation and engineering projects.

Outsourcing is the buzz word and as the miners rejoice in the continuing upturn so do the consultants who mirror their fortunes. As one consulting firm told Australia’s Mining Monthly: “Outsourcing is the smart thing to do – it makes economic sense”

In an era when miners big and small are saying “we want it and we want it now” every area of mining expertise is being bought and brought into the operational mix in the mining, exploration, production and financial services sides of the industry.

Mine and project management, resource estimation, optimisation, geotechnical engineering, feasibility studies, mine planning, business performance, data acquisition and engineering are among the services on offer from the consultants menu of mining industry expertise and professional advisers.

Mining consulting industry growth in the past few years has been substantial and is continuing to expand in Australia and overseas with some companies’ mining business activity having increased more than 30% in the past year.

An increasing part of that growth and expansion within the consulting companies is in the international market place from Africa to Asia and the Americas.

Several companies have international offices and their expertise – especially in technical areas of mining and its operations – is in demand from overseas companies and Australian companies who have moved into international mining exploration and development projects.

Golder Associates, an Australian ground engineering mining services and environmental services consulting group, employs 5500 people worldwide with 100 offices on all continents.

It covers everything from the drill-out of new deposits and resource modelling to mining engineering and planning, rock management, environmental and mining services.

Golder Brisbane-based mining team leader Ian Lipton said: “We have a broad base and cover everything apart from core processing.

“We often work on feasibility studies and will provide effectively a full service – sometimes one specialty, at other times combine various tasks – often working with larger engineering firms who would look after the processing side.

“We provide a complete range of services but at other times clients prefer to cherry pick specific services or areas of expertise. We have a diverse mix of clients from major mining companies, who are significant clients, but also a number of important projects with junior miners who are pushing projects through feasibility stages.

“At the moment the junior end of the market is cashed up and a lot of juniors have acquired very interesting projects in Australia and increasingly overseas. There is a lot of activity driving those projects forward.

“A lot of our work is international, dealing with projects for junior miners in Central America, North Africa and South-East Asia, and the Australian market is still very busy.

“The growth of the consulting industry has been substantial over the past few years. Last year we had 34 percent growth in our mining business and it is still very strong.”

Coffey Mining is also looking at significant growth overseas, especially in Africa. It is opening a new office in Zambia, and establishing a Toronto office in the next three months to handle work it is doing for Toronto Stock Exchange listed companies.

Its expansion in Australia is mainly in the areas of technology with instrumentation, data acquisition business and areas of business improvement and management consultancy.

“We have a strong capability from the cradle to the grave,” Coffey Mining chief operating officer Dan O’Toole said.

“We have an exploration project management services capability, which is our earliest entry point to resource projects, carry out feasibility studies and due diligence for banks for fundraising.”

The company works with major mining companies and juniors in project implementation, particularly underground.

“Partly because of the skills shortage those organisations do not have the depth and experience they used to have so we can supplement their in-house experience,” O’Toole said.

“There is an increasing trend towards outsourcing and not just by juniors. In some cases it is outsourcing day to day core operational planning work to release staff to work on the growth of projects. There is a mix of reasons and a mix of work that is outsourced.

“The growth of the miners and mining work has flowed on to the amount of work and growth in the consultancy industry.

“Over the past decade there has been a move away from having large in-house specialists – engineering feasibility groups, mining research groups – so the depth of experience is not sitting out there in companies any more.

“Through using specialist consultants you can get access to a very high level of experience and technology.

“One of the things consultants provide is a great cross-pollination of ideas that you probably won’t get from an in-house group. The other reason is that you can turn on and off technical resource as you need it. Not paying for something you don’t need makes economic sense.”

Relationship build

While there is a lot of work about, client relationships can be important. Palaris Mining managing director John Pala said his company did a lot of repeat contract work.

“Our business model is very much high level quality consulting services across our main areas of expertise – mine operations, which include geological, geotechnical, engineering and risk management with a focus on pure consulting, due diligence, business improvement and feasibility studies at every level,” Pala said.

“People we use have worked at high levels in organisations and can seamlessly slip into what are equivalent senior roles across a range of organisations including acting as senior site executives.

“We do work for almost all majors but also for smaller companies. There is a lot of work for South-East Asia equity investors looking to put money into a start-up company to establish a listed company.

“Some companies are doing more outsourcing than others. That is mainly related to the company’s own philosophy but I would say the smart companies are looking outside their own organisation.

“We are growing not only in areas of core expertise but capability across a number of closely aligned areas. Our strategy is to continue to bolt on complementary areas of capability.

“In the current climate BHP Billiton, Xstrata and other resource companies are struggling to find enough human resources to meet their needs.

“They have the depth of people but at the rate they want to develop new projects they do not have the resources to develop them as quickly as they would like so they bring in outside resources, particularly if they are confident you have the expertise and reputation to develop projects to their standard.”

Mining and processing operation analysis, modelling and optimisation specialist Whittle Consulting’s Gerald Whittle said there was an urgency in demand and the consultancy industry was growing, while SRK Consulting, a 600-staff, 30-office strong specialised consultancy in the mining, exploration and financial...click here to read on.