It is highly competitive but it is buoyant and has its challenges but they are being met with growth and expansion. The contract miners and drillers industry is riding the resources boom.

The contractors, who have been an integral and expanding part of the mining industry since the 1970s, are looking at full order books and with growing confidence in the longevity of what has been described as “the greatest level of mining activity in Australian history”

Operating across the sector from the small junior gold mining operations to the billion-dollar iron ore projects and the strategic eastern states export coal industry, mining and drilling contractors are a vital ingredient to industry economics as well as production and development.

The debate over owner-mining against contracting has waged for years and taken many turns but in the words of one senior executive it probably comes down to one choice and that’s “horses for courses”

Others say the market is cyclical when it comes to mining operations, with contractors or clients themselves taking the reins and there is no discernible trend and no appreciative difference in the percentage of work now being done by the contractor operators.

One thing is certain, their presence is being felt and they mirror the success of the mining companies.

In the past couple of years, more contractors, drill companies and services suppliers to the mining industry have moved to expand their own businesses as the opportunities for growth continue, and have been listed on the Australian Securities Exchange after successful initial public offerings.

Many are posting their best ever results, their share prices are at some of their highest levels, more rigs are in operation, staff levels are higher, and the industry continues to exude confidence in the future, both short and long term.

Contractors may not necessarily be taking a bigger slice of the business cake from the owner-operators but their order books are full, the industry itself is moving with the changing relationship needs and expectations of their clients and there is both solid growth and a demand for their services.

From large contractors with staff in the thousands to smaller specialist and niche market players, most companies are flat out, although they continue to compete for the lucrative stability of long-term contracts with the blue chip and major mine producers and developers.

Walter Diversified Services, whose specialist services include those to the underground coal mining industry, only listed on the ASX in December and closed on its debut at a 110% premium to the offer price. By the end of February, it had announced a net profit of $5.8 million for the first half to February 28, 2007.

Revenue had increased from the previous period from $40 million to $107.2 million.

Swick Mining Services began as a small family business and after prodigious growth floated 29% of the company. The former water well drilling business has had a massive two-year growth spurt, with its drilling and mining services bringing in $11.3 million in 2006 and expected to more than double by the end of the financial year.

It now provides drilling rigs to clients, which include BHP Billiton and Consolidated Minerals.

Ausdrill had a revenue jump last financial year of 56% to $317.1 million and a 69% increase in operating profit with its Kalgoorlie, Western Australian business, which carries out exploration drilling in the Goldfields, and its drill and blast activities increased revenue to record levels.

Macmahon Holdings has a workforce of more than 2700 employees and had a 72% after- tax profit increase in the 2006 financial year, the best in the company’s 43-year history.

Private company Barminco expanded substantially including into the international market while Byrnecut grew 30% in 2006 and now has 1800 employees and an international division and wants to grow to $750 million a year by 2010.

Leighton Contractors has a 3000-strong workforce in its mining sector and Brandrill has the capacity to do $150 million turnover in drill rigs, with 500 employees drilling and maintaining drills.

It all adds up to a picture of continued success and future growth in an industry mainly spawned by the needs of the small gold mining companies, which were without their own resources and access to capital funding.

Now it is not only the small miners but the major mining companies and international giants such as BHP that use contractors, although the way they do business is changing.

Relationships between the contractors and their clients are becoming one of the most significant factors of change in the future direction of the mining partnerships between the two.

Termed relationship contracts, they describe the new flexible approach to the business relationship between the two in the more complex mine management and operational structures prevalent in the first decade of the new millennium.

Walter Diversified Services says that by providing professionally managed services and integrating with its customers’ existing operations, the company has achieved long-term relationship-based contracts, which the group has established with a number of leading blue-chip coal mining companies.

According to Barminco general manager Neil Warburton, the contractor game has matured over the past three years and contractors are seen more as partners involved in areas such as site management and a co-employer of senior people onsite working together to achieve the best result.

“We get involved in mine planning, mine issues and are heavily involved in bringing in our own experts to assist the client’s technical people,” Warburton said.

Thiess, a world-class mining services provider with new managing director David Saxelby at the helm, is also strongly involved in collaborative working relationships and what is called alliance contracting, with clients.

The client and contractor or services provider work cooperatively on the basis of sharing the project risk and reward for the purpose of achieving agreed outcomes.

Thiess mines more than 60 million tonnes of coal a year and operatesArticle continues, click here.