A new strategic path for the company’s mining activities has been evidenced by its equity participation in projects, including the Burton coal mine in Queensland, the AuIron coal, iron ore and steel project in South Australia, and, most recently, the problematic North Goonyella coal mine in central Queensland. The latter, described by Trundle as an “exception”, saw Thiess take 40% in the underground mine with Germany’s RAG Coal its partner. Their efforts to rejuvenate North Goonyella represent the last gasp for a mine which has beaten several operators.
While he is uncomfortable with the high level of direct ownership, Trundle knows that despite North Goonyella’s unhelpful geology (for longwall mining) and past labour unrest, the mine represents a good opportunity for the company to demonstrate its competency and expertise in the operation of a 4 million-tonnes-per-annum-plus longwall. It is an underperforming sector of Australia’s coal industry that could do with fresh ideas and legs.
“We are very conscious of not wishing to take a major position long term in projects because that’s not what our balance sheet’s for and it could be perceived by our other customers as a threat in that we could be looked upon as a competitor,” Trundle said.
“We have no, and I have to stress this, no expertise in coal marketing. We don’t seek to be involved at all in selling the commodity. That responsibility in this case rests totally with RAG. Our responsibility is to operate the mine.
“If there is a need for us to take a position such as at North Goonyella, in order to secure an operating role, with an objective of selling down in due course, then we will do so. But it is not a long term strategy to hold major positions in mining projects.”
The extent of Thiess’ involvement in mining and other projects, and the diversity of its income stream — which comes from environmental services, telecommunications, facilities management, maintenance, construction, engineering and mining — saw the company drop the “Contractors” from Thiess Contractors in July last year.
“Contracting remains central to the business,” Trundle said. “But more and more we are taking a role as managers of feasibility studies, for example, with a view to taking a role in projects as they move forward. We have a diverse base in terms of the disciplines employed and industries in which we operate, and most importantly we do get ourselves involved at an early stage and we’re not what people view as a traditional contractor.
“We don’t just pick up a project when it’s well advanced and say, there’s a set of documents or plans, and we’ll give you a price on it. Line it up against others’ prices and pick one. Not too much of our business is secured in that way today.”
One company Thiess still finds itself lining up against in the construction, mining and civil engineering industries is Leighton Contractors, its Leighton Group stablemate. The two companies have similar levels of exposure to many industry sectors, but perhaps there is some significance in the fact that Thiess is now the dominant player of the two in the mining industry. In the 1990s, mining underpinned Thiess’ expansion while its importance to Leighton Contractors receded.
Trundle said this did not mean Thiess had become the designated mining arm of Leighton Holdings.
“Thiess is doing what we feel is best for Thiess,” he said. “We go about our business. We are not directed by Leighton Holdings, and we are not constrained as to whether we do more or less mining work. And I expect the same would apply with Leighton Contractors, although I don’t know.
“Obviously we have a significant amount of mining work. That has been a big factor in our growth in the past 5-6 years because there have been good opportunities there and we have embraced them.”
Originally published in the March 2001 edition of Australia's Longwalls.