CONSULTANTS SURVEY: Palaris

Full transcript of Palaris' response to second exclusive survey of consultants servicing the underground coal market.
CONSULTANTS SURVEY: Palaris CONSULTANTS SURVEY: Palaris CONSULTANTS SURVEY: Palaris CONSULTANTS SURVEY: Palaris CONSULTANTS SURVEY: Palaris

John Pala, Palaris

Staff Reporter

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?

As the market conditions have improved for the industry, there has been a stronger trend toward

· New project evaluation

· Major capital expenditure program evaluation work.

The /business improvement/ bread and butter areas of

· Longwall productivities improvement

· Development productivities improvement

· Geotechnical services and

· Due diligence

Has also been very strong

How do you see roles developing in the future?

I think as the current growth cycle reaches maturity (over the next 2-3 years) there will be a return to the areas of

· Business improvement

· Asset utilisation

· Specialist technical and operational advice

· Support for management change processes.

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?

This is a perennial issue which is related to many factors not just cost. The decision has more to do with company philosophy than just a straight cost factor. Some companies use very few consultants; others have consultants do a lot of their work as well as having many of their people on short term-contracts.

If we take out the extremes, then the decision of permanent verus consultant can come down to factors such as

· The need for specialist technical expertise- how often is this needed?

· Peak work loads- assistance in project evaluation, planning and project execution support

Issues such as mine location, existing site expertise, timeliness of a particular project etc can often have a greater bearing than cost.

What are the key factors determining why consultants are used and how do you expect these factors to change in the future?

Key factors include:

· Reputation of the consultancy firm

· Quality of the relationships with the different levels of management

· The ability to provide specialist technical advice

· Ability to deliver on time, on budget and to a high quality

This is not expected to change too much in the future

One area which seems to be increasingly filled by consultants is short-term management support. Areas such as mine management, mine planning, statutory support services continue to be in strong demand. This refects an acute shortage of good people available to cover these areas.

How will these changes impact the way consultants do business and the nature of consulting?

The mine management support services will continue to grow in the future. This is particularly the case in remote areas and start-up operations. This is likely to be an area complimentary to existing consultancy services.

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 PI cover issue seems to have gone through a few phases. It now seems to be back to more affordable levels. Very few clients (

AL: Please comment on the impact on consultants of corporate governance protocols that mining companies are introducing.

A number of the larger mining houses espouse their corporate governance principles more strongly than previous. The principles which are espoused reflect good business and are consistent with how we operate.

AL: How has the issue of ‘sustainable mining’ impacted on your business? And what impact has it had on your clients?

Sustainable mining has had no discernable impact either on our business or on our clients.

AL: What has been your experience with regards to international vs Australian work? How do you see this trend going into the future?

As our consultancy has grown we are doing an increasing level of international work. While this trend is likely to continue, Australia will continue to be our main source of work.

AL: 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?

We have found an increasing demand for straight management support services. This has been in areas such as statutory support, mine planning, engineering services, project management etc. This trend will continue strongly in the future as the pool of qualified and experienced personnel continues to drop.

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 management support services work we do provides an opportunity to maintain “hands on experience”. The majority of our consultants maintain some experience in active industry roles.

How do you view looming professional engineer registration impacting this?

The professional engineering registration is a positive step if we want to maintain a vibrant professional status for the industry.

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 last 12 months has seen a high turn-over of personnel. It has also seen an increased level of roof falls on many longwalls. I suspect the two areas are related and have resulted in the reduced utilisation.

Many operations see the running of a longwall as a purely technical exercise. The business risks of running in a particular manner are often overlooked. I think that there are still too many cases where longwall run at a higher level of business risk than is acceptable.

If we examine the cost of roof falls and generally “out of control situations” resulting in major outages, the numbers are staggering. The industry seems prepared to spend significant amounts of money on PUR, cavity fill, emergency response measures to get production up and running again.

In comparison, much smaller amount is spent on prevention.

Each time there is a major event causing a delay on the longwall it should be fully costed. This should include material costs, revenue losses and potential loss of market as well as safety impacts. Then the question should be asked; how much of this could have been spent in prevention to obtain a more cost effective outcome for the business?

Business risk management principles still have a long way to go in our industry.

Continues, click here.

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