Full transcript of Tennent Isokangas' response to second exclusive survey of consultants servicing the underground coal market.

Brian White, Tennent Isokangas

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?

Increase use of consultants and labour hire. The process shows little sign of abating, with continuing down sizing of planning departments and out-sourcing of resources. There is competition for qualified/experienced engineers/professionals, who are in demand, particularly in the 35-45 year age group.

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?

See comments above, plus growing tendency for companies to want ‘body shop’ relationships with consultants and/or short-term ‘contractor-style’ assignments. This has the potential to be a detriment to the industry in the longer term, with loss of in-house expertise and issues with ‘corporate memory’. Increased on-site work also leads to demands on consulting and labour hire firms to increase staff salaries.

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?

We attempt to effect full cover in all areas in which we practice, but we have suffered exclusion and restraint clauses in (some) areas of legitimate practice. This is generally due to lack of understanding and/or misinterpretation by the potential insurers. We have assisted in attempts by brokers, the institutions, and others to ‘educate’ the insurers. Where this has been ineffectual, we have required the client to ‘carry the can’ or to exempt us.

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

Has had the effect of tightening up on contractual arrangements / agreements, often to mutual benefit as a result of enhanced understanding of mutual obligations. However, sometimes poorly applied in irrelevant areas in a sledgehammer/nut, i.e. a tendency to attempt a ‘one size fits all’, approach.

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

As yet, not a great impact, except with some of the larger clients (lip service?). TIP has fostered the concept for some years and MD (B White) designed and delivers a Course in ‘Sustainable Development of Resources’ to Year 1 Engineers at University of Queensland. Most companies do not yet appear to be wholly adopting the concept but it is emerging more often in longer term and strategic planning.

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

International is still a relatively small proportion of turnover. Not through lack of willingness or ability – ‘chicken and egg’ situation with respect to previous work. Expect to increase with greater marketing activity in this area.

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?

Still a problem, exacerbated by retiring/retrenched professionals opting for sole operator status – at conflict with issue of PII coverage but often encouraged by client companies due to lower charge-out rates because of lower overheads. Bigger problem with mid-career professionals due to ‘salary package’ competitiveness issues and unrealistic expectations by the individuals. Also adversely affected by contractors able to offer higher inducements in their attempts to expand their services with consulting work, frequently with inadequate professional staff capability.

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?

Revised Professional Engineer legislation is already in print in Queensland but awaits proclamation of the Regulations /Code of Conduct. The previous Act has been around for many years, but has tended to be ‘honoured in the breach’! The new Act requires a more honest and assiduous attention to CPD and issues of competency need to be addressed at annual renewal of registration. Potentially it should be a good thing for industry if acknowledged by the companies, but it is yet to be seen how it will be applied (in detail). Companies should be encouraged to address its implications seriously, as a problem that has been around for a long time and that raises PII related issues.

This is a significant ethical issue with major duty of care implications. Some of the apparent deficiencies are remedied, by contact with practising production professionals, when carrying out other work (planning, due diligence, etc), plus there should be active efforts by the consultant in participating in ‘traditional’ CPD activities, such as industry-based conferences, seminars, field and site visits, and workshops.

In addition, short term industry placements, i.e. site-based work with remote support, and exchange arrangement with clients, can also assist. If a consultant’s lack of recent experience is an impediment, they should remedy the deficiency or adjust their areas of practice.

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?

Continuing evidence of failure of the industry (in general) to address the issue, self-evident for many years, that mines, longwall mines in particular, need to be addressed as a composite interlinked system. Optimisation of one component merely puts greater stress on another, etc. Companies should elicit assistance from those able to address the whole picture and use more powerful tools, such as dynamic simulation. However, good detailed operational data is a necessary basis for effective / quality optimisation studies.

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