Buying a coal mine - the good, the bad and the ugly

Andrew Boyd, Chief Executive Officer, Baralaba Coal Company

Over the course of my career I have led a dozen corporate acquisitions, from operating mines, mines in care and maintenance, tenure portfolios, heavy engineering businesses and professional services businesses. They have ranged in size from less than $1 million to close to $1 billion in value, and in terms of employees, from 10 to 600 people.

The most recent acquisition I have been involved in is American Metals and Coal International (AMCI) who acquired Baralaba Coal Company in December 2021 from Liberty Mining and Metals. Baralaba Coal is a small PCI producer with one operating mine close to the town of Baralaba in Central Queensland. We produce around two million tonnes of coal per annum for export through Gladstone.

New owners bring new ideas, and it is important to not just focus on the things that you now want done; but also focus on shedding the things that don’t add value or are unnecessary in your business context.

The acquisition has been a great success for AMCI and it has been a privilege to lead the small Baralaba Coal team over the last year, focussing on building open and constructive relationships with our key service providers and the local community. Every acquisition has its unique characteristics and challenges. When it comes to acquiring operating mines there are certain things I have observed, learned and got wrong along the way.

These lessons are based on actual events, only the names have been withheld to protect the innocent; however, I’m sure those that know me will be able to speculate as to who or what I am referring to. Hopefully I’ve been successful in putting these lessons to good use over the past 12 months at Baralaba.

Lesson 1 – Tell your story early and often

When you enter an operating business as a new owner, there will be no shortage of speculation from the employees, service providers, community and other stakeholders about your motivation, your plans for the business, your values and your approach. Some of this speculation will be accurate, some will be wildly inaccurate, and most will be somewhere in between. My advice is to take every opportunity to tell your story to as many people as possible, and as often as possible.

Tell people why you bought the business, what you intend to do with it and how it might impact them. Also, tell them what you don’t know, what decisions are yet to be determined and what your timeline is to make those decisions. If you are not telling the story, you can rest assured that others will do it for you, with varying degrees of accuracy.

Lesson 2 – Make change quickly and with respect

If you intend to make changes to the senior team, do it quickly and with respect. Faced with the prospect of new owners, most senior people expect their world to change. If you intend to keep senior people, tell them and get them on board quickly.

If you intend to make changes, make them quickly and respectfully. If you don’t know, work it out before you take control and, if you’re still not sure, my advice would be to make changes rather than keep people that you’re not sure about. Whatever you do, it is important that you do it with respect for those impacted. The rest of the business will be looking at you and forming their own view of your values and how you treat people from these early interactions.

Lesson 3 – Face reality - it’s never all bad… or all good

You always get surprises when you take control of an operating business. Sometimes these are pleasant surprises (and sometimes not so much). There will be things that you thought you knew from due diligence that you got wrong, parts of the business that you thought were going well that aren’t, people that are just waiting for an opportunity to step up and help and others that struggle with change and act as blockers.

The important thing to do as a new owner is to have your eyes wide open, trust your gut and face reality. If the team got something wrong in diligence, then evaluate it, manage it, accept it and move on. If you got lucky, acknowledge it. If people don’t want to come on a new journey with you then get them off the bus … again, with respect.

Lesson 4 – Focus on not doing ‘stuff’

When you buy an operating business, particularly from a larger player, there will be thousands of things that people do just because that’s the way they have always done it. New owners bring new ideas, and it is important to not just focus on the things that you now want done; but also focus on shedding the things that don’t add value or are unnecessary in your business context.

It never ceases to amaze me how some people will continue to do what they have always done until (repeatedly) told otherwise, and even then, they may only change begrudgingly. Be patient, bring them along for the ride and hopefully, they will see the light.

Lesson 5 – Bring some friends

You can’t understand a new business, set a strategic direction, make important decisions, win hearts and minds and get alignment all by yourself, no matter how talented you are.

If you want to lead a successful integration, you need to have a talented and trusted team of people around you that understand the objectives, have the authority to make decisions and can be trusted to give you completely open and honest feedback.

Lesson 6 – Enjoy the ride

Executing the successful acquisition and business integration of an operating mining business will stretch your capacity and test your patience. At times you will face uncertainty, feel out of your depth and question your judgement. These feelings are very normal but, despite this, don’t forget to enjoy the ride.

As you look back on your career, it will be projects like acquisitions and integrations that will stand out as highlights, and you will meet many great people along the way. So, to sum up, be open and honest, be respectful, expect the unexpected, be patient, trust your inner circle and take time to enjoy the experience. 