National Resources Review June 2016

Tough times call for collaboration and a helping hand How new CEOs can boost their odds of success Oil and Gas and the digital technology age

june 2016

Australian Made

PIONEERING SEAT PROTECTION Australian made and owned 100% satisfaction guarantee* 12oz heavy duty canvas Tailored fit Water resistant Safety — Certified side airbag compatible covers available for selected vehicles.

This Toyota Hiace van, belonging to a courier driver, had Black Duck Seat Covers fitted when it was new. Eight years and over 400,000km later, the seats underneath are still like new.

1800 803 825

*Terms and conditions apply

• • • • • •

BLACKDUCK.COM.AU

cover story 12 Tough times call for

collaboration and a helping hand

features 18 Bigger strategies needed

for emerging oil and gas companies Major oil and gas discoveries during the last decade opened new energy regions which saw a surge of exploration interest from foreign oil companies of various sizes.

24 Sales of mining assets need

better strategy The market for mining and earthmoving equipment has continued to plateau from the previous two quarters whilst the smaller to medium sized equipment sold quite well.

26 Keeping equipment clean to

last longer Mining vehicles work in extreme conditions and require routine maintenance to operate efficiently and safely.

28 Oil and gas and the digital

technology age A number of existing and emerging technologies have the potential to reduce costs and increase recovery rates in the oil and gas sector.

36 Water reform drives more

interest in MAR There has been significant progress in the development and implementation of Managed Aquifer Recharge (MAR) schemes in Australia over the past 10 to 15 years.

40 Research into tyre recycling

and re-use to be realised Traditionally, the majority of oversize tyres have been disposed of by burial on mine sites, with other end-of-life options including off-site disposal and use in safety bunds and stabilisation structures.

44 How new CEOs can boost their

odds of success A look at the link between the strategic moves of new CEOs and the performance of their companies highlights the importance of quick action and of adopting an outsider’s perspective.

50 Needed: Better planning for

mine disasters Joint pre-planning between the mine operator and the local community’s emergency planning committee will lead to an effective emergency operation.

52 Alerting the industry to the

dangers of fatigue In a work context, fatigue is a state of mental and/or physical exhaustion that reduces a person’s ability to perform work safely and effectively.

regular 6 News

34 Projects

56 Finance

16 Events

36 Environment

60 Going Global

18 High Profile

42 Skilled

62 Opinion

28 Innovation

50 Safety june 2016 1

T

he Australian mining and mineral

exploration industry continues to face a number of challenges in 2016. Key challenges include the difficulty in attracting investment in an internationally competitive market; confidence in stable long term public policy settings; high cost operating environment; low discovery rates; costly delays in obtaining land access; increased community expectation and social licence to operate; flexible workplace relations framework and ready access to a skilled workforce; and excessive red tape in approvals and compliance.

Mining industry bodies such as the Minerals Council, the Association of Mining and Exploration Companies (AMEC) and the South Australian Chamber of Minerals and Energy (SACOME) have each developed a number of key Federal Election priorities which they say need to be tackled in order to address the current challenges, mainly by driving increased exploration activity and reducing business costs.

The Australian mining and mineral exploration industry has continued to experience considerable financial and economic pressures, falling commodity prices, unemployment, reduced international competitiveness and capital investment going to competing projects.

Although many Australian miners have managed to keep their operations viable with low margins and limited cash flow due to cost savings and efficiency measures, a number of financial pressures are beyond the control of companies as they are compulsory expenses, such as with corporate taxation, power, water, stamp duty, tenement rentals, shire council rates, fees and charges, levies, superannuation, regulation and compliance costs.

These costs may have not made a big impact during the boom, but in the last couple of years companies have had no alternative but to find other ways to meet these payments. This has been accomplished through projects being closed, put on care and maintenance or deferred; reduced exploration; increased production efficiencies; operational savings; or through job losses.

The fact that mineral exploration drilling activity has been declining over the last decade is also starting to become apparent in government forecasts of exports from the resources and energy sector. The Resources and Energy Quarterly, produced by the Department of Industry, Innovation and Science and Office of the Chief Economist, released in March 2016 forecasts a reduction in the value of exports from resources and energy between 2019/20 and 2020/21 of A$46 Billion compared to the Resources and Energy Quarterly report produced in September 2015.

Although the coming Federal Election cannot change the low commodity price market, it has the authority to determine the future of Australia and the resources industry.

Annelie Wressmark Editor

2 june 2016

Volume 5, Issue 44, JUNE 2016 Published by Sage Media Group ABN 56 155 835 555 Director/CEO Noman Kabir Director/Publisher Cordelia D’Souza Group Editor Annelie Wressmark Contributors Reg Howard-Smith Brendan Pearson Paul Baruya Adel Van Der Walt Peter Wiese Dipesh Jasmat Jay Leary Simon Reed Geoff Kerrigan Yuan Chou Michael Birshan Thomas Meakin Kurt Strovink Research and Development Shah Talukder Business International Art Director Karolina Larsson Communications Manager Peter Harris Graphic Design and Production Ellen Johnson Group Sales Manager Joel Prentice National Agency Manager Peter Stevens IT Support Zayd Bhyat Accountant M.H.Morshed Subscription Manager and Administration Amber Arnold

M E D I A

G R O U P

8/4 Queen Street Bentley WA 6102 Australia P 08 6336 6430 F 08 9458 1136 www.nationalresourcesreview.com.au info@sagemedia.com.au editor@sagemedia.com.au Disclaimer: National Resources Review is subject to copyright and cannot be reproduced in whole or part in any print or electronic form without the consent of the Editor. Although every effort has been made to ensure that the information is correct, no responsibility is accepted by the Publisher for any entry supplied by individuals, organisations or companies.

RECYCLE WASH WATER, SAVE MILLIONS EACH YEAR OIL REMOVAL, NOT FILTRATION WASH WATER TREATMENT ✖ CONVENTIONAL ✖ CONVENTIONAL WATER WATER TREATMENT TREATMENT METHOD METHOD WASTE WASTE WATER WATER

COLLECTION COLLECTION SUMP SUMP

WATER WATER TREATMENT TREATMENT ✔ WASTE ✔ WASTE WITH WITH OLEOLOGY OLEOLOGY

WASTEWASTE WATERWATER

→ Recycle 100% of water used in LV/HV wash COLLECTION COLLECTION SUMP SUMP

WASHDOWN WASHDOWN WATERWATER REUSE REUSE

OIL OIL SEPARATION SEPARATION

(No liquid waste water trucking costs, small footprint) → No chemicals are used - no cost, no storage, no

CHEMICAL CHEMICAL DOSE & DOSE WASTE & WASTE SLUDGESLUDGE

> ONGOING > ONGOING TEST TEST REPORTING REPORTING

process and maintenance operations → Containerised OLEOLOGY treatment system

SEPARATION SEPARATION

dosing - in OLEOLOGY treatment systems SANITISING SANITISING

> FUTURE>EPA FUTURE LIABILITY EPA LIABILITY

How does an Oleology treatment system benefit your mines needs?

WATER WATER

FILTRATION FILTRATION

DISCHARGE > WATER SUPPLY/USE > WATER SUPPLY/USE DISCHARGE AND WASTE AND WASTE > HEAVY METALS > HEAVY METALS

→ Real time online water quality monitoring → Immediate results → Environmentally friendly → Low cost for treatment per litre → Treatment systems customised for your needs → Hydrocarbon, organic odour removal → Removal of heavy and fine solid matter → Systems routinely monitored

(monthly) for bacteria like E.coli → 20ft container → Able to treat water from a variety of sources:

• LV wash • HV wash • workshop

Existing washpad with OLEOLOGY retrofit container to improve compliant water quality at minimum cost

Call OLEOLOGY to discover how we can help you Engineer Oil-Free Water

• bore water • process water • dust supression

OLEOLOGY saves water, money, and environmental liabilities.

1300 692 359 oleology.com.au

Authorised Sole Australian Distributor

upcoming

EVE NTS South Australian Chamber of Mines and Energy Lunch SACOME’s corporate events are renowned for attracting high calibre speakers and large audiences comprising the key stakeholders in the South Australian resources industry.

With the most timely and relevant topics, the events regularly attract 200 - 400 industry executives and employees, government officials and executives, parliamentarians and service providers to the mining and energy sectors. Hear from keynote speakers covering important issues and industry challenges, as well as updates on existing and potential major projects in South Australia.

8 July 2016 Adelaide Convention Centre http://www.sacome.org.au/events/ corporate-events.html

Innovations in Mining Conference 2016 Mineral commodity prices have experienced unpredictable and huge fluctuations, resulting in severe cost cutting measures and mine closures. This has affected mining companies

4 june 2016

of all sizes. The Innovations in Mining Conference is a forum for the mining industry to discuss common challenges, to improve understanding of new and existing technologies leading to sustainable resource extraction, to share latest innovations in the mining industry and to promote dialogue on sustainable mining policy and corporate governance frameworks.

19–20 July 2016

Holiday Inn Bulawayo, Zimbabwe saimm.co.za/saimm-events/upcomingevents/innovations-in-miningconference-2016

PNG Industrial and Mining Resources Exhibition The PNG Industrial and Mining Resources Exhibition will attract employees of the industrial, oil and gas and mining sectors from Papua New Guinea with invitations extended to Irian Jaya, Solomon Island, Balikpapan, New Zealand and Australia with expected interest from these regions.

20-21 July 2016 Sir John Guise Stadium, Port Moresby tradeshoworganisers.com.au/apng/ index2.html

Noosa Mining and Exploration Conference This valuable and informative investor conference will be held for a sixth year at Peppers Noosa Resort and Villas from Thursday 21st to Friday 22nd July. The 2016 conference will feature listed resources companies showcasing and selling their investment credentials via an exhibition and formal presentations. Designed for resources investors to better understand current investment opportunities in the mining and exploration sector, the conference brings senior company executives and resource investors together in a relaxed yet sophisticated setting.

21-22 July 2016 Peppers Noosa Resort & Villas, Queensland noosaminingconference.com.au

QLD Mining and Engineering Expo Since the first edition in 1993, QME (Queensland Mining Expo) has grown to become the leading industrial exhibition in central Queensland. Ideally timed during a period of unprecedented growth in Queensland’s mining industry, QME 2012 was considered by the majority of its record 600 exhibitors and over 11,000 high quality professional visitors, to be the most impressive edition yet. QME has become an important biennial event for all buyers, specifiers and industry professionals to come together to catch up on the latest products and technologies, keep abreast of industry trends and network with industry colleagues in a vibrant business environment.

26-28 July 2016 Mackay Showground queenslandminingexpo.com.au

Oil Spill India 2016 The Oil Spill India (OSI) International Conference and Exhibition is a global forum to discuss the best of practices, technologies and experiences on oil spill management. OSI includes the world’s most eminent experts and the exhibition showcases global technology and equipment suppliers displaying the latest in equipment, technology, services and solutions for prevention and response of oil spill. Themed ‘Commitment, Synergy, Excellence’ OSI 2016 will provide a forum on stakeholder’s commitment for environmental sustainability, oil spill preparedness and prevention, the need for synergy in oil spill response and excellence in restoration efforts.

11-12 August 2016 JW Marriott, Sahar, Mumbai, India oilspillindia.org

AT LAST!

A NEW ‘BREAKTHROUGH GREASE’ THAT EXTENDS THE LONGEVITY OF YOUR MACHINERY....

AND REDUCES MAINTENANCE AND DOWNTIME COSTS! OUR ADVANCED REASE TECHNOLOGY G NGER! IS A GAME-CHA

BENEFITS E N A S N I ENJOY REASE! G W E N S I WITH TH tance,

esis or WateroR t u • Superite h s a no wa r w & grime ract dust tt a ’t n s e • Do ance in g Performssure in d n ta ts • Ou & high pre high heat ance & s Mainten • Reductieme costs vity down ent longe n o p m o c • Extends e most s best in sth rm o rf e P • ndition hostile co lfonate alcium Su C m iu m • Pre Grease

“OUR SERVICE DOWNTIME HAS BEEN HALVED!”

GREG HYLAND VAC GROUP

Advanced Technology Grease has provided a dramatic reduction in maintenance costs, our service downtime has been halved with a massive reduction in maintenance and repairs required. In the past 14 months since using ATG we have not had one Kingpin or Shackle Bush failure. I feel in our wet, harsh operating conditions our results speak volumes.

PHONE FOR A DEMO

(07) 3807 8919 VISIT www.atgrease.com.au

NEWS

Western Australian Mines and Petroleum Minister Sean L’Estrange has announced a commitment of $5.14 million in exploration funding for Round 13 of the highly competitive Co-funded Drilling Program under the Exploration Incentive Scheme (EIS).

$5m The Co-funded Drilling Program refunds up to 50% of direct drilling costs with caps of $150,000 for a multi-hole project, $200,000 for a single deep hole and $30,000 for a prospector’s project.

A total of 48 companies and prospectors successfully

injected for mines exploration in WA

applied to receive the cofunding for exploration drilling projects.

The Co-funded Drilling Program is in its eighth year and continues to help explorers make exciting new discoveries. $30 million has been allocated to the EIS out to 2020.

“The Co-funded Drilling Program provides incentives to drill in under-explored areas and is the key to the continued economic prosperity of the State’s resources industry,” Mr L’Estrange said.

The program has already been successful with commercially promising

and scientifically interesting projects such as the Nova nickel project, which used State Government precompetitive data as well as co-funding support.

“In addition, there have been more than 20 other mineral discoveries that can be credited to the drilling program.”

Recent finds include nickel

by Panoramic Resources at its Savannah North project, zinc at Millennium

by Encounter Resources, and gold at Alloy Resources’ Horse Well project and Gold Road Resources’ Gruyere discovery in the Yamarna greenstone belt.

Treatment plant turns waste into electricity A trial to turn food waste into renewable energy to help power the Cronulla Wastewater Treatment Plant in New South Wales has been announced – the first of its kind for a utility in Sydney.

Minister for Primary Industries, Lands and Water Niall Blair said the NSW Government needed to find new and better ways to lower the amount of electricity used from the grid, not only to benefit the environment, but also to reduce operating

6 june 2016

costs of utilities and lower customers’ bills.

“Not only will the food waste help to generate renewable energy to power the Plant, it will also save 150,000 wheelie bins of fruit and vegetables per year from landfill – that’s 600 wheelie bins a day, five days a week.”

Environment Minister and Member for Cronulla Mark Speakman said that this project would be of great benefit to the environment and local residents.

“Renewable energy being

produced from food waste will generate more than 60% of the energy the plant needs to run, which is enough to power a third of homes in Cronulla for a whole year,” Mr Speakman said.

“Fruit and vegetable waste which is typically driven many kilometres away for landfill will also now stay in Cronulla.

This means fewer trucks travelling long distances and a saving of 90,000

kilometres each year.”

The three-year trial is jointly funded by Sydney Water and the Office of Environment and Heritage’s Sustainability Advantage Program.

Japanese glass coating perfect solution for easy maintenance and better visibility Together Pan Surface, ITSUWA & Vault welcome BRILA Australia.

The globally established product is engineered in Japan and has celebrated many successes since its establishment. As the product continues to penetrate into new markets we continue to satisfy our clients with our unbeatable product.

We maintain a credible product by using quality assured processes and products that are proven to provide the highest grade premium coating worldwide.

DURABILITY The inorganic glass coating is never degraded by heat, UV rays or acid rain. It has 100% no oxidisation or damage. Each BRILA liquid agent is combined to form a highly durable structure.

SPECIFIC SHEEN The silica glass coating covers the body. Its double layered hybrid structure protects the paint for up to five years and maintains its showroom glossiness to accentuate the body silhouette.

STRONG REPELLENCY BRILA body glass coating possesses a solidity more than 10x that of an organic glass coating. It prevents the adhesion of grime leaving a smooth surface. Water becomes droplets perfect for visibility and maintenance.

HEAT RESISTANT The quality of BRILA is proven to withstand harsh tropical environments. It will reduce paint fading and will maintain its high resistance effects after withstanding five years of harmful UV rays and heat.

This property is unique to inorganic matter.

MAINTENANCE The anti-fouling properties of BRILA make it very easy to maintain. The strong repellent of the product means that dirt and grime will not build up. Water usage is minimised and there is no need to wax your car.

SUPERIOR BRILA body coating hardens 99% within the first 12 hours then 100% by the third day. This gives the coating a reliable protective property immediately after treatment unlike its competitors that take up to 30 days.

Call us to book a free appraisal today!

129, Burswood Rd, Burswood, WA 6100 (08) 9355 0401 Info@au.brila-coating.com facebook.com/BRILA.Australia

NEWS

Reducing chemicals in oil and gas production Researchers from The University of Western Australia (UWA) are aiming to prevent calcium scale in oil and gas pipelines through the innovative use of an environmentally friendly seaweed extract.

Dr Brendan Graham, Dr Zachary Aman and Professor Eric May from UWA’s Fluid Science and Resources research group are investigating using alginate, a naturally occurring product and common food additive, to target scale formation in pipelines which can result in major production losses for industry.

“Scale formation in oil and gas pipelines has always been a liability for the oil and gas industry as it reduces production rates. In some cases scale formation can result in a loss of production

of over $1,000,000 per day from a single affected well,” Dr Graham said.

“Traditionally, dissolving calcium from gas producing pipelines involves pumping chemicals into pipes to remove the scale and then another batch of chemicals to prevent further scale formation.

“The innovative use of a natural product from the ocean would markedly reduce any harmful impact on the environment. Its use would represent a natural cycle of resources: the product comes from the ocean and could enable oil and gas companies to employ environmentally friendly production techniques.”

Using their diverse knowledge of chemistry and chemical engineering, the researchers tested alginate

Researchers (from left to right) Zachary Aman, Brendan Graham and Eric May.

in various field scenarios and found not all types of seaweed alginate effectively prevent calcium from forming on the pipe walls.

They discovered the most effective type of alginate comes from brown seaweed and lends itself to an impressive return on investment as it is recyclable, renewable and potentially a far superior solution to the current methods of preventing scale formation in pipelines.

“Alginates are currently used in a number of industries such as the medical and food industries, to control the release of calcium from watery solutions through the formation of water insoluble gels,” Dr Aman said.

“So far there’s been no information available to describe the effectiveness of

alginates in the oil and gas industry. By using alginate in pipelines, we can control and prevent scale formation without disrupting the protective iron carbonate layer in flowlines,” he said.

The next stage of the technology development includes a detailed qualification plan for the development of this new approach to scale prevention, allowing for continued investigation of the applications of alginate across the industry, and eventually for deployment in the field.

profile

Spitwater cleans up with diesel Spitwater, Australia’s largest manufacturer of pressure cleaners, has a full range of Diesel-powered pressure cleaners, ideal for the resources industry.

The Spitwater range offers heavy-duty cold water as well as hot and cold water high pressure cleaners for the big industrial cleaning jobs where Diesel powered machines are required.

The Spitwater Diesel powered range is ideal for

8 june 2016

many industrial applications where petrol is not a fuel of choice, including heavy industry, mining applications, earthmoving equipment, trucking operators, large workshops and agriculture.

They are built tough for tough Australian working conditions and will remove heavy dirt with ease.

Designed and built in Australia, at the Albury manufacturing plant, this range of pressure cleaners

offers users all of the benefits expected of large, powerful high pressure water cleaners as well as the additional smart and exclusive Spitwater features.

The Kubota Diesel engines, fitted to the Spitwater range are based on Kubota’s superior overall technological capability. The advanced design enables these engines to maintain lower noise levels and less vibration.

All models are fitted with a large water cooling tank which acts like a radiator in a car and is designed to allow full, 100% water bypass in trigger-closed mode.

This system offers real protection from temperature fluctuations in the pump.

The Spitwater cooling tank is a genuine by-pass tank with water being drawn from and returned to it when the trigger is closed and the machine is operating.

Spitwater pressure cleaners for the mining industry heavy duty pressure cleaners for the toughest jobs!

With rugged all steel construction and a load of smart features, Australian made, Spitwater, industrial, heavy duty pressure cleaners are designed to suit the toughest working conditions. These high quality pressure cleaners are ideal for the hard cleaning tasks demanded in the mining industry. Available in cold as well as hot and cold water versions with power options that include threephase 415 V electric as well as Kubota Diesel engine models.

nel mwodels

dieSe -cooled er with wat engines KuBota

For more information on the Spitwater range

call now 1300 880 403 BriSBane – Sydney – MelBourne – adelaide - Perth

E: info@spitwater.com.au

www.spitwater.com.au

NEWS

Australia top spot for mining investment Australia is the world’s most attractive country for mining investment, according to an annual global survey of mining executives released by the Fraser Institute.

“Despite a global downturn of commodity prices, governments worldwide can offer competitive, transparent, and stable mining policies to encourage exploration and investment,” said Kenneth Green, Fraser Institute senior director of energy and natural resources and director of the Fraser Institute Survey of Mining Companies, 2015.

The annual survey rates 109 jurisdictions around the world based on geologic attractiveness and the extent government policies encourage or deter exploration and investment.

10 june 2016

Western Australia ranks as the number one jurisdiction in the world for mining investment. In addition to being blessed with an abundance of mineral potential, miners give the jurisdiction’s government credit for having transparent mining policies, a strong legal system, clear regulations and skilled labour force.

In total, three Australian jurisdictions finished in the top 10 worldwide: Western Australia (1), Northern Territory (7) and South Australia (10).

Canada and the United States also fare prominently in this year’s survey.

Saskatchewan is the topranked Canadian province— second overall—while Nevada is the top U.S. state placing

third. Five out of the top 10 worldwide jurisdictions are, in fact, in North America.

Two European jurisdictions complete the top 10 list— Ireland (4) and Finland (5).

“Europe’s median investment attractiveness score experienced a notable increase. As in previous years, a number of European countries continue to be praised for their attractive policy environments, which include clear licensing policies and efficient permitting processes,” said Taylor Jackson, Fraser Institute policy analyst.

Chile, ranks 11th overall, remains the most attractive jurisdiction for mining investment in Latin America and the Caribbean Basin while Honduras (107th) and Venezuela (108th) continue

to be among the least attractive jurisdictions in the world for investment.

The African continent, as a whole, continues to better its performance since 2012, buoyed by Burkina Faso (29th). As a region, Africa now ranks ahead of Oceania, Asia, Latin America and the Caribbean and Argentina for its investment attractiveness.

Worldwide investment attractiveness rankings (Top 10): 1. Western Australia 2. Saskatchewan 3. Nevada 4. Ireland 5. Finland 6. Alaska 7. Northern Territory 8. Quebec 9. Utah 10.South Australia

COVER STORY

Tough times

call for collaboration and a helping hand

By Herbert Smith Freehills Partners Jay Leary, Simon Reed and Herbert Smith Freehills solicitor Geoff Kerrigan.

There is no doubt that the mining sector is under great pressure on a number of fronts, particularly those operating in the exploration and early development phases. These companies have historically been at the forefront of exploration activity in Australia and other key mining regions of the world such as Africa.

12 june 2016

M

any of these companies are now facing risk-adverse public markets and lenders and as a result, they are struggling to attract capital. This is having a flowon effect when it comes to the level of exploration seen in the sector.

Those in the mining sector understand the long-term value of exploration activities to increase the geotechnical understanding of prospective areas, and ultimately, support the discovery of new, low-cost mines.

However, matching this long-term value proposition with near-term funding needs for current exploration programs continues to be challenging in light of the depressed spot prices across a range of commodities and the associated constraints this places on fundraising.

This has led to a sustained downturn in exploration activities. The Association of Mining and Exploration Companies noted in October 2015 that investment in mineral exploration was at its lowest levels in the past 10 years and that the rate of new discoveries was not keeping pace with the depletion of existing mines. The Federal Government also recently acknowledged the risk of accelerated depletion of known deposits of non-bulk commodities leading to production declines over the next 15 to 20 years.

In light of these challenges, the Federal Government, as well as resource majors, have committed to supporting the exploration sector during this challenging period.

On the legal front, Herbert Smith Freehills has also extended its support to the sector and recently launched Extract - a free online legal portal for exploration companies.

Ensuring survival - The need for innovation Managing cash flow continues to be a key challenge for exploration companies and many are taking measures to reset their cost base. Innovations that allow exploration companies to carry out more exploration for less financial outlay such as talent pooling and

sharing infrastructure, have become an increasingly important part of commercially viable exploration activities.

Partnerships and collaboration within the exploration sector, between established mid-tiers and majors currently in production continues to be an important component of providing the financial and technical support necessary to support the ongoing viability of the exploration sector during this challenging period.

The pressure on cash flow is unfortunately not expected to abate in the near future. In addition to their own efforts, the junior end of the market needs external support from others in the industry, such as government, regulators, advisors and the majors to help them through this challenging time.

A helping hand during challenging times The Federal Government has recently announced $100 million in funding for the Exploring for the Future program which will fund geotechnical data acquisition and analysis by Geoscience Australia, along with the ATO’s Exploration Development Incentive which became effective in July 2014.

One resource major is also assisting exploration companies by offering them the opportunity to have samples and drill cores analysed by their mineral analysis division.

As a global mining law firm, Herbert Smith Freehills wanted to alleviate some of the cost pressures for the exploration industry. As a firm, we view ourselves as being part of the industry and therefore having a responsibility to try and ensure the viability and sustainability of the industry going forward.

Exploration plays a very important role in that and after carefully considering how to best assist, Herbert Smith Freehills created Extract, an innovative online resources portal.

Extract explained Recently launched, Extract is an online resources portal that allows

exploration companies to access free legal information, including basic documentation, on a range of issues relevant to exploration activities.

Providing this sort of assistance will allow exploration companies to better advance their projects from exploration to implementation phase.

Providing access to legal documents and information free of charge is a first for Herbert Smith Freehills. Extract recognises the firm’s commitment to support the exploration sector during a challenging period and the pivotal role exploration companies play in the long term success of the mining industry as a whole.

Extract will allow junior to mid-cap miners to access a range of practical legal knowhow such as standard form contracts, confidentiality agreements and term sheets tailored to their sector while, at the same time, alleviating some of the pressure explorers are finding on their cashflow.

Users will also be able to obtain insights from the firm’s mining specialists on more detailed contracts such as joint ventures, farm-in and mining services agreements, which is intended to help fast-track the user’s understanding of key legal agreements.

The future? Collaboration Effective collaboration between all industry stakeholders, including state and national governments, as well as mining majors, industry bodies, research institutions, landholders, traditional owner groups and service providers is increasingly important to ensure exploration and mine development remains viable.

Whilst Herbert Smith Freehills recognises that Extract will not be a panacea for the issues facing junior miners, it hopes to alleviate some of their legal cost pressures during this period of low commodity prices and also allow juniors access to the firm’s market-leading insights at an earlier stage of their exploration project. june 2016 13

profile

Offshore

New range of tyres handles heavier loads in all conditions

Bridgestone’s new range of VCHR steel Bridgestone Earthmover Tyres (BSEM) has a leading market position and radial tyres are superior tyres in almost supplies a complete range of off-theevery aspect of performance compared road (OTR) products and services to against the conventional but very mining, construction, highway service successful VCHD pattern. and port customers around the world.

The deep-ribbed tread design and BSEM offers a range of hightough sidewalls reinforced by side-wallperformance, work-specific OTR tyres cut protectors greatly reduce damage to for industrial vehicle applications, with the tyre’s side areas, which may come the ability to handle heavy loads in all into contact with containers. This, plus conditions. Industrial vehicles comprise superior wear resistance, lengthens the vehicles such as counter-balanced lift service life of VCHR tyres and the tread trucks, container handlers, straddle life is greatly extended thanks to the carriers, aircraft tow tractors, mobile sophisticated tread design. crushers, log stackers etc., used on hard New, unique rib patterns help to improved surfaces, smooth floors and increase dynamic stability and driving runways. comfort during traveling, and the lug The demand for OTR tyres has grown strongly, particularly in ports, with worldwide container traffic increasing Performance comparison by about 8% annually in recent years.

To respond to this increase in demand VCHR Performance comparison Tread life 150 VCHD and to improve the productivity for ports, Bridgestone has launched the VCHR VCHR 100 Cornering (V-steel Container Handler Rib),Tread which life 150 Even wear VCHD performance is designed to enhance driving comfort, 100 extend tyre life and maximise the Cornering Even wear performance0 comprehensive operating efficiency of container-handling assignments.

With major expansion of ports 0 nationally and internationally, the increase in 24-hour-a-day port Casing durability Puncture resistance operations and heavier payloads, Puncture resistance

14 june 2016

Casing durability

pattern design assures smoother tyre rotation. This enhanced stability during operations greatly reduces tyre vibration.

As a result, VCHR tyres produce more even wear and deliver superior cornering performance compared with VCHD tyres.

The benefits of VCHR’s pattern, including balanced wear and operator comfort, and the slim grooves provided at the centre of the tread, not only substantially enhance the ease of driving but also realise outstanding tractive performance.

With their effective balance of even wear, lower rolling resistance and superior carrying capacity, Bridgestone VCHR tyres will greatly enhance the overall efficiency of material handling operations at port facilities around the world.

Benefits of the VCHR tyre Superior driving comfort Advanced tread design Longer tread life Enhanced overall operating efficiency Exceptionally long tyre life

Tread life comparison by pa

V V

Tread life comparison by pattern User A

VCHD VCHR

User B

User A

50

100

1

(Tread li

User B 50

100

150

(Tread life)

“We change tyres single-handedly, in no time!”

At Bridgestone Earthmover Tyres, each team member is trained to operate the strong-arm. It’s how we remove the defunct tyre and replace it with a new one, single-handedly and all in a matter of minutes. When you have a loading dock that’s bursting at the seams, time is of the essence.

Bridgestone Earthmover Tyres offer the highest levels of customer support in the Australian OTR industry. We back this with a complete tyre and wheel repair and maintenance service plus site-specific tyre management systems.

Maximum tyre life and minimum downtime is our aim.

We constantly invest in personnel and resources to promise the products and services you need to continue operating with optimum safety and reduced costs.

So if you need help in a hurry, talk to Bridgestone Earthmover Tyres.

We’ll extend you more than a helping hand ... we’ll offer the whole arm!

To get the nitty gritty contact us.

bsem.com.au sales@bsem.com.au

EVENTS

Queensland resources industry

not just gloom and doom

T

he Queensland Treasurer Curtis Pitt recently announced that mining royalties will be $2.7 billion less than was previously expected at the December’s Mid-Year Fiscal and Economic Review (MYFER), despite record-level coal exports and a strong ramp-up in LNG exports.

Since December 2015 Queensland has been faced with soft domestic and global economic conditions and a further $3 billion in expected write-downs have occurred and state taxes are expected to be a further $350 million lower than at MYFER. “The write-downs mean that since last year’s Budget expected royalties and state taxation revenue over the four years to 2018-19 is estimated to be down $4.7 billion,” said Mr Pitt.

“They are largely the result of low world prices for our export resources and the tailing off of major upfront investment in the mining sector.”

Queensland Resources Council (QRC) Chief Executive Michael

16 june 2016

Roche said in a statement that the announcement comes as no surprise.

“While Queensland continues to set records in the volume of resource commodities we export, our commodity prices have remained stubbornly low. In retrospect, it is clear that the commodity price forecasts in last year’s budget and mid-year review were far too bullish,” he said.

Mr Pitt said that despite the challenges the state is facing in the transition to a post-mining boom economy, the competitive edge will be maintained over other states while investing in services and job-creating infrastructure across the state.

However, Mr Roche said that “while Queensland has enjoyed a huge revenue windfall from the commodity price boom, it’s not correct to refer to ‘a postboom mining economy’ as if somehow all mining has suddenly stopped in Queensland. The state has just seen a once-in-a-generation investment phase that has delivered our economy much

greater production capacity in existing resource industries and established brand new export industries like LNG”.

Mr Roche said that the reason state taxes are lower is due to the greater capacity, which means that despite weak prices, the mining industry still contributes billions of dollars in revenue via royalties, payroll tax, land rents and stamp duty.

“Our sector does not control commodity prices, however our sector has been punching above its weight when it comes to production outputs,” he said.

Queensland exported 19.5 million tonnes of coal in May this year, up from 17.9 million tonnes last year. For the 11 months of this financial year, Queensland’s exports sit at 202 million tonnes, compared to 199 million tonnes at the same time last year.

“This achievement comes despite the sector has had around 23,000 job losses since November 2013, and we reported in February that one-third of all

QGC with its two-year $1.7 billion Queensland coal mines were operating Charlie 1 project to develop its natural at a loss.” gas tenements at Wandoan, supporting Additionally, the gas sector exported 1600 jobs. nearly 1.5 million tonnes of LNG to 13 Rio Tinto is investing $2.6 billion to different counties during May this year, develop one of the world’s largest bauxite after its $70 billion dollar investment in deposits at Weipa, with an average Queensland. construction workforce of 600 people The sector directly and indirectly over three years. contributes one in every five dollars to Adani has its mining leases for the the state’s economy and one in every $21.7 billion Carmichael coal mine, rail six jobs and benefits more than 24,000 and port project.

Queensland businesses last year, Stanmore Coal is reviving the former injecting a total economic contribution Isaac Plains coal mine near Moranbah in to the state of almost $65 billion. central Queensland.

In a statement by the Natural QCoal has the first of seven mining Resources and Mines Minister Anthony lease applications for its Byerwen coal Lynham in May, he said although project. commodity prices globally were low, MMG has prescribed project status investment activity was continuing in to cut red tape and hopes to get its $1.4 Queensland. billion Dugald River Zinc project into “It’s certainly tough, but it’s not all production mid-year up in the northgloom and doom,” he said. west.

He mentioned the positive Krucible Metals’ korella phosphate movements of seven Queensland mine is ready to move to commercial projects including: QME16_HPv2_188x124 2016-05-12T12:49:37+10:00

production of up to 600,000 tonnes of phosphate per annum.

Dr Lynham said the Queensland Government has recognised the impact of low international commodity prices on the industry.

“International markets are beyond the control of any individual government, but there are things we can and are doing to assist the industry and the communities it supports.”

He said the government has implemented a royalties freeze, the state has the lowest payroll tax in the country, it is investing heavily in innovation and explorers have been given a 50% reduction in the expenditure that they have to commit to their mineral exploration permit.

“This will provide some relief while the market recovers, and importantly, will keep explorers investing in Queensland which is vital for the long-term health of the mineral sector.”

HUNDREDS OF EXHIBITORS

Showcasing the latest mining and engineering technical solutions and innovations

QUEENSLAND MINING & ENGINEERING EXHIBITION 26 – 28 JULY 2016 MACKAY SHOWGROUND

THOUGHT LEADERSHIP PANEL* MICK BUFFIER

LIVE DEMONSTRATIONS

CHARLES MEINTJES

EDUCATION SESSIONS

Chairman World Coal Association President – Australia Peabody Energy

ANDREW BARGER

Director Economic and Infrastructure Policy Queensland Resources Council *Panellists subject to change

See the latest processes and technologies live in action Hear from expert speakers sharing industry information on new technical advancements across the METS supply chain that can save time & money.

NETWORKING EVENTS

Connecting with like–minded industry professionals in an informal environment

REGISTER NOW FOR FREE ENTRY

qmeexpo.com.au

PARTNERS

PREFERRED AIRLINE PARTNER

OFFICIAL VEHICLE OF QME

OFFICIAL WORKWEAR SUPPLIER

june 2016 17

HIGH PROFILE

Bigger strategies needed for emerging oil and gas companies

M

ajor oil and gas discoveries during the last decade opened new energy frontiers in East Africa and offshore West Africa, as well as in the Caribbean and the Mediterranean. These regions saw a surge of exploration interest from foreign oil companies of various sizes.

However, the fall in oil prices since mid-2014 has made a big impact on the prospects for national oil companies (NOCs). According to a new research report by Chatham House, if prices remain low for a number of years, investors will be far more cautious, international oil companies will see reduced cash flows, and many exploration projects will be put on hold or cancelled. As a result, companies are currently focusing on developing reserves rather than exploring for new ones. Therefore, the report says, NOCs, and the oil and gas industry as a whole, must reconsider their future strategies.

The fall in oil prices, and the prospect of prices remaining ‘low’ for some years, are causing private-sector companies to focus their activities on the highestquality/lowest-cost projects. They are also reducing the scope of capital expenditure to match their lower expectations of cash flow and financial capacity.

New reality for NOCs The new NOCs need to adjust their plans and ambitions to the new realities of price and competition for investment.

In this context, emerging NOCs and governments will need to have realistic investment terms. They will also benefit from building collaborative relations with foreign oil companies (in order to better understand the market and their investors), as well as from keeping their house in order: ease of doing business, 18 june 2016

good governance, transparency and accountability all contribute to making a country more attractive to investors and its NOC a better partner.

According to the report, the current market will influence the ambitious plans that some emerging producers have had to grow their participation in the petroleum sector, instead forcing them to refocus on an affordable strategy for developing upstream capabilities.

Most emerging producer countries wish to see their NOCs play a strong role in the upstream sector, eventually competently overseeing foreign operators and, one day, competing with them at home and abroad. But the report suggests that governments must first look carefully at what such a role entails in practice, in order to assess the capacity and finance required and to determine whether that role brings value to the country. This assessment must be repeated over time, as the resource base develops.

Too big responsibility Given the very high expectations – along with a need to demonstrate to the public an ability to exploit reserves efficiently and transparently – some governments have tasked NOCs with roles they cannot play because of limited capabilities. And without a clear view of revenue streams in the pre-production phase, those NOCs struggle to make staffing decisions, develop strategies to deliver these roles and raise finance. In practice this requires the company to have the capability to propose a development plan, raise money and manage a large project, including supervising international partners and contractors.

There is often a mismatch between available finance in emerging producer

countries and national aspirations for the extent of NOC activities in the early stages of development.

What governments can do Governments of emerging and prospective producer countries, and their NOCs, need to understand the cost of various NOC roles, and how these can be financed at different stages of developing the resource base. This will enable them to formulate clear and appropriate strategies for the future.

The report says the current environment offers an opportunity for governments to refocus their efforts on defining a mandate that supports their national vision and priorities. This requires an evaluation of the resource base, capabilities and possible revenue streams, so that the NOC can be tasked with a role it can execute and the state can afford.

Together, governments and NOCs should be strategic about capacitybuilding, so that efforts and scarce resources are dedicated to building the right skills and using them on the job.

In addition to the context provided by the stages of development of the resource base, governments and NOCs must consider the impact of the market context on NOC roles and strategies.

Emerging NOCs NOC

Policy or regulatory role

Operational role

Current activities

Stage of development

Employees

ANCAP, Uruguay

Yes, regulator and concessionaire

Designed geophysical data acquisition programme

Integrated company with strong downstream and retail segments

Exploration

2,837 (at end 2014)

ENH, Mozambique

No (separate regulator INP)

Medium- to longterm goal. Holds minority carried stakes

Upstream

Development of significant gas finds

111

Previously adviser to the Minister of Energy and informal regulatory role.

Regulatory responsibilities now handled by a new independent regulator (Petroleum Commission)

NAMCOR, Namibia

Yes, data management and petroleum storage

Seeks to farm in partners for its 44% stake in Kudu gas to power project; company strategy to develop operator capabilities

Natoil Uganda

No (separate regulator already established)

NOCAL, Liberia

Was regulator and concessionaire until amendment of Petroleum Act in 2014 removed these roles

GNPC, Ghana

Plans to be standalone operator Upstream Ghana’s total in 7 years and oil production averaged world-class operator 108,000bd in 2015 in 15 years

253 (at end 2013)

Upstream, storage, retail, import

Development plan for Kudu gas field; exploration

99 (50% technical)

Long-term focus of strategy

Upstream

Development phase for sizable onshore oil finds, not yet on stream

To be established

Not at present

Upstream

Potential commercial oil discovery

43 (in 2016)

Source: Chatham House: The Cost of an Emerging National Oil Company

june 2016 19

HIGH PROFILE

Queensland’s confidence gets a beating Queensland’s business confidence rating is the highest of any mainland State, according to a recent National Australia Bank Monthly Business Survey.

T

he survey results have been further backed by the Queensland Chamber of Commerce and Industry’s Pulse Survey which shows its Business Confidence Index for Queensland had risen in the March quarter. The most recent WestpacMelbourne Institute Consumer Sentiment survey also shows a rebound in consumer confidence. The survey showed business confidence fell one point in Queensland to six points, ahead of New South Wales and Victoria on five points.

However, another survey by the Queensland Resources Council (QRC) of resource company CEOs has found that confidence in the regulatory environment in Queensland is at a near-five year low.

QRC Chief Executive Michael Roche said compared to a year ago, the latest findings revealed a stark change in the confidence of the CEOs confidence about regulation and doing business in Queensland.

“This time a year ago after a change of government in Queensland our sector deemed it business as usual for the resources sector, but in the space of 12 20 june 2016

months a lot has changed,” Mr Roche said.

The resources sector contributes directly and indirectly one in every $5 of Queensland’s economy and is responsible for one in six jobs, while also contributing $2.1 billion in royalties to the government in the last financial year.

Mr Roche said while the Labor Government’s commitment to royalty stability for its first term of government is welcome there has been anything but stability elsewhere in the regulation of the sector.

“Our sector has been the target of a raft of regulatory changes – some enacted – and many more proposed – therefore it’s little wonder the resource leaders’ sentiment has substantially changed.”

In the QRC survey, the CEOs listed a range of concerns, including the inflexible nature of royalties to adapt to changes in commodity prices, uncertainty around financial assurance, inability to control input costs and operational impacts and skyrocketing local government rates.

The survey also reveals that 44% of CEOs said that costs such as infrastructure charges, royalties and other taxes and charges were somewhat significantly more expensive in Queensland than in other jurisdictions.

“One of the biggest issues facing our sector is that in recent years the sector has been loaded up with significant increases in local government rates and this came to the fore in the comments from the sector bosses,” Mr Roche said.

The survey results shows there is a deteriorating sentiment towards uncertain and/or poor regulation, high input costs and insufficient government resources over the last quarter. The highest result was sentiment towards attracting and retaining skilled employees at -41 down from -33 in the December quarter. Negative sentiment towards regulation has not been this low since June quarter 2011 and the decrease in sentiment over the last quarter was 17 points.

When asked how favourable it was to do business in Queensland - just 13% backed Queensland over the other states - while one in five CEOs said their companies suffer a cost disadvantage in

Queensland. Some of the main concerns include: The Chain of Responsibility Bill.

Unstable federal and state leadership.

Raising capital for exploration is becoming increasingly difficult.

Regulatory burden impacts safe production.

Federal and state government policy in relation to energy.

Recent state government proposals and regulatory changes.

Inflexible royalty regime to reflect a low price environment.

Sharply growing costs and uncertainties associated with financial assurance.

Mr Roche said the majority of respondents to the survey did reveal that if the state government were able to reduce industry costs such as royalties this would improve the business outlook.

One company CEO said, “The Queensland Government must act to amend local government legislation and policy … if they fail to do this … this will further erode Queensland’s national and international competitiveness”.

Mr Roche said while the QRC is getting a good hearing from Treasurer Curtis Pitt and Mines Minister Anthony Lynham, he hopes the results from the survey showing the damage being done to industry confidence due to the uncertainty will be recognised by the government.

Mr Roche said that the Chain of Responsibility law recently enacted is causing enormous angst and uncertainty in the business community.

“QRC had no disagreement with the government’s intent with that new law but, as we feared, it has gone too far and is doing serious damage to investor confidence.”

One CEO put it this way in responding to the QRC survey, “Recent state government proposals and regulatory changes appear reactionary and populist.”

The majority of operating companies are confident that any efforts by state government to reduce imposed costs

would somewhat or significantly improve the operating outlook.

“The QRC is working with companies and the government to make this a great state to do business in, but if the government’s approach towards policy and regulatory stability does not change then investor confidence could keep spiralling down further, leaving taxpayers out of pocket.”

The cost of doing business in Queensland In addition to the standard survey questions, two additional questions regarding the cost of doing business in Queensland were also included.

Question: Given the focus on cost reductions and productivity improvements in your organisation, would efforts by the state government to reduce imposed costs (including royalties, infrastructure charges and other taxes/charges) improve the outlook for your operations?

Just 13% of respondents noted Queensland was a more favourable jurisdiction to do business. The majority of companies indicated that the cost of doing business in Queensland is comparable (44%) with other jurisdictions.

Interestingly, the same share (44%) found that Queensland was more expensive than other jurisdictions – either somewhat more expensive (25%) or significantly more expensive (19%).

It is alarming that almost one in five resource companies CEOs describe Queensland as suffering from a significant cost disadvantage to other jurisdictions.

Question: If your company operates in other jurisdictions outside Queensland, how do the fixed regulatory costs including take or pay, compliance, payroll tax and royalties in Queensland compare as a cost of doing business?

While the participating CEOs acknowledged the government’s welcome decision to allow exploration spending commitments to be reduced, they also called out a number of concerns with fixed (or rising) regulatory costs. june 2016 21

HIGH PROFILE

Australia signs up

to global transparency standard The Extractive Industries Transparency Initiative (EITI) is a global standard that promotes open, accountable and inclusive management in the oil, gas and mining sectors.

By Adel Van Der Walt, Peter Wiese and Dipesh Jasmat, Clayton Utz

O

n 6 May 2016, the Australian Government announced it would implement the fiscal transparency principles of the Extractive Industries Transparency Initiative (EITI), an international standard for increased transparency and accountability in the oil, gas and mining sectors.

In its statement, the Government said, “By joining the EITI, we ensure that our domestic policy is consistent with international efforts to increase transparency, including in tax systems.

This will provide significant benefits for Australian companies through improved global investment conditions resulting from consistent and open reporting standards for the world’s resources sector. It will also allow Australia to demonstrate leadership in transparency and anti-corruption matters and strengthen its credibility in advocating the adoption of the EITI by other countries.”

The EITI is a global standard that promotes open, accountable and inclusive management of natural resources.

Governments who sign up to the initiative pledge to publish the information on 22 june 2016

payments they receive from extractive companies and have extractive companies operating in their jurisdiction publish information on the payments they make. There are currently 51 countries participating in the EITI worldwide.

The EITI is motivated by the idea that extraction of natural resources can lead to economic growth and social development but when poorly managed it has too often lead to corruption and even conflict.

Therefore, the idea is that more openness around how a country manages its natural resources wealth is necessary to ensure that the resources benefit all citizens.

Australia is one of the largest supporters of the EITI, committing more than $20 million since 2007. This has included funding for the EITI Secretariat, as well as the World Bank EITI Multi-Donor Trust Fund, which was established to support developing countries implementation of the EITI.

EITI Principles The EITI was established at the Lancaster House Conference in London in 2003, where representatives from a diverse group

of countries, companies and civil society organisations were hosted by the UK Government. They agreed to a Statement of Principles to increase transparency over payments and revenues in the extractives sector. The principles can be regarded as a codification of the terms of the social licence of a company to operate in extractive industries and are expressed as follows: We share a belief that the prudent use of natural resource wealth should be an important engine for sustainable economic growth that contributes to sustainable development and poverty reduction, but if not managed properly, can create negative economic and social impacts.

We affirm that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national development.

We recognise that the benefits of resource extraction occur as revenue streams over many years and can be highly price dependent.

and workable approach to the disclosure of payments and revenues is required, which is simple to undertake and to use.

We believe that payments’ disclosure in a given country should involve all extractive industry companies operating in that country.

In seeking solutions, we believe that all stakeholders have important and relevant contributions to make – including governments and their agencies, extractive industry companies, service companies, multilateral organisations, financial organisations, investors and non-governmental organisations.

The EITI in practice

We recognise that a public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable development.

We underline the importance of transparency by governments and companies in the extractive industries and the need to enhance public financial management and accountability.

We recognise that achievement of greater transparency must be set in the context of respect for contracts and laws.

We recognise the enhanced environment for domestic and foreign direct investment that financial transparency may bring.

We believe in the principle and practice of accountability by government to all citizens for the stewardship of revenue streams and public expenditure.

We are committed to encouraging high standards of transparency and accountability in public life, government operations and in business.

We believe that a broadly consistent

Validation of compliance is an essential feature of the EITI process. Where it is manifestly clear that a significant aspect of the EITI Principles and requirements under the EITI Standard are not adhered to by an implementing country, the EITI Board may suspend or delist that country.

The EITI International Secretariat collects data for review by the International Secretariat. Based on consultations with key stakeholders, the International Secretariat prepares reports by making evaluations of progress against requirements in accordance with the EITI Validation Guide for consideration by the EITI Validation committee and ultimately by the EITI Board.

Suspension may also result from political instability or conflict.

The EITI Standard also makes provision for protocols in connection with the way in which civil society’s entitlement to participate in efforts to achieve the objectives of EITI, driving at transparency, the sharing of expertise and the provision of data in “granular, machine-readable forms”.

The EITI Standard notes that, “Open data promotes accountability and good governance, enhances public debate, and helps to combat corruption. Providing access to government data can empower individuals, the media, civil society, and business to make better informed choices about the services they receive and the

standards they should expect. Open data, can also be a valuable tool for government in improving policy making and sector management.”

The EITI Standard The EITI Standard contains the set of requirements that countries need to meet to be recognised as first an EITI Candidate and ultimately an EITI Compliant country.

The EITI Standard is overseen by the international EITI Board, with members from governments, companies and civil society and requires: effective multi-stakeholder oversight, including a functioning multi-stakeholder group that involves the government, companies, and the full, independent, active and effective participation of civil society; disclosures of information related to the rules for how the extractive sector is managed, enabling stakeholders to understand the laws and procedures for the award of exploration and production rights, the legal, regulatory and contractual framework that apply to the extractive sector and the institutional responsibilities of the State in managing the sector; disclosures of information related to exploration and production, enabling stakeholders to understand the potential of the sector; a comprehensive reconciliation of company payments and government revenues from extractive industries; disclosures of information related to revenue allocations, enabling stakeholders to understand how revenues are recorded in the national and, where applicable, sub-national budgets; disclosures of information related to social expenditures and the impact of the extractive sector on the economy, to help stakeholders to assess whether the extractive sector is leading to desirable social and economic impacts and outcomes; and the facilitation of public awareness, an understanding of what the figures mean and public debate about how resource revenues can be used effectively.

june 2016 23

HIGH PROFILE

Sales of mining assets need better strategy

A

ccording to a new report, sales in mining assets need to have better marketing strategies to be considered in the current market.

The report, the Slattery Asset Advisory 1st Quarter Report for 2016, says that by obtaining greater value for the sale of goods in Western Australia and targeting the stronger buying markets on the east coast, sellers achieved a better result.

A company was recently advised to reject offers on a fleet of light commercial vehicles, which represented 20% less than those prices being achieved on the east coast. For the cost of approximately $600 per vehicle, an additional $3000 per vehicle was attained.

“We are presently seeing a price differential that justifies buyers covering these transport costs particularly with the lack of small to medium sized earthmoving assets in New South Wales,” says the report.

Mining and Earthmoving According to the report, the market for mining and earthmoving equipment has continued to plateau from the previous two quarters. The heavy mining related equipment unsurprisingly remained subdued whilst the smaller to medium sized equipment sold quite well.

The other results shown in the report include: Values for ultra-class mining equipment have continued to plateau.

Sales have been achieved in spite of the global glut of off-highway dump trucks on the market.

24 june 2016

Small and mid-size assets used in civil construction have been selling very well through auctions nationally.

A lot of success has been achieved in WA by attracting east coast buyers.

NSW appears to be the strongest state for sales of mid-sized plant and equipment followed by QLD.

Large mining assets The report says there is a changing market when dealing with ultra-class mining assets.

“It is not sufficient to expect that an asset can be simply advertised and expect buyers to come to you. It is critical that any sales agents are very considered in developing a tailored remarketing strategy and extremely proactive in executing that strategy.

We have found the most effective sales strategies have been to engage with our existing buyers whilst also approaching new buyers to determine levels of interest,” says the report.

Whilst noting that sales are still possible and continuing in this market, the values for the assets are depressed and vendors need to manage their expectations on the final sales result, especially in the context of what may have been paid to originally purchase the asset. This is particularly true of older equipment. Previously there was a market to sell these larger assets as parts only however the appetite for this has since reduced significantly.

“We expect this segment of the market to have increasing volumes come on to the market in the next three to six months, which may impact both

values and timeframes to achieve an asset sale.”

Small to mid-size used earthmoving equipment In contrast to the negative reporting in the ultra-class equipment the used small to mid-sized plant and equipment sector has better news.

There were strong sales results from the last quarter which continued into the first quarter of 2016 across a range of asset categories.

New South Wales continues to be the strongest market nationally for plant and equipment with high levels of business confidence. Whilst the demand is strongest out of NSW, the supply has been much lower than normal. Victoria has had strong sales but are finding most of their buyers are shipping sold assets interstate and

overseas. Some of the older machines are heading to the Middle East.

Queensland has had both good levels of supply and demand with buyers coming both locally and from NSW. WA is still finding the bulk of their buyers for plant and equipment coming from the east coast and a number of assets have been sold overseas into the Middle East.

“We expect demand from interstate to underpin asset values in WA for

some time as supply outstrips local demand and the challenging market conditions.”

With safety and maintenance on government funded construction sites paramount, operators are opting for the most modern and well-presented machines on the market.

“We see the greatest demand for ‘work ready’ units as opposed to a machine that will require some repairs prior to generating an income.”

Recent Mining and Earthmoving Sales Assets

Hours

Price Achieved

% of Retail

State

2007 CAT 432E Front End Diesel Backhoe

5,197

$37,000

88%

QLD

2007 Ammann ASC70 Roller

836

$33,000

89%

QLD

2009 Caterpillar 262C Skid Steer Loader

3,343

$29,000

82%

NSW

2008 Caterpillar 226B2 High Flow Skid Steer Loader

2,440

$19,000

83%

NSW

2002 Caterpillar 815F Compactor

8,014

$137,000

95%

VIC

2002 Daewoo SL200 Excavator

6,715

$23,500

80%

VIC

2006 CAT 998H Wheel Loader

14,064

$118,250

91%

WA

204

$53,750

100%

WA

2015 Kubota Excavator U55 (5.5 Tonne) with 3 buckets

24hr/7day a week service

Heavy Haulage

James Contract Supplies Heavy Haulage Division specialises in the safe transportation of Indivisible, Over Dimensional and Excess Mass loads up to 350 tonne.

crane Hire

At James Contract Supplies we have extensive experience in Mobile Crane Hire ranging from 7 tonne up to and including 140 tonne.

AdministrAtion Ph +61 8 8348 6900 86 Francis Rd Wingfield 5013

Jacking SyStem

We also provide jacking and skating equipment with capabilities up to 400 tonne.

This system is utilised when confined spaces do not allow crane access for the loading and placement of equipment over 100 tonne.

trAnsport division Ph +61 8 8243 9500 26 Wingfield Rd Wingfield 5013

W www.jamescontract.com.au M 0418 826 110 E hugh@jamescontract.com.au

june 2016 25

HIGH PROFILE

Keeping equipment clean to last longer

M

ining vehicles work in extreme conditions and require routine maintenance to operate efficiently and safely.

Maintaining machinery is required to prevent major problems in the future, such as a breakdown of equipment which can incur big costs due to downtime. Improper maintenance will shorten the lifespan of machinery, cause it to breakdown frequently, require costly repairs, and slow down operations.

However, inspecting and repairing heavy machinery every now and then isn’t enough to keep it in peak condition. By maintaining machinery frequently, the life of the machinery will be extended and the performance increased.

Keeping equipment clean regularly is the most important thing to extend the life of the equipment and also makes it easier to inspect for problems and required repairs.

The task of cleaning these vehicles before the maintenance can be done is a challenge and depending on the size of the vehicle and conditions at the mine site, it can take many hours to clean each piece of equipment.

However, with new methods available, there has been a substantial decrease in the time required to clean these vehicles, which reduces equipment downtime and allows

26 june 2016

the vehicles to be maintained and placed back into service faster.

Making sure machinery and equipment stays as clean as possible is vital for it to last longer. Dirt and debris can damage one or more of the delicate parts of heavy machinery which could lead to costly repairs.

Once the equipment is clean it is important do a consistent and thorough inspection. Mine site machinery parts are fitted with special seals and filters designed to keep dirt and grime out of sensitive areas. If a seal cracks or breaks, it won’t properly protect the machinery.

Filters that are clogged with excess dirt and grime won’t function properly. Even a machine’s cab has many delicate pieces of equipment that will malfunction if contaminated. Therefore it is important to repair broken seals immediately and breathers must be kept clean. Check belts and pulleys for proper alignment. Bolts should be closely inspected to determine if they have stretched. Any broken parts should be replaced immediately if they do not pass the test. Gears and other moving parts should be inspected for wear and tear, and then lubricated properly, cleaning off any excess grease. Without proper lubrication, parts will create excess friction, and this friction can cause severe wear and tear on the machinery. As a result of this deterioration, the lifespan

of the moving parts will be drastically shortened.

The proper amount of lubrication is just as important as the part itself. With too little lubrication, the moving parts may not operate properly, but with too much lubrication, the machinery won’t be able to handle it properly, and this could cause energy loss, seal issues and an excess accumulation of grease.

To properly maintain heavy machinery, the lubrication specifically recommended by the manufacturer should be used since using the wrong type could be ineffective or even damage the mining machinery.

During normal operations signs that point to wear and tear could be noticed.

It is important to be aware of these signs because they may signal problems that can cause machinery to malfunction more often or result in needed repairs or component replacements before the regular inspection.

Some common signs of wear and tear are vibration, heat, and belt shape.

Vibration can be caused by a number of items, from misaligned belts to gear glitches. If higher temperatures than normal are notices, improper lubrication or overuse may be the root of the heat source. Misshapen belts are another clue that something needs to be repaired. Fix any issues as soon as they are found so they don’t cause worse problems later.

Mobile Maintenance Challenges Made Easier While all of the headlines and noise is being made around Clive Palmer, Adani, Roy Hill and commodity prices etc, the life blood of a mine operation in production and maintenance continues to strive for greater performance and efficiencies with small budgets and ailing equipment. Pressure cleaners are an integral part of day to day operations and it’s time for new thinking to produce better more efficient results.

Whether it be a CAT 997 dump truck or a pressure cleaner similar questions and answers are required and we are millions of dollars apart in investment terms. The key criteria that ThoroughClean work through during stakeholder collaboration is, what is the performance expectation required, will it perform to expectation in a mining environment, what is the whole of life projected costs, what is the return on investment against external contractor costs.

Glencore George Fisher Mine, Yancoal Moolarben Coal and Yarrabee Coal, Newcrest Lihir Gold Mine are a few mine sites that have led the way in improving wash bay and pit wash down efficiencies by investing in their own ThoroughClean equipment and people to improve performance, productivity and profitability.

ThoroughClean Water Blasters are the Return On Investment Kings when it comes to manufacturing pressure cleaning equipment suitable for on-site wash bay and pit wash down requirements.

It’s really quite simple in the big scheme of things having the experience to assess the client’s needs properly, the ability and facilities to manufacture to the client’s specific requirement, deliver a quality product, work with the sites stakeholders around educating and training personnel effectively and the back up to support whole of life value. Unfortunately, most pressure cleaner brands just sell for the sake of a sale, with or without the understanding of the clients needs.

Pressure Cleaning contractors, while offering a great service, have been grazing in a very green paddock during the mining super cycle, however now their services and costs are being scrutinised and sites are looking to invest in their own equipment and people for maintenance wash downs.

Rio Tinto Innovation General Manager Andrew Shook hit the nail on the head when he stated in April’s Mining Monthly around vehicle automation – “When companies make an investment they look for a return. So one of the difficulties we have with working collaboratively, is justifying in terms of ‘what do we get’.”

Call Paul Smart and Hayden Thorley at ThoroughClean Water Blasters to discover how your pressure cleaner can enhance performance, productivity and profitability in your business.

Ph: 07 5467 2025

www.thoroughclean.com.au june 2016 27

Innovation

New research says a number of existing and emerging technologies have the potential to reduce costs and increase recovery rates in the oil and gas sector. Enhanced oil recovery (EOR) and the integration of digital technology will make the biggest impact over the 10-year forecast period.

Oil and Gas and the digital technology age

A

ccording to a new report by BMI Research, the oil and gas sector will change dramatically over the course of the next decade. Disrupting technologies will be most prominent in relation to increasing recovery rates at existing field and lowering costs across the board.

Lower oil prices have accelerated these efforts, spurring substantial progress in reducing drilling costs and increasing recovery, particularly in the shorter-cycle projects of the US shale sector where its impact shows through more rapidly. However, much of the cost reductions have been down

28 june 2016

to stripping out spending profligacy alongside reduced demand for oilfield services deflating prices.

The report says a significant degree of cost savings across the oil and gas industry have been achieved over the last two years, with capex and dividends the remaining areas where spending can be substantially reduced. Much of the technological capability that will support the oil industry over the next 10 years already exists; the key will be applying this cost effectively at projects.

Technological innovations are now of much greater importance to becoming more competitive in the oil and gas space.

Increasing Recovery Rates There are more proven oil reserves globally in conventional fields than the amount of oil produced cumulatively throughout history. Recovery rates from existing conventional oil fields globally average around 35%, leaving substantial remaining volumes underground. Proven resources have no associated finding and development costs, assuming existing infrastructure can be leveraged to tap the resource.

In this respect, oil companies are expected to more effectively use existing resources rather than increase exploration into new, higher risk frontiers - this would mark a change in tactic from drilling and

Âť

THE SHINY NEW WAY TO STAY CONNECTED

NO MATTER WHERE IN AUSTRALIA YOU ARE It’s the simple, easy and no-fuss way to turn your smartphone into a satellite phone! Meet the Optus Thuraya SatSleeve+ and SatSleeve Hotspot.

They’re available from Optus Satellite, Australia’s leading satellite provider, and can keep you in touch right across Australia.

And the best thing? As long as you have a line of sight to the satellite, you’ll be able to stay connected with voice, SMS and data, all whilst using your favourite smartphone!

SatSleeve Hotspot

GET IN TOUCH WITH US TODAY TO FIND OUT WHICH OPTUS SATSLEEVE OPTION IS PERFECT FOR YOU OPTUSSATELLITESALES@OPTUS.COM.AU OR GIVE US A CALL ON 1800 500 269 SatSleeve+ THE NITTY GRITTY: Important information: The Optus Thuraya SatSleeve+ and SatSleeve Hotspot are compatible with selected iOS or Android devices only. You’ll need to connect your smartphone to the SatSleeve via WiFi and download the new SatSleeve Hotspot app free from the Apple App Store or Google Play Store, whilst you are in a mobile coverage area. The SatSleeve requires its own SIM card and phone number, and uses the Thuraya Satellite Network. The SatSleeve+ smartphone adaptor can hold smartphones from 58-85mm in width.The Satellite Hotspot usually has a WiFi range of 30 metres or less. Apple iPhoneTM and © 2012 Apple, Inc. All rights reserved. iPhone and App Store are trademarks of Apple Inc. Android and Google Play are trademarks of Google Inc. IMM01700 (12/15)

june 2016 29

Innovation

moving on, to maximise existing resource bases. In recent years, the majority of producers have struggled to replace 100% of reserves, previously a key investor metric used to gauge growth, but now increasingly less important.

Enhanced oil recovery (EOR) will be targeted to a much greater extent, depending on its cost-effectiveness.

Highlighted below are advancements in chemical EOR and the application of enhanced recovery techniques to shale wells as potential game-changers:

Chemical EOR BMI Research see a strong potential in the use of water-based chemical sweeps to boost recovery, given lower costs and wider potential application compared to other EOR techniques. One project to be closely monitored is BP’s Clair Ridge II development in the North Sea, due to begin production in 2017. This will be the first full field deployment of BP’s chemically altered low salinity waterflood, which is expected to enable 40mn barrels of additional production at a cost of USD3/bbl. Similar implementation in other high saline fields could result in low-cost access to substantial incremental volumes of proven resource.

EOR In Shale In extensively drilled and hydraulically fractured areas of shale plays, reservoir connectivity is greatly increased, potentially enabling the effective use of certain EOR technologies. With tight oil recovery rates averaging 6-8% of reserves, there is substantial room to extract more existing oil. EOG Resources has been testing miscible gas injection at mature sites in the Eagle Ford shale, where it claims incremental recovery increase of 30-70% (an additional 1-2% of reserves) 30 june 2016

Enhanced oil recovery (EOR) will be targeted to a much greater extent, depending on its cost-effectiveness.

for a cost of around USD1mn per well or USD6/bbl. This could have a substantial impact if it can be more widely applied in mature shale areas.

Critical to these techniques will be an in-depth understanding of the oil reservoir being targeted. Digital technologies such as 4D seismic will be a central part of this process.

Decreasing Costs The greater application of technology and processing of data will be key to reducing costs in the oil and gas sector.

Digitalisation of the oil sector is predicted to be a megatrend to 2050, with digital technology proliferating through its integration in new projects.

The oil and gas industry is traditionally a slow adopter of new technologies, partly due to the multi-year cycle of traditional upstream projects, and partly down to the conservatism of using tried and tested methods. The sector is also mature with a vast amount of existing, very mechanical infrastructure.

In the next five to 10 years, it is therefore expected that the biggest opportunities for digitalisation will be in areas where it can be effectively retrofitted into a project to optimise operations. That said, projects will need to have sufficient remaining lifetime to achieve the pay-off from the integration of technology.

Potential areas where digital

technology can be retrofitted into projects include: Equipment Monitoring: Adding sensors to and collecting data from mechanical operations will ensure the integrity of equipment. This will improve processes by identifying failures before they occur and recognise underperforming equipment that needs to be replaced. This could be applied to wellheads, pumps, rigs, pipelines, LNG trains and refineries, and will reduce downtime and improve efficiency.

Digitalising Wells: Monitoring well flows with downhole sensors will enable the operator to optimise production by controlling water volumes and maximising oil sent to the surface.

Sensors can also track well performance, minimise downtime and improve overall safety.

Automating Processes: Automating equipment will reduce the workforce needed and result in more consistent results. In most cases this will need to be built into equipment. For example, in next generation rigs, specific well designs could be pre-programmed, resulting in more accurate drilling and fewer workers required on site.

Remote Control: Remotely operated equipment has the potential to substantially reduce costs. Inspection, maintenance and repair projects could be carried out from a centralised location with autonomous or remotely operated vehicles (ROVs). This equipment is already available and its use is beginning to increase as reliability improves. Similarly, with improved communication, drilling operations could be centralised, reducing the number of workers needed on site, with particular benefits in more remote project sites.

ARE YOUR PRIORITIES SAFETY AND PRODUCTIVITY? THEY´RE OURS.

With hundreds of installations globally Becker Mining is dedicated to providing advanced, robust and reliable mining communications systems.

Our communications solutions cover voice and data, tracking and tagging, collision avoidance, Wifi networking and mine automation to ensure the safety and productivity of your people and your mine site.

Supported by a global team of elite engineers we are constantly improving our range as part of our commitment to deliver the best solutions available.

ENERGY DISTRIBUTION AUTOMATION COMMUNICATION VOICE COMMUNICATION WIFI & DATA COMMUNICATIONS, POWER ELECTRONICS COLLISION AVOIDANCE RTLS/ TAGGING

TRANSPORTATION

ENQUIRIES 02 4941 3333 NEWCASTLE. TOWNSVILLE. MOSS VALE. PERTH. WWW.AU.BECKER-MINING.COM

june 2016 31

Innovation Innovation has become a central focus of the Australian Government under Malcolm Turnbull. This is timely – for too long, we have been beset by a lack of world-first innovations and dearth of truly innovative companies.

By Yuan Chou, Principal ACIL Allen

Catalysing innovation in Australia

A

ccording to the World Economic Forum Global Competitiveness Index 201415, Australia was ranked only 23rd for innovation. In the World Knowledge Competitiveness Index for regions compiled several years ago, Victoria was ranked only 99th and New South Wales 104th, compared with 1st for Silicon Valley, 6th for Stockholm and 27th for Singapore.

Australia ranks 20th in the OECD in terms of patents per capita, accounting for less than 0.8% of the world’s patents. Just 1.5% of Australian companies developed new-to-the-world innovations in 2011, compared with between 10-40% in other OECD countries. Only 6% of Australian businesses engage in international innovation, compared with the OECD average of 18%. While Australia’s research ranks highly in the OECD on indicators of quality, Australia ranks last for industryresearch collaboration.

What’s behind the problem?

Major contributing factors to Australia’s woeful innovation performance are our small talent base due to our small population, the low proportion of our young people studying Science, Technology, Engineering and Mathematics (STEM) courses, and our risk-averse culture.

While the US can draw on the finest talent from a domestic population pool of 320 million and China from a population 32 june 2016

pool of 1.4 billion, we are severely handicapped by a population pool of just 24 million. Only 16% of our university students in a Bachelor’s course are studying STEM, compared with 21% for Japan, 29% for the UK, 33% for Korea and 35% for Germany.

According to Sandy Plunkett, an Australian-born former venture capitalist who returned to Australia three years ago after 15 years in San Francisco and Los Angeles and who consults on entrepreneurship and global innovation systems, “compared to other innovation cultures, we are risk averse and seek authority and approval too much.

Innovators, by nature, don’t ask for permission”.

The new chair of Innovation Australia, Bill Ferris, who founded Australia’s first venture capital firm in the 1970s, calls it “fear of failure”.

A 2013 survey of more than 2,000 managers by the University of Melbourne and the Australian Institute of Management confirmed that a risk-averse company culture was one of the biggest obstacles to innovation in Australian organisations.

The Government’s new plan The Australian Government’s comprehensive new National Innovation and Science Agenda (marketed under the catchphrase “The Ideas Boom”) comprises a

myriad of initiatives that can be categorised under seven key strategies: Encouraging risk taking by entrepreneurs, businesses and investors (through insolvency laws reform, tax incentives for early-stage investors, and more favourable arrangements for venture capital partnerships).

Supporting start-ups and commercialisation of research (through a Biomedical Transition Fund, a CSIRO Innovation Fund, an Incubator Support Programme, more favourable rules for crowd-sourced equity funding, reforms to employee share schemes and more favourable rules for depreciating intangible assets).

Enhancing collaboration between research and business (through financial support for industry-led collaborations between researchers and small businesses, faster researchindustry collaborative project grants, revised university and research funding arrangements, and establishing ‘landing pads’ in Silicon Valley, Tel Aviv and three other locations to support entrepreneurial Australians).

Enhancing R&D and new technology capabilities (through funding for collaborative research infrastructure, the Australian Synchrotron and Square Kilometre Array, financial support for the development of silicon quantum

computing technology, the establishment of a Cyber Security Growth Centre, and investment in CSIRO’s new research unit Data 61).

Expanding the talent and skills base (through Entrepreneur Visas, initiatives to help students create and use digital technologies, expanding the Prime Minister’s Prize for Science, and expanding STEM opportunities for women).

Government leading by example (through a grants competition to solve national policy and service delivery challenges, release of non-sensitive public data to encourage data sharing for innovation, the establishment of Innovation and Science Australia to provide strategic advice to government on all science, research and innovation matters, and the establishment of an online directory of digital and technological services for government agencies to procure ICT solutions from smaller businesses).

Melbourne and Sydney becoming San Francisco’s tech hub sibling In the past few years San Francisco has become the epicentre of technology start-ups, displacing Silicon Valley to its immediate south. San Francisco is the headquarters of Airbnb, Pinterest, Yelp and Uber. Firms like Twitter have relocated to San Francisco because it offers a more attractive lifestyle and culture to talented young employees than the suburbia of Silicon Valley.

However, there are considerable constraints in the availability of commercial and residential property spaces in a city with an anti-growth attitude, with spiralling rents now three times that of Melbourne. Technology companies have established outposts in other lower-cost U.S. cities which also offer a desirable lifestyle such as Seattle (Washington), Portland (Oregon) and Austin (Texas). They also have international research and development

facilities in cities such as Dublin and Berlin.

Melbourne and Sydney, amongst the Australian major cities, are well suited to becoming an ‘overflow’ location for San Francisco’s technology industry. They have good air links to California and have a lifestyle and cultural offering (including diversity) more similar to San Francisco’s than do other American or international cities. Residential and commercial rents, while high by Australian standards, are much lower than rents in San Francisco.

Success in wooing technology companies to Melbourne and Sydney hinges on ensuring a ready inflow of talent and skills from around the world through an appropriate immigration policy, to augment the existing pool of domestic talent. The inflow of foreign talent would enable Australia’s talent base to reach critical mass and energise the start-up scene in the two cities, thereby drawing interest and investment from Australian and overseas venture capitalists and angel investors.

june 2016 33

Projects

Meeting the Execution Challenges of Prelude FLNG

F

loating Liquefied Natural Gas (FLNG) has gained wide recognition as one feasible and attractive method for the monetisation of offshore gas fields. It is an exciting technology that will enable the development of gas resources where, for a range of reasons, an onshore development is not viable. FLNG can mean faster, cheaper, more flexible development and deployment strategies.

In May 2011, Shell started the entire LNG and gas industry in a new direction when it took the Final Investment Decision on Prelude FLNG and gave the TechnipSamsung Consortium (TSC) Notice to Proceed.

Prelude FLNG is a project backed with the industry’s best resources. Years of careful planning and front end engineering and design have been the basis for this ground breaking project, but the current progress would not be possible without the vigilance, professionalism and collaboration of all involved during execution of this complex project.

The TSC project directorate proposes to look back jointly with Shell project management over the years from notice to proceed in a paper that focuses on solving some of the expected and also the unexpected challenges that are always inevitable in a large, complex and first-ofits-kind project.

34 june 2016

The innovative concept and technology of FLNG The novel concept of FLNG has been extensively studied over the last 15 years or so. It consists of a combination of several technologies that aim to liquefy natural gas offshore. FLNG solutions have the potential to place gas liquefaction facilities directly over offshore gas fields, and unlock new energy resources offshore. They will enable access to stranded gas reserves that, up to now, were too costly and difficult to exploit. The Shell Prelude FLNG project is especially well placed to help meet the growing natural gas demand of Asia.

The Shell Prelude FLNG facility will chill natural gas produced in the field to –162°C (-260°F), shrinking its volume by 600 times so it can be shipped to customers, where the gas is needed. Once constructed, the facility will be towed to its location, some 475 kilometres north-east of Broome, Western Australia. There, the facility will be moored and connected to the undersea infrastructure and the whole production system commissioned.

Shell Prelude FLNG will remain permanently moored at the location for around 20-25 years before needing to go back to the dock for inspection and overhaul. The LNG, LPG and condensate produced will be stored in

tanks in the hull of the facility. LNG and LPG carriers will moor alongside to offload the products with tandem offloading for condensate.

Most of the technologies used on the FLNG facility have been used successfully onshore by Shell. Some have been adapted or modified in order for the processes, such as liquefaction and offloading, to run at sea.

Important attributes of Shell’s Prelude FLNG design are: it can provide high production rates of 5.3 million tons per annum (mtpa) of liquids (including LNG, LPG and condensate); it can process a wide range of gas compositions and can export LPG and condensate; it uses an efficient double mixed refrigerant liquefaction cycle; it can stay on station and does not have to be moved during severe weather conditions such as cyclones, which will increase the availability of the plant.

Shell Prelude FLNG is the largest floating facility ever built. In numbers this means: 488 metres long (more than four FIFA football pitches) and 74 metres wide.

260,000 tonnes of steel, the equivalent of 36 Eiffel towers.

With its cargo tanks full, Prelude will

boats through the Geoje harbor to its new position on the quay, where it is secured by 32 heavy mooring ropes.

At Geoje, the topside process and utility modules, each weighing as much as a single typical offshore platform, were installed on the hull one by one, with the final module lifted in June 2015. The 140-metre flare tower, was installed in November 2015. At the field off the North Coast of Western Australia, Technip’s Deep Orient and Deep Energy have already installed 12 km of flowlines and eight PLETs.

Managing the challenges A digital impression of Shell floating liquefied natural gas facility design. Courtesy of Shell.

weigh roughly six times as much as the largest aircraft carrier.

The total storage capacity is equivalent to around 175 Olympic swimming pools.

The world’s largest non-disconnectable Turret Mooring System, taller than the Statue of Liberty with its base (93 metres high).

Living quarters of the size of the Paris Arc de Triomphe.

50 000 m3/h of cold water will be drawn from the ocean to help cool the natural gas.

-162° Celsius (-260° Fahrenheit) is the temperature at which natural gas turns into LNG and 1/600 is the factor by which a volume of natural gas shrinks when it is turned into LNG. 117% of Hong Kong’s annual natural gas demand could be met by the facility’s annual LNG production.

20-25 years is the time the Prelude FLNG facility will stay at the location.

More than 600 engineers worked on the facility’s design option (1.6 million hours during the engineering and design phase).

The history of Shell Prelude FLNG Following the Master agreement signed with Shell in 2009, Technip started to

carry out a Generic FLNG FEED (FrontEnd Engineering and Design) and, in 2010, it was adapted to the Prelude field.

On May 20, 2011 Shell took the final investment decision (FID) on the Prelude FLNG project.

The construction and integration phase of the Prelude FLNG project are well under way and commissioning has now started. Shell, Technip and Samsung Heavy Industries’ common aim is to deliver Prelude FLNG safely and to do it right.

This means developing a facility that is safe, robust, and reliable and with high availability to enable continuous, stable LNG production.

Prelude is a global project, with fabrication of components taking place all over the globe. A key location is Geoje, South Korea, where the Prelude FLNG substructure and topsides are being built at the SHI shipyard – which has one of the few dry docks in the world big enough to construct a facility of this size.

In November 2013, the project celebrated the launch of the Prelude FLNG hull. For a whole year, steel was welded together by thousands of workers at the SHI yard to create the biggest hull ever built. Once structurally complete, and weighing approximately 200,000 tonnes, the hull was floated in the massive dry dock before it was towed by nine tug

The challenge of Shell Prelude FLNG is to develop an offshore version of an onshore Liquefied Natural Gas (LNG) plant on an area that is one-quarter the usual size. Therefore engineers had to find different and innovative solutions to optimise the space, such as to design components that will stack vertically to save space, or to build the plant to the shape of the modules.

The traditional supply chain for LNG consists of the upstream phase, the pipelines, the onshore treatment and liquefaction, the transport, the regasification and the distribution. The Shell Prelude FLNG design concept allows for the four first phases of this supply chain to be centralised and operated in a single place.

However, several challenges were faced by engineers designing this ‘first of a kind’ FLNG: engineering challenges, construction and commissioning challenges, and challenges in terms of project management and HSSE. The operating plant will be placed above LNG storage tanks, themselves being integrated into the hull. By pumping cooling water from the cold of the ocean depths to cool the gas, this helped to reduce the size of the cooling facilities. An assembly of eight one-metre diameter pipes will extend from the facility to about 150m below the ocean’s surface to deliver around 50,000 cubic metres (m3) of cold seawater each hour. This helps to cool the gas from below the facility, saving deck space.

Source: This paper was presented at the LNG 18 Conference in Perth in April 2016 by key executives from Technip, Samsung Heavy Industries and Shell.

june 2016 35

Environment

Water reform drives more interest in MAR

T

here has been significant progress in the development and implementation of Managed Aquifer Recharge (MAR) schemes in Australia over the past 10 to 15 years. This has been both supported and enabled by a substantial body of research investment and output.

According to a report by the Australian Water Recycling Centre of Excellence and the Goyder Institute for Water Research, while MAR has existed in Australia in some form for much longer than this (some examples date from the 1960’s), the unprecedented drought conditions of the early 2000’s and associated commitments by governments to water reform have driven increased levels of interest in MAR from a range of stakeholders.

Interest in the potential of MAR as a viable water supply option is reflected in the increasing number of trials or active schemes now in operation, and research output that has answered many questions in relation to its feasibility.

The application of MAR has expanded from early beginnings in agriculture, to stormwater, mining and resources, and recycled water – with increasing diversity in end uses, including potable end use in some locations. In 2008, MAR contributed 45 Gigalitres (GL) to irrigation supplies and 7 GL to urban water supplies. In that year, five states and territories had operational MAR

36 june 2016

projects and two states had investigations underway. More specifically: In South Australia (SA), investment in stormwater aquifer storage and recovery (ASR) has been substantial, with an estimated 30 individual stormwater MAR schemes now in existence processing approximately 8 GL of water (with up to 23 GL capacity). Trials have also demonstrated the feasibility of using aquifer storage transfer and recovery (ASTR) for drinking water purposes.

In Western Australia (WA), a significant recycled water MAR trial has been proceeding at the Beenyup Water Recycling Plant, which injects water into the Leederville aquifer. The government has approved the trial for full scale production by 2016 with around 7 GL of water to be processed, and which will ultimately involve potable use.

In Victoria (Vic), City West Water has completed pre-feasibility studies into broadscale MAR and has further investigations due for completion in 2015.

Pre-feasibility studies have been completed in Penrith and Blacktown (NSW), Gawler (SA), Broadmeadows (Vic), Orange (NSW), Brisbane (Qld), Mackay (Qld), several locations in suburbs west of Melbourne (Vic), and the Murray drainage area (WA).

The mining sector is increasingly using

MAR to reinject brackish or saline water from dewatering processes as a means of better managing this water and providing for future supply.

Investment into MAR research has intensified in recent years, with Australian researchers and projects suggested as being world leaders in the field and producing a large proportion of research output on the topic. For example: The National Water Commission has invested over $1.6 million to develop MAR guidelines, feasibility studies, case studies, policies and toolkits.

The Goyder Institute for Water Research has invested over $2 million in the Managed Aquifer Recharge and Stormwater Use Options (MARSUO) project, with an additional $4.8 million from the National Water Commission, CSIRO and Water Research Australia to support this research. Additional investment of approximately $8.3 million in related research areas such as investigating the capacity of the Adelaide Plains groundwater system, water sensitive urban design and optimisation of water source mixes at a city scale, as well as the ownership of different water sources.

The Australian Water Recycling Centre of Excellence (AWRCOE) and industry partners have invested $3million to expand MAR into other

»

ADVERTORIAL

OLEOLOGY’S COMPLIANT METHODS OF WATER FILTRATION DELIVERING FAULTLESS RESULTS. OLEOLOGY is a leading water filtration company that utilises MyCelx technology for the removal of hydrocarbons and organic contaminants in waste water.

BEFORE

The unique equipment build and design, with no chemicals used in the removal process. This allows for effective removal of solids and oil as well as biological treatment with ozone. All OLEOLOGY Treatment Systems adhere to the Department of Health (DOH) compliance for recycled water with success being 100% water availability. All OLEOLOGY Treatment Systems are carefully monitored with onsite visits by the engineering staff and real time remote monitoring to insure systems run smoothly and efficiently.

WATER TREATMENT OLEOLOGY has successfully delivered EPCM water treatment and recycling plants to a variety of major industrial clients in Australia. The foundation of the success of these products is based on the utilisation of three fundamental principles; 1. Solids removal primarily by mechanical only (regenerative filtration) or in conjunction with chemical addition.

2. Oil removal by the utilisation of patented MyCelx oil removal separators / cartridges.

3. Biological treatment with the use of ozonation for ongoing management and UV sterilisation at point of use.

4. PLC control and WQ monitoring These three principles are tailored and sized to meet the required flowrates and thus contaminant removal rates required to comply with the “Guidelines for the Non-potable uses of Recycled Water in Western Australia”.

AFTER

ONGOING MONITORING On-site Water Monitoring of the Wash Water Recycling System (WWRS) system is in accordance with published Guidelines for Uses of Recycled Water in WA, Aug 2011 as a minimum, the monitoring schedule is as follows:

CONTINUED SUCCESS A key to the successful operation of our systems is the remote monitoring

by OLEOLOGY staff. This enables OLEOLOGY to ensure smooth running and operational support or to empower local staff with appropriate responses to process upsets.

To date, no water recycling facility commissioned by OLEOLOGY has required a shutdown due to a loss in water quality or biological control. This has enabled 100% availability of the water treatment system and leads to reduced operational costs for the end users.

One of the keys to the success of these facilities has been the ability to remotely monitor plant operations via the internet to ensure that issues are dealt within a timely manner.

OLEOLOGY monitors water quality online and remotely: • pH – online monitoring • Turbidity – online monitoring • Disinfection: Ozone - ORP online monitoring • TPH – online monitoring Additional NATA sampling conducted • BTEX – yearly sampling analysis • E coli sample/monitoring 6 monthly

Call Oleology to discover how we can help you Engineer Oil-Free Water

1300 692 359 oleology.com.au

Authorised Sole Australian Distributor

june 2016 37

Environment

regions and to use with recycled water for heavy industry near Perth.

MAR case study by the Australian Water Recycling Centre of Excellence MAR with recycled treated wastewater is a cost-effective option for augmenting non potable water supplies at Kwinana’s heavy industry precinct near Perth, Western Australia.

The project, led by CSIRO, investigated the economic and technical feasibility, and the environmental and social benefits, of recharging aquifers with recycled water at several sites in the region.

The Kwinana industrial area proved to have some advantages for evaluating MAR with recycled water. Groundwater is not used for drinking or private irrigation, and there is an opportunity to control access to infiltration ponds, which are cheaper to install and maintain than buried galleries or injection bores.

The project shows that recycled water infiltration ponds are cost effective, as the Kwinana industry’s current main source of non-potable water (shallow groundwater) becomes less secure and industrial demand continues to grow.

The analysis describes options and assumptions about the cost of alternatives, the cost of tapping into the main coastal wastewater pipeline (the Sepia Depression Ocean Outfall Line), the need and cost of pre-treating the water, and managing down-stream discharge. The cost of MAR water ranges between $0.40 and $1.94/ kL, with the lower costs being for no pre-treatment and infiltration by ponds close to the Sepia Depression Ocean Outlet Line, and the higher costs being the converse. Pumping distance and the need to remove nitrogen increase costs the most. The proportion of MAR water that can be recovered by industry also affects its cost effectiveness, as some of the MAR water may be required for environmental purposes in the drying climate.

When compared to the price of purchasing recycled water or the price 38 june 2016

of scheme water, the cost of MAR water is more competitive. This finding is reinforced by results from another independent Centre-funded MAR project; the economic benefit of MAR with recycled water.

Although the project focussed primarily on the MAR as a future water supply for heavy industry, it found other stakeholders would benefit from its uptake, especially if carried out in inland and northern areas where water tables respond more, and there are several inter-dunal wetlands and higher demands for irrigation water. For example, the project concluded that discharging treated wastewater to the Superficial Aquifer at the Kwinana Waste Water Treatment Plant appears to have helped save The Spectacles wetlands from drying out. It also found no long-term evidence that recycled water has contaminated the wetlands or the groundwater, which discharges into Cockburn Sound. A related project is underway to assess the relative contribution of groundwater to nitrogen levels in the Sound.

Groundwater modelling also demonstrated that modest additions of water through MAR can reverse coastal zone salt water intrusion by almost a kilometre. The project also found residential properties near wetlands which are influenced by groundwater levels have higher property values. Depending on the number and closeness of the houses, and whether the wetland has recreational and visual appeal, the impact of property prices can be in the order of several hundreds of millions of dollars.

The case study demonstrates that managed aquifer recharge, using suitably treated recycled water, has the potential to replace and enhance natural groundwater levels. In the future, cost-effective underground storage and reuse of recycled water in rural and regional Australia will help provide certainty in water availability and increase industry confidence to invest.

The main project partners with CSIRO were: Western Australia’s Department of Water, Kwinana Industries Council, Water Corporation, Western Trade Coast, and the WA Department of Health.

ENVIRONMENT

Research into tyre recycling and re-use to be realised

O

utilise a steel and fabric-free rubber crumb. There are many useful civil engineering applications that are appropriate for mine sites.

Alternative disposal options

In December 2015 the Tyre Stewardship Australia (TSA) announced two major cooperative projects as part of a $1.5 million funding looking at both the immediate practical application of a tyrederived civil engineering product and at ways to get rubberised asphalt laid down as the high-tech, new road surface of choice throughout the country.

Another research project by the University of Wollongong, in conjunction with industry partner Ecoflex, funded together with the New South Wales Environmental Trust, is looking at a solution to upgrade rail tracks for larger, heavier and faster trains.

Furthermore, in April this year a national cooperative research project was launched, targeting greater use of rubberised road products, including asphalt and spray seal.

Rubberised road products not only provide quieter, more durable roads, but will also play a central role in helping to solve the challenge of dealing with over 51 million end-of-life tyres each year.

TSA has partnered with the Australian Road Research Board (ARRB), Sustainability Victoria, VicRoads, and the Queensland Departments of Transport and Main Roads and Environment and Heritage Protection, to research particular market barriers and to find ways to increase use of tyre-derived products in the construction and maintenance of Australian Roads.

Rubberised asphalt has been in use for many years around the world including in the USA, principally in Arizona, California, Florida, Texas and South Carolina. Current USA use of rubberised asphalt, even in the limited number of states highlighted, consumes over 12 million end-of life tyres per year and rubberised road asphalt and spray seal have delivered superior performance in terms of noise, drainage and durability.

Although rubberised asphalt and spray seal have both been in use in Australia for some time, the scope to increase use nationally offers a major opportunity to utilise recycled rubber.

ff-the-road’ (OTR) tyres are used for vehicles in the minerals, construction, civil engineering and forestry industries. A typical 240 tonne mining dump truck needs six OTR tyres, each costing approximately $25,000, and the tyre stands 3.5m high and weighs 3.2 tonne. It is estimated that 177,000 tyres or 168,000 tonnes of OTR tyres are in use in Australia, and on average one in 2.6 tyres is replaced annually, almost double the rate for passenger tyres.

In the past, most recycling technology has been directed towards developing the market for waste passenger tyres. Passenger tyres are much smaller and typically stockpiled in urban areas close to recyclers where they benefit from access to relatively cheap transport and handling costs. However, the higher proportion of natural rubber found in large OTR tyres is more valuable than the synthetic rubber used in passenger tyres, offering different, niche recycling opportunities.

Unfortunately, due to the sheer size of OTR tyres, many have been disposed of by burial on mine sites, with other end-of-life options including off-site disposal and use in safety bunds and stabilisation structures.

Currently, some of the OTR tyre recycling options include: Tyre Derived Fuel (TDF) for cement and brick kilns and power stations. The cement industry discovered that tyre chips have a 25% higher energy value than coal and that the steel beading and belt material within a tyre could serve as a replacement for the addition of iron oxide in the cement manufacturing process. Studies have shown that the high temperature combustion in kilns can preclude products of incomplete combustion (black smoke and odours) and that TDF produces emissions comparable to conventional fossil fuels.

Civil engineering applications; and

1

2 3

Recycled rubber products. Shredding, grinding or granulating scrap tyres is a pre-requisite for most reprocessing routes. Rubber particle size and the degree of steel and fabric remaining in the final product are inversely proportional to cost of processing and almost all recycled rubber products

40 june 2016

Funding for re-use of tyres

A tyre shredder that comes to you?

Now that’s clever.

In an Australian first, our specially designed and built mobile shredder will help you eliminate dangerous stockpiles of rubber waste like abandoned tyres and conveyor belts, even in remote areas.

Our shredder is unique in that it doesn’t just tear the tyre apart; it produces a six inch chip that has numerous industrial uses, such as fuel for energy recovery.

At Tyrecycle we have a strong belief that we all need to be smarter about how we use the earth’s limited resources. Our new initiatives are leading the way in clever tyre recycling and the reuse of rubber products.

Our mobile shredder: • is road and rail compliant for transport.

• reduces associated freight costs through onsite processing.

• is easy ‘plug & play’ setup.

• operates in ambient temperatures up to 45 degrees Celsius.

• has a processing output of 8-10 tonnes per hour.

For more information call us on 1300 4 TYRECYCLE (1300 489 732), email sales@tyrecycle.com.au or visit tyrecycle.com.au

Winner of Environmental Project of the Year, Australian Bulk Handling Awards 2015.

A

COMPANY TOMORROW’S SOLUTIONS. TODAY

june 2016 41

SKILLED

Mining, oil and gas employers reluctant to increase salaries Cautious optimism and reemerging demand for certain highly-skilled candidates are not enough for employers to loosen the salary purse strings, according to the 2016 Hays Resources & Mining Salary Guide.

42 june 2016

A

ccording to the Guide, 14% of mining employees can expect a salary increase of between 3 and 6% in their next review. Just 1% can expect an increase of between 6 to 10%, while another 1% can expect 10% or more. 44% of Australia’s mining workers will receive an increase of less than 3%. The final 40% will receive no increase.

“Overall, it’s clear that employers remain reluctant to offer increases unless absolutely necessary to secure a

candidate with skills in short supply,” says Chris Kent, Regional Director of Hays Resources & Mining.

“Global commodity prices remain at historically low levels and while Australia’s miners are resilient, many took big steps to create leaner workforces and lower their production costs. In this cost conscious environment, any salary increases remain minimal.”

According to Hays, over the last year 59% of mining employers offered no salary increases. Those who did receive a salary increase found that their wallets were not that much heavier. 26% received an increase of less than 3%, 10% saw their pay increase from 3 to 6%, and 4% received 6% to 10%. Just 1% received an increase of more than 10%.

But Hays warns employers not to be complacent. “In other industries employees are starting to take matters into their own hands and ask for a pay rise,” says Chris.

“Staff turnover has increased in 29% of organisations. While mining is not in the same position as many other industries in this regard, employers should still be ready for employees to seek some form of financial or non-financial reward after the lack of salary increases in recent years.”

According to Chris, this will be especially evident as vacancy activity grows in response to several factors.

“A solid start to 2016 created cautious optimism across the sector with gold miners doing particularly well. We are also seeing the emergence of new markets such as lithium, a vital ingredient in the innovation of using batteries for electric cars and the storage of PV solar power, and this is generating excitement for investors.”

While controversial, uranium is touted as a major opportunity for Australian miners and with improved waste management and disposal and a growing risk appetite from state governments (with the exception of Queensland) jobs are expected to grow in this space in 2017.

Coal has been difficult to predict in recent years but like iron ore, the majors have all taken significant steps to reduce costs to remain globally competitive. Any

increase in demand for coal should result in jobs given the current lean workforce.

Western Australia was named the world’s most attractive region for mining investment by an international survey released in March 2016 based on its decrease in wage costs and greater government facilitation.

“The majority of new job opportunities in the state have come from the Goldfields with several operations increasing production whilst ramping up exploration. WA-based Geologists, Field and Lab Technicians are in demand but employers are not paying a premium for their skills.

Employment is often offered on a shortterm trial basis. In all regions, there is demand for experienced Reliability Engineers to drive new technologies for further efficiency gains.”

Blue-collar candidates are being asked to maintain their own tickets and qualifications and in many cases take steps to be dual trade qualified or multi-skilled in order to future proof their roles. This is particularly evident in South Australia and New South Wales as they continue to lose talent to the larger resources states due to a lack of opportunity. As a result, South Australia has a severe shortage of some niche skills such as Rubber Liners and Belt Splicers. Underground and Haul Truck Operators are also required in the midwest of NSW. Meanwhile the strong start to 2016 for several key commodities has seen several capital improvement projects dusted off. This has created some project delivery vacancies but salaries in this area are still in decline.

“In Queensland there are vacancies for candidates with current medicals and inductions ready to go on DIDOfriendly rosters and we expect this to continue. However, the wages on offer are now comparable to those of city-based industries leading many candidates to walk away from the sector,” says Chris.

In the Northern Territory, mining activity has stabilised after several large mines went into care and maintenance in recent years.

“Some optimism is coming out of Victoria’s gold miners and we expect limited movement from Tasmania other than following the trends of the larger states as they ride the wave of global price volatility for commodities.”

Mining employment facts 44% of resources and mining employers will increase salaries by less than 3% when they next review; Just 16% will increase by 3% or more; But 40% expect to offer no increases; During the last year, 59% of resources employers gave no salary increases.

Australian oil and gas sector proven resilient After a tumultuous year, the oil and gas industry is hoping for some relief in the months ahead. It is hoped that oil prices will regain some strength as the Organisation of the Petroleum Exporting Countries (OPEC) organises to restrict supply.

Time will tell but OPEC has continued to struggle with the task with some shocking results. OPEC’s failure coupled with greater oil supplies flowing from the lifting of economic sanctions against oil rich Iran and a resilient US fracking industry has seen oil prices dip to lows not witnessed since the 1980’s.

Conditions have been devastating to employment globally with the exploration sector of the oil and gas industry particularly hard hit.

Interestingly, oil and gas salaries in Australia have proven more resilient than those globally. While salaries have depreciated here they have not done so at the levels seen elsewhere, partly due to employers opting for redundancies in non-critical roles instead of reducing salary levels for the roles retained.

“Saying that, contract salaries have been renegotiated where possible to lower rates. Per discipline, we have seen some dramatic decreases in geosciences and petroleum engineering roles. Senior Geoscientists have seen up to 50% reductions in staffing in some states.”

Job numbers for Drilling Managers

are also in decline with dramatic reductions in South Australia and Western Australia where the market is more or less dominated by certain super majors. Jobs in major East Coast global headquarters have been somewhat protected. So have roles in the project delivery and controls area as the industry looks for savings and will pay a premium for candidates with good cost control skills and a proven background in streamlining processes.

Some roles in demand include Cost Engineers, Commercial Managers and Planning Engineers.

There has been little if any change in salaries in project delivery and controls except in South Australia and for some roles in Victoria. There has been a general move away from hiring by super majors and engineering, procurement and construction management.

The recruitment activity is currently coming from small to medium operators, particularly niche companies such as specialist equipment or gas pipelines suppliers. Increased levels of LNG production have created more roles such as those associated with marine systems.

“The outlook over the coming 12 months is likely to reflect what we have seen this year with LNG prices down but production yet to hit a peak until 2017. We expect many employers to be looking for efficiency savings either directly or through new technologies creating greater demand for more strategic roles in niche areas,” says Chris.

“And as the market fully transitions from capital expenditure projects to full house production we have seen construction roles and related design roles continue to decline with the exception of niche areas. We expect some of the surplus construction skills to be absorbed.”

Salaries have been tapered at the top end in the design and engineering sector with senior operations roles like Operations Managers and Operations Superintendents peeling back, particularly on the west coast. june 2016 43

SKILLED

How new CEOs can boost their odds of success A look at the link between the strategic moves of new CEOs and the performance of their companies highlights the importance of quick action and of adopting an outsider’s perspective.

By Michael Birshan, Thomas Meakin, and Kurt Strovink, McKinsey & Company

T

he success of CEOs is deeply linked to the success of the companies they lead, but the vast amount of popular literature on the topic explores this relationship largely in qualitative terms. The dangers of these approaches are well known: it’s easy to be misled or to conclude, mistakenly, that prominent actions which seem correlated with success were responsible for it.

The results of an analysis by McKinsey & Company, bolstered by nearly 250 case studies, shows that the number and nature of the strategic moves made by CEOs who join well- and poorly performing companies are surprisingly similar. The efficacy of certain moves appears to vary significantly across different groups of companies, however. What’s more, the sheer number of moves seems to make a difference, at least for CEOs who join

44 june 2016

poorly performing companies. Also, external hires appear to have a greater propensity to act.

These findings have important practical implications for new CEOs and the boards that hire them: focus early on a few bold moves well suited to the context of your company, and recognise the value of the outsider’s perspective—whether or not you are one.

Surprising similarities It is believed that CEOs taking the helm at poorly performing companies, feel compelled to do something to improve results, have a greater propensity to make strategic moves than those who join wellperforming organisations.

However, it was found that new CEOs act in similar ways, with a similar

frequency, whether they join well- or poorly performing organisations. CEOs in different contexts make bold moves— such as mergers and acquisitions (M&A), changing the management team, and launching new businesses and products— at roughly the same rate.

Contextual contrasts Although new CEOs transitioning into companies that have been performing well and CEOs transitioning into companies that have been performing poorly make similar moves with a similar frequency, that doesn’t mean those moves are equally effective. At companies where chief executives make strategic moves early on, striking contrasts were found between organisations that had been performing well when the new CEO took charge and

those that had been performing poorly: Organisational redesign was correlated with significant growth (+1.9%) for well-performing companies, but not for low performers.

Strategic reviews were correlated with significant growth (+4.3%) for poorly performing companies but were less helpful for companies that had been performing well.

Poorly performing companies enjoyed +0.8% growth when they reshuffled their management teams. But when well-performing companies did so, they destroyed value.

It stands to reason that troubled companies would enjoy special benefits from major overhauls of management or strategy.

However, organisational redesigns are challenging for all companies and may, in some cases, be premature for organisations in significant flux.

A final point on context is that the bar for top performance varies significantly by sector. The implication is that new CEOs seeking to calibrate their starting points and to prioritise strategic moves should look beyond top-level performance metrics to understand what it will really take to beat the market.

Bold bouncebacks The number of major moves that new CEOs make in parallel at well- and poorly performing companies was also reviewed.

The analysis showed that well-performing companies had no discernible pattern.

But in poorly performing ones, CEOs who made four or more strategic moves at the same time during their first two years achieved an average of 3.6% growth over their tenures.

This shows how difficult it is to reach higher levels of economic profit without making substantial strategic or operational shifts.

Outside views When the time comes to appoint a new CEO, corporate boards face a difficult question: promote an executive from

within or choose an outsider? The analysis found that the performance of outsiders and insiders differed significantly.

Externally appointed CEOs have a greater propensity to act: they were more likely to make six out of the nine strategic moves we examined. The size of the gap in frequency—in other words, the chance an external CEO would make a particular move minus the chance an internal CEO would do the same thing—was much greater for the moves external CEOs opted to make.

External CEOs almost certainly have a leg up when it comes to bold action.

They are generally less encumbered by organisational politics or inertia than their internal counterparts. They may also be more likely to take an outside view of their companies. It’s no coincidence, that the strategic moves that have the largest gaps in the propensity to act include some of the most far-reaching ones: organisational redesign, for example, or geographic contraction.

Poorly performing companies are more likely to appoint external CEOs, and corporate performance tends to revert to the mean. Outside hires, over their tenure, outperformed their internally promoted counterparts by a margin of more than five to one—on average, a 2.2% growth, compared with 0.4%.

Clearly, this performance differential is the result of multiple factors, and it’s important to note that new CEOs need not come from outside companies to cultivate an outsider’s mind-set—or to be successful in their role.

While these results are averages across multiple organisations and industries, they do suggest a few principles for new CEOs: Adopt an outsider’s mind-set. On average, external hires appear to make more moves during their early years. This doesn’t mean that insiders are the wrong choice for boards. But it does suggest that it’s critical for insiders to resist legacies or relationships which might slow them down and that approaches which help insiders adopt an outsider’s mind-set have great potential. Equally, there is value in having outsiders who can lean into

the boldness that their status naturally encourages. Some executives have done so by creating new ways to assess a company’s performance objectively— for example, by taking the view of a potential acquirer or activist investor looking for weak spots that require immediate attention. Others have reset expectations for the annual allocation of resources, changed the leadership model and executive compensation, established an innovation bank, and looked for additional ways to bring an external perspective to the heart of the leadership approach.

Don’t follow the herd. On average, new CEOs make many of the same moves, regardless of starting point. They will do better, however, by carefully considering the context of their companies and leveraging more scientific ways to assess their starting points. For instance, some new CEOs take stock of the economicprofit performance of companies relative to that of their peers and, in light of the starting position, assess the odds that potential moves will pay off.

When you’re behind, look at the whole playbook. On average, CEOs taking the helm at underperforming companies do better when they make more major strategic moves, not fewer. That doesn’t mean they should try to do everything at once, but it does suggest a bias toward boldness and action. Plan a comprehensive set of moves that will significantly improve your company’s performance, and make sure that you aim high enough.

New CEOs take the helm with a singular opportunity to shape the companies they lead. The best ones artfully use their own transition into the CEO role to transform their companies. But this window of opportunity doesn’t last long. On average, an inflection point arrives during year three of a CEO’s tenure. At that point, a CEO whose company is underperforming is roughly twice as likely to depart as the CEO of an outperforming one—by far the highest level at any time in a chief executive’s tenure. During this relatively short window, fortune favours the bold.

june 2016 45

SKILLED

Indigenous jobs in resources on

T

he Queensland Resources Council (QRC) survey on Indigenous participation has reported growth of Indigenous businesses within resources supply chains.

The resources sector spent $83 million with more than 55 Indigenous business, which translates into further indirect employment opportunities for Indigenous people.

These efforts, and the people and programs behind them, were recently recognised at the Queensland Resources Council (QRC) Indigenous Awards.

QRC Chief Executive, and member of the judging panel, Michael Roche said the calibre of finalists across all the award categories was very impressive.

“As a sector that largely operates in regional and remote communities with high Indigenous populations, bridging the divide with tangible opportunity is of great priority,” Mr Roche said.

“We have a vested responsibility to spur opportunity for training, employment and local Indigenous business and I’m proud to say the sector does this well.”

Queensland Gas Company’s (QGC) innovative approach to Indigenous procurement resulted in a ‘Best Company Indigenous Procurement Initiative’ award, with Rio Tinto Weipa a very close runner up.

Mr Roche commended QGC’s commitment to understanding the barriers of contracting and procurement practices.

“QGC is really making strides in its Indigenous procurement program and the impressive results speak for themselves,” Mr Roche said.

“Under the program, the company has traded with over 20 local Indigenous businesses and has awarded approximately $45 million in contracts.”

Glencore won the ‘Best Company Employment and Training Initiative’ award for its commitment to fostering

46 june 2016

Although 23,000 resources jobs have been lost in Queensland since the start of the downturn, new data shows a 20% increase in the number of Indigenous employed in the sector last year.

the rise

life-long careers for the local Indigenous population.

Mr Roche said the Glencore North Queensland employment program provided the tools for a career, not just a job.

“The two-stage program fosters work readiness, it refines worth ethic skills and professional goal setting to build selfesteem and confidence,” Mr Roche said.

“The program moves away from the traditional lower-skilled roles to give Indigenous people the opportunities for a learning capacity that sets them up for life.”

RBY Projects took out the top spot in the ‘Exceptional Business’ category, with Sarra Consulting a very close runner up.

Mr Roche said the Indigenous business operated under an innovative business model.

“The success of RBY is largely due to the company’s commitment to fostering the professional skills of its Indigenous employees,” Mr Roche said.

“RBY Projects is the largest 100% Indigenous owned and managed company providing contracting services to the gas industry in Queensland.”

“By delivering above and beyond expectations throughout its contract with QGC, RBY has been able to employ more than 100 people at peak and triple its turnover within 12 months.”

Arrow Energy Client Representative Tom Draper won the ‘Exceptional Person’ award, with Rio Tinto Geotechnical Engineer Duane Fewquandie a close runner up.

Mr Roche said not only had Mr Draper achieved great personal success, the work he was doing to mentor others was commendable.

“Outside of his day job with Arrow, Tom has spoken to thousands of students in the hope his story can inspire others,” Mr Roche said.

“Tom’s approach to life, his dedication to his culture and career ambition shows that with hard work and the right attitude, anything is possible.”

As one of the nation’s largest employers of Aboriginal and Torres Strait Islanders, Tom Draper is one of a growing number

of Indigenous people working in the Queensland resources sector.

Myuma Senior Advisor Noel Gertz and Thiess Diversity Manager Penny Hamilton jointly won the ‘Indigenous Advocacy’ award.

Mr Roche said the judges simply could not pick between Noel and Penny, both of whom have made an outstanding contribution to advancing the participation of indigenous people in the sector.

“Noel Gertz has a long advocacy history and his efforts in fostering relationships has generated opportunities for hundreds of Aboriginal and Torres Strait Islanders across the state,” Mr Roche said.

“Equally, as Thiess’ first ever diversity advisor, Penny Hamilton has channelled her passion into a leading and multifaceted program of Indigenous participation.”

“Both Noel and Penny are proud Aboriginal people who ensure the resources sector continues to be one of the nation’s largest employers of Indigenous people.”

Full list of award winners BEST COMPANY INDIGENOUS PROCUREMENT INITIATIVE Winner: QGC Runner up: Rio Tinto –Weipa BEST COMPANY INDIGENOUS EMPLOYMENT AND TRAINING INITIATIVE Winner: Glencore Runner up: Rio Tinto –Weipa Highly commended: Arrow Energy & BHP Billiton Mitsubishi Alliance EXCEPTIONAL INDIGENOUS BUSINESS Winner: RBY Projects Runner up: Sarra Consulting EXCEPTIONAL INDIGENOUS PERSON Winner: Tom Draper, Arrow Energy Runner up: Duane Fewquandie, Rio Tinto INDIGENOUS ADVOCACY AWARD Winner: Noel Gertz, Myuma Group Winner: Penny Hamilton, Thiess Runner up: Davina Shearer, Incitec Pivot

june 2016 47

SKILLED

Maintaining vehicles in harsh environments

M

anaging the maintenance of equipment, fleet of vehicles and machinery is a continuing battle for mining operators. All products deteriorate at different rates over time depending upon the materials used, the corrosivity of the environment and the mechanisms involved.

When it comes to protecting your assets, any paint protection method, whether it is a wax, sealant or coating, is designed to provide a sacrificial barrier where the protective layer takes all the impact from the environment instead of the paint. Some paint protection options will respond differently.

Options for paint protection: Wax- Car waxes can come in the form of liquids or hard pastes. Each feature a specific ratio of naturally-occurring wax as the main ingredient. Waxes are intended to protect the paint and/or increase the depth of gloss. Traditional waxes will diminish through repeated washes and exposure to the elements. Car waxes usually provide protection for one to four months depending on their composition, quality and contents.

Sealant- Paint sealants are liquids that contain manmade polymers, resins and synthetics to increase their durability and longevity of protection.

Paint sealants offer an easy application and an extremely good barrier to a paint surface.

Coating- A coating contains man-made or synthetic protection ingredients. They bond to the paint to both provide a barrier of protection as well as create a clear, high gloss finish. The products are considered ‘permanent’ coatings because they cannot be removed other than through polishing or neglect.

48 june 2016

Research into coatings Corrosion can become a big problem for equipment, machinery and other steel structures on mine sites and traditionally substances that protect metals effectively from harsh environments are often damaging to the environment or have other disadvantages. Consequently, scientists at the Max-Planck-Institut für Eisenforschung (Iron Research) in Germany are developing synthetic coatings that can protect steels and other metals from rust and heal themselves if they become damaged.

Not only would this kind of overlay eliminate the problem of chromium(VI), but it could also boast other advantages.

It could enable steel manufacturers, for example, to reduce the zinc layer, as even zinc is controversial in some ways.

“The zinc coating can actually heal itself to a certain extent, because it also deposits passivating zinc oxide in gashes and holes, preventing further corrosion,” says Michael Rohwerder, head of the Molecular Structures and Surface Design Research Group. “However, it is considered problematic from an environmental perspective, and it is expensive and vaporises easily during laser welding, contaminating the welding equipment.”

Self-healing coating for metals could mark a new chapter in car and machinery manufacture. Currently, car bodies can’t be treated with protective coatings until they have their final shape. It would be cheaper to treat the steel beforehand, but would do little good, as fine cracks form

in the protective skin while the material is being formed. Again, a self-healing layer could solve this problem, benefitting car manufacturers and mechanical engineers, as well as steel producers. The manufacturers could cut out an expensive step that has nothing to do with their core business, while steel producers could make their products more valuable and lucrative.

These coatings could also minimise maintenance requirements for vehicles.

Any fine scratches would be sealed off immediately by a self-healing layer.

The scientists are building on their research into certain plastics that materials scientists working in the field of corrosion protection have been experimenting with for almost 30 years: conductive polymers.

“These materials were used commercially for corrosion protection at an early stage, but they didn’t work properly and most products have disappeared from the market,” says Mr Rohwerder. “In some cases, using these products even led to increased corrosion.”

“Chromium(VI) coatings also took decades to develop,” says Rohwerder, “so we can’t expect to do it in a few short years.”

And while there are still important gaps in scientific understanding, this only spurs the German scientists on all the more.

“After all, we’re not in this to solve the everyday problems of industry,” explains Martin Stratmann. “We want our research to advance the state of knowledge about corrosion and corrosion protection, and for this reason, we are looking far ahead into the future.”

profile

Innovative product avoids mine vehicle degradation Maintaining and keeping a fleet of vehicles up to standard is a time consuming procedure and it is even more challenging when these vehicles endure the hot, dusty and remote conditions of a mine site.

However, a new revolutionary product can prevent vehicle degradation caused by heat, UV rays or acid rain without any oxidisation or damage. BRILA Australia, a new inorganic glass coating product which recently reached the Australian market, repels water, dirt and stains for years. The liquid agent is combined to form a highly durable structure which protects any vehicle from weather damage.

“The quality of BRILA is proven to withstand harsh tropical environments.

It will reduce paint fading and will maintain its high resistance effects after withstanding five years of harmful UV rays and heat. This property is unique to inorganic matter,” says the company.

The globally established product is engineered in Japan and was developed by Pan Surface Co. Ltd in 1991. Since its establishment, and after multiple trials for more than 15 years, BRILA has celebrated many global successes.

In 2014, Pan Surface and Itsuwa Vault formed an alliance to elevate BRILA to new heights, by venturing into the markets of Singapore, Vietnam, Philippines, Malaysia, Shanghai, and Australia.

The product has been applied to more than 500,000 cars in Asia and the US and over 1,500 dealers are using it as their Highest Grade Premium Coating worldwide. Now the company has further ambitions for Australia.

“The Australian market is a perfect fit for this product and we are already

seeing a lot of interest. As the product continues to penetrate into new markets we continue to satisfy our clients with our unbeatable product.”

The anti-fouling properties of BRILA make it very easy to maintain. The strong repellent of the product means that dirt and grime will not build up.

Water usage is minimised and there is no need to use wax.

“We maintain a credible product by using quality assured processes and products that are proven to provide the highest grade premium coating worldwide.”

BRILA body glass coating has a solidity more than 10 times that of an organic glass coating, it prevents the adhesion of grime, leaving a smooth

surface and water becomes droplets perfect for visibility and maintenance.

BRILA body coating hardens 99% within the first 12 hours and 100% by the third day. This gives the coating a reliable protective property immediately after treatment.

For the consumer market, the product is exceptional for those wanting to maintain the new car look.

The silica glass coating covers the body and the double layered hybrid structure protects the paint for up to five years and maintains its showroom glossiness to accentuate the body silhouette.

The first Australian BRILA retail shop was opened in December 2015 in Burswood, Western Australia.

june 2016 49

SAFETY

needed: Better planning for mine disasters

I

n Australia, mine disasters involving miners trapped underground are not common. However, experience from recent mine disasters in Australia and overseas show that when underground entrapments happen they create a range of issues for the mine and local community to manage. The emergency response will therefore include participation of multiple emergency services with specialist support potentially coming from across the globe. Joint pre-planning between the mine operator and the local community’s emergency planning committee will contribute to ensuring the conduct of an effective emergency operation.

An article published earlier this year by the Australian Journal of Emergency Management and authored by David Parsons, Mine disasters: the need for planning partnerships between mine operators and local community emergency planning committees, recommends actions mine operators should take to build a strong partnership with their Local Emergency Management Committee.

On 25 April 2006 a mine collapse in Beaconsfield, Tasmania killed one miner and trapped two others approximately 900 metres underground. This event attracted dozens of media crews to the town and

50 june 2016

involved emergency services from multiple Australian states and territories. On 19 November 2010 the Pike River coal mine explosion occurred in New Zealand, killing 29 miners whose bodies have never been recovered. This disaster drew dozens of media crews to Greymouth and resulted in an extended emergency response operation. The management of the disaster involved national and international resources. Most recently, on 9 February 2014, the Hazelwood open cut coal mine fire occurred in Victoria. The fire caused significant disruption to the community and public health issues. The Hazelwood coal mine fire involved an extended emergency operation using large numbers of emergency services personnel from multiple Australian states and territories.

The official reports from both the Pike River mine disaster and the Hazelwood mine fire recommend improving the ability of mine operators to work effectively with emergency management agencies.

The combination of complex issues, intense public interest and multiplicity of agencies involved requires formal coordination arrangements. Each Australian state and territory has legislation to enable this to occur. The legislation also creates Local Emergency Planning Committees at local government level. These committees are responsible for planning for emergency events in their area.

Inquiries into the Pike River and Hazelwood mine disasters found that interaction and cooperation between emergency services organisations and the mining companies involved was not optimal. Inquiries from both events found that inter-agency problems were due to the lack of a common incident management operating system. The lack of this common process meant that sharing of information and critical decision-making was disjointed and dysfunctional. In response to this, the New Zealand, Victorian and New South Wales governments initiated requirements for mining companies to apply the Incident Control System in their emergency response processes. In Australia it’s called

the Australian Inter-service Incident Management System (AIIMS).

Although a mine operator will provide the initial response to a mine disaster, other agencies such as emergency services organisations, health specialists, psychosocial support agencies and local government may join the operation.

Mine disasters can involve all levels of government due to the international nature of the industry, both in terms of the country of origin of the workforce, company ownership and the possible requirement for the global sourcing of expertise and equipment.

Effective emergency management depends significantly on the relationships that exist between those involved.

Mine operators can take a number of actions to establish critical relationships with their Local Emergency Planning Committee including: arrange a tour of the mine for members of the Local Emergency Planning Committee review the mine’s incident plan with the Local Emergency Planning Committee explain the mine’s incident response capability and capacity to the Local Emergency Planning Committee explain the mine’s incident management structure to the Local Emergency Planning Committee introduce the mine’s Incident Controller to the Local Emergency Planning Committee conduct a discussion exercise involving a long duration underground rescue with the Local Emergency Planning Committee.

The development of a strong partnership and mutual understanding between the mine operator and the Local Emergency Planning Committee is essential for an effective response operation. The partnership and understanding ensures each group is aware of the capabilities and responsibilities of others, and develop the relationships required for effective cooperation.

profile

Putting responsive into first response Response Services Australia (RSAust) design and provide specialist medical, fire fighting, rescue, security, equipment, fleet and training services nationwide.

It is backed by International SOS, the world’s leading medical and travel security assistance company which saves and protects lives in more than 850 locations in 92 countries.

A serious incident at the workplace can have a profound impact on productivity and safety performance. Thus it’s critical that first responders to an incident possess the right skills and experience to combat and control the situation and help your business recover quickly. Importantly RSAust help its clients to prevent incidents from occurring in the first place by deploying its experts to deliver absolute peace of mind in safer, more secure operating environments.

The demand for RSAust was generated by industry itself. Feedback showed that clients want to regain cost controls, and

have flexible and relaible services delivered by trusted suppliers that understood their biusiness whilst being an expert in their own.

General Manager Darryl Cook said, “We are genuinely passionate about our business and that of our clients and this is reflected in the way in which we deliver services”.

The complete turnkey model supplied

by RSAust extends to the provision of specialised members of staff who’s qualifications and approach are built on reallife emergency response experience.

They provide an immediate response to any emergency whether it be fire, rescue, hazardous material, medical, or security related. Given the multi disciplined nature of staff, one highly skilled responder can effectively provide multiple roles thus minimising your operating costs with maximum coverage.

Darryl said, “Our services are proven to

reduce injuries and save money with direct benefits to productivity and performance. As a result we are driven to execute projects with excellence”.

“Our staff are committed to their responsibilities as well as those of the client and they go above and beyond to outperform”. This has been reflected in the amount of return business generated

by RSAust, becoming a hallmark of the successful local brand.

In recent times RSAust has assisted clients in Western Australia, New South Wales, Victoria and in the Northern Territory to reduce reported injury rates through education, prevention, and support.

Similarily, the company has delivered services in vastly different settings from surface mining to underground operations, and from the construction site to the corporate office.

RSAust is safeguarding your business, your operations and your brand today as well as into the future.

1300 739 091 info@responsesa.com.au responseservicesaustralia.com.au

Response Services Australia designs and provides specialist medical emergency response, rescue, and security services nationwide.

Our class leading Site Support Officers are fully trained in advanced life support, protective security, and emergency incident response and provide high quality site support services to the workforce.

Perth

Brisbane

Sydney

Melbourne

Canberra

june 2016 51

SAFETY

Alerting the industry to the dangers

F

atigue can occur because of prolonged or intense mental or physical activity, sleep loss and/ or disruption of the internal body clock.

Signs of fatigue include: tiredness even after sleep reduced hand-eye coordination or slow reflexes short term memory problems and an inability to concentrate blurred vision or impaired visual perception a need for extended sleep during days off work.

Fatigue can be caused by work related or non-work related factors or a combination of both.

Work related causes of fatigue include excessively long shifts, not enough time to recover between shifts and blocks of shifts, very strenuous jobs and long commuting times. An example of non-work related fatigue would be poor quality sleep.

Fatigue may increase the risk of incidents because of a lack of alertness.

It can also result in a slower reaction to signals or situations and affect the ability to make good decisions, particularly when: operating fixed or mobile plant including driving vehicles undertaking critical tasks that require a high level of concentration undertaking night or shift work when a person would ordinarily be sleeping.

The transport industry and fatigue Road transport is a priority industry under the Australian Work Health and Safety Strategy 20122022. Data by Safe Work Australia from a report, Work-related fatalities involving trucks, Australia, 2003 to 2012, show an alarming number of Australia’s truck drivers are being killed at work each year.

52 june 2016

Fatigue is more than feeling tired and drowsy. According to Safe Work Australia’s Fatigue Management guide, in a work context, fatigue is a state of mental and/or physical exhaustion that reduces a person’s ability to perform work safely and effectively.

Safe Work Australia Chair, Ann Sherry AO said more needs to be done to ensure the safety of these workers and reduce these worrying statistics.

“Around 80 workers are killed each year while working in or around a truck,” said Ms Sherry. “Not only is this figure disturbing in itself, but 39% of these people die in single vehicle truck crashes.

“While the data showed that driving too fast for the conditions caused some of the fatalities, for many the cause of the crash was unknown, however it is likely that fatigue and lack of concentration played some part in these deaths.”

The National Transport Commission (NTC) recently released the Heavy Vehicle Driver Fatigue Data Final Report which was endorsed by the Transport and Infrastructure Senior Officials Committee (TISOC).

Chief Executive of the National Transport Commission Paul Retter said fatigue is a major contributor to crashes but without more rigorous data it is difficult to know what reforms will reduce the problem.

“The regulation of driver fatigue is a complex policy issue and more detailed research needs to be done on its causes and impacts.”

of fatigue

analyse commercial data to evaluate the frequency and impact of fatigue regulations, and review road agencies’ ability to link crash data to driver accreditation.

Research activities will be conducted by the Alertness Safety and Productivity Cooperative Research Centre (CRC) who will conduct comparative research in both laboratory and field environments. This will include evaluating the accuracy of existing fatigue monitoring technology. Anyone interested in financially contributing to the CRC should contact them as soon as possible.

Mr Retter said the fatigue data framework would also obtain more data about the use of nose-to-tail shifts, where a heavy vehicle driver works two long work periods within a 24 hour period with a major rest break in between. This work would consider factors such as insufficient sleep, long work shifts, the impact of circadian rhythms and the frequency of nose-totail schedules.

Employer’s responsibility

He said the fatigue data framework would help to ensure data about the frequency and impact of driver fatigue was collected in a consistent and comparable way across the nation’s states and territories.

The framework developed by the NTC will see four fatigue-related projects being pursued. These projects will: conduct new research to evaluate the fatigue impact of the current laws develop nationally consistent definitions and measurements of fatigue

A person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of workers while they are at work.

This means if fatigue is identified as causing a risk to work health and safety, then suitable control measures should be implemented in consultation with workers to eliminate or minimise the risks.

The current model WHS laws do not contain any requirements specific to fatigue management in mines. However, under the model WHS laws, there is a general primary duty imposed on the person conducting the business or undertaking (PCBU) in relation to workers and other persons.

Some states and territories have laws dealing specifically with mining which operate separately to their general WHS laws. This mining legislation may contain specific requirements relating to fatigue.

The duties imposed on an operator in

relation to fatigue by the model WHS laws will vary depending on whether the operator is the company operating the mine (which has duties as a PCBU) or a worker who operates or drives a vehicle (who has the duties of a worker). Please note, an owner driver may be a PCBU where they operate their own and drive their vehicle.

Generally speaking, a PCBU must ensure, so far as is reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking. The PCBU must also ensure that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. This duty would extend to include managing risks to workers and other persons arising from fatigue.

This model WHS laws expressly provide that this duty includes ensuring, so far as is reasonably practicable: provision and maintenance of a work environment without risks to health and safety provision and maintenance of safe systems of work, and monitoring the health of workers and the conditions at the workplace for the purpose of preventing illness or injury of workers arising from the conduct of the business or undertaking.

The duty on the PCBU applies regardless of a worker’s preference for certain shift patterns for social reasons, their willingness to work extra hours or attending work fatigued.

The PCBU would need to take these circumstances into account when adopting or implementing measures to comply with its duty under the model WHS laws.

Worker’s responsibility Under the model WHS laws, while at work, a worker must: take reasonable care for their own health and safety take reasonable care that his or her acts or omissions do not adversely affect the health and safety of other persons

»

»

june 2016 53

SAFETY comply, so far as he or she is reasonably able, with any reasonable instruction that is given by the PCBU to allow the PCBU to comply with the model WHS laws, and cooperate with any reasonable policy or procedure of the PCBU relating to health and safety at the workplace that has been notified to workers.

This would include policies relating to worker fatigue at the workplace, such as those on fitness for work or working second jobs.

The duty imposed on workers under the model WHS laws do not mean that a worker must never work extra or additional hours. However, a worker should inform their employer if they are fatigued (for example, they should let their manager or supervisor know when they are fatigued). A worker should not agree to work additional hours or undertake safety critical tasks when they

know they are, or are likely to be, fatigued.

Workers have a duty to take reasonable care for their own safety and health and that their acts or omissions don’t adversely affect the health or safety of others. Workers must also comply with any reasonable instruction and cooperate with any reasonable policy or procedure relating to fatigue at the workplace, for example fitness for work policies and policies regarding second jobs.

To reduce the risk of being involved in a work incident caused by fatigue, you should: comply with your organisation’s policies and procedures relating to fatigue understand your sleep, rest and recovery needs and obtain adequate rest and sleep away from work seek medical advice and assistance if you have or are concerned about a health condition that affects your

sleep and/or causes fatigue assess your own fitness for work before commencing work monitor your level of alertness and concentration while you are at work look out for signs of fatigue in the people you work with in consultation with your supervisor, take steps to manage fatigue, for example take a break or short nap (night shift), maintain hydration (drink water), do some stretching or physical exercise, adjust the work environment (lighting, temperature) talk to your supervisor or manager if you foresee or experience being impaired by fatigue likely to create a health and safety risk e.g. because of a health condition, excessive work demands or personal circumstances assess your fatigue levels after work and take suitable commuting and accommodation options (e.g. avoiding driving if fatigued).

profile

Miners Embrace SmartCap Technology The SmartCap is a wearable technology that is being used by mining operations and on-road fleets around the world to eliminate microsleeps from their business. Being the world’s only fitfor-mining wearable device that uses the gold standard in sleep science, SmartCap is seeing significant demand for its alertness monitoring solution for haul truck fleets as well as ancillary equipment and light vehicles.

The SmartCap business has an admirable mission – Everybody Home Safe Every Day – which is plastered on every wall of their global headquarters in Brisbane.

This has clearly resonated with the industry, with uptake of SmartCap increasing over 200% in the last 12 months including major deployments in

54 june 2016

Mongolia, Chile, and the United States.

Dush Wimal, CEO of SmartCap Technologies, attributes the growth of the business to an ongoing shift toward tools that empower the workforce.

“SmartCap Technologies are well known as thought leaders in the driver fatigue space”, Mr. Wimal told National Resources Review. “It’s because we are passionate that we have created a system that not only intrigues, it is the instigator that changes operator behaviour”.

The past year has also seen an emerging trend of sites writing off their investment in camera systems that count microsleeps, instead choosing SmartCap to empower their workforce to make change.

“Using proven science founded in

over a decade of research, SmartCap has been repeatedly validated to provide the most accurate fatigue measurements”, said Dr. Daniel Bongers, SmartCap creator, and CTO. “Our unique ability to provide accurate and truly predictive information enables the elimination of microsleeps, the number one cause of driver accidents in the workplace”.

The SmartCap product suite continues to evolve with a new product due to be launched in Las Vegas at MINEXPO later this year. All we can say is we can expect to see a lot more SmartCaps driving around; on-site and off-site.

Eliminate driver fatigue accidents in the workplace SmartCap is the world’s only fit-formining wearable device that uses the gold standard in sleep science, EEG. • Used in heavy equipment, light duty vehicles and control rooms worldwide • Journey management for off-site commuting • Wireless connection to in-cab display • Real time operator feedback • Visual and audible alarm system • Management software for remote monitoring of fleet • End to end change management services

SmartCap helps to get everyone home safe every day.

june 2016 55 www.smartcaptech.com

FINANCE

M&A and capital raising activity continued its downward trend in the first quarter of 2016. Besides prolonged volatility in commodity prices, increasing distress and subdued investment appetite, further adversity may be expected before a significant turnaround arises in transaction activity.

Mining & metals deal volume, value continues to languish

T

he latest merger and acquisitions (M&A) and capital raising numbers confirm the stark reality of the ‘lower for longer’ sentiment in the mining and metals sector, according to EY Oceania Mining & Metals Transactions Leader Paul Murphy.

EY’s Divestments: extracting hidden value report shows global deal value and volume in the sector continued the fiveyear downward trend.

Global deal value in the sector fell 45% to US$3.3b in the first quarter of 2016 compared to the same period in 2015. Global deal volume followed the same downward trend with 72 deals in the first quarter of 2016 compared to 90 in the fourth quarter of 2015.

The numbers tell a similar story for Australia, with the overall value of capital raising in the sector for the first 56 june 2016

quarter of 2016 US$931m, 58% lower than the same period last year. Deal volume remained at near-record low levels, with just 17 deals for the quarter.

Overall deal value was US$1.4b, with two deals accounting for all but 3% of total deal value.

Included in this quarter were the completion of Barrick’ s divestments of Bald Mountain and Rio Tinto’ s US$606m divestment of the Bengalla Coal JV. Gold deals specifically comprised over half of the quarter’s deal value at US$1.7b and 46% of the volume at 31 deals. The top wwwdeal was undertaken by Australian and USbased financial investor group, EMR Capital Group, and Farallon Capital for the Martabe gold mine in Indonesia, a US$775 transaction.

“Financial distress, particularly in the US coal industry, continues to weigh

on many companies across the mining and metals industry and it’s playing out in the form of portfolio realignment and divestments to raise capital,” says Murphy.

Private capital activity signals start of deal cycle Cash and sustaining costs continue to be the focus for most players in the sector, and while well capitalised miners will continue to consider acquisition opportunities, there is a foray of private capital in the sector.

“Private capital activity is most certainly a lead indicator for growing deal activity. If they are seeing value it is a sign that the deal cycle will begin to pick up,” says Murphy.

Murphy says divestment programs in Australia and globally will pick up

over the coming months, with the need to reduce leverage and make difficult decisions to withstand ongoing volatility.

“We are also seeing increasing interest in the ‘tech’ metals sector – copper, cobalt, graphite, lithium and vanadium – driven by anticipated demand for inputs into electric motors and battery storage,” says Murphy.

Murphy says the tough market and increasing interest by financial investors has put a sharp focus on the level of preparation by sellers.

“Sellers must be able to tell a credible and compelling value story to attract and retain buyer interest, they need to prepare more and sharpen their sales skills if they want to secure a deal and secure the best outcome for shareholders.”

The report notes that over one third of executives (36%) see lack of fully developed diligence materials as the main cause of value erosion in corporate divestments. And, when it comes to factors that induce private equity buyers to reduce offer prices or drop out of bidding, 44% of executives cited lack of confidence in information.

Deal execution: fail to prepare, prepare to fail With boards under constant scrutiny to ensure they deliver shareholder value, sellers of corporate assets need to answer three critical questions: 1. What drives the business’s purchase and valuation decisions?

2. How can the seller develop a value story tailored to individual bidders in order to maximise value?

3. What impact will the divestment have on the remaining business?

Sellers that can answer these questions make an asset easy to buy and create competitive tension. The value story should clearly articulate the future value of the separated business, which often deviates from its value in the current operating model under the existing corporate umbrella.

And yet, just over one-third (36%) of companies have developed consistent execution procedures across their divestments. Corporates continue to point to deal execution as a divestment area ripe for improvement.

With intrinsic value so closely aligned with the quality of underlying reserve base, sometimes, it is easy to overlook the importance of preparing an asset for sale and presenting it in the best possible light. Often, there is a view that bidders should be able to identify and articulate the upside potential in a sales process, rather than the seller preparing the necessary documentation in order to ensure all bidders are approaching the opportunity consistently.

In this market, where the buyer typically has the negotiation leverage, it is critical to prepare and provide detailed evidence of any turnaround plan or basis for improvement in earnings to ensure that sellers stay in the process and attribute the appropriate value to these initiatives.

Operational separation: vital to value creation, often neglected One of the most effective ways to create value pre-sale is to present a compelling vision to a potential buyer of how the business will be operationally separated and how it would fit into the buyer’s organisation.

Sellers should be able to ensure that: Stand-alone financials can withstand diligence Assets, liabilities and operations within the perimeter of the deal have been vetted.

Separation activities, particularly long lead-time items, have already commenced.

Sellers are often reluctant to implement these measures until a buyer has been identified and appropriate personnel are cleared because they can generate significant work and costs. But, waiting for a buyer’s agreement can cause delays

and increase transaction execution risk.

While many assets being considered for sale are run on a relatively autonomous basis, there is typically an element of codependency with the wider organisation and, in some cases, this can be very significant.

Ideally, a seller will begin separation as part of its preparation process, developing a clear view of what is included in the deal and preparing a detailed separation roadmap. This view details timelines, costs and transitional arrangements, which enhances buyer confidence and adds certainty to negotiations.

What makes a buyer walk away from a deal?

Companies should understand how to create a compelling story for experienced buyers. Particularly among private equity (PE) buyers, there is often a stark difference between what sellers think causes a reduction in offer price or a bidder dropout and what actually drives them away.

Corporate executives think that lack of confidence in the management team and level of capital investment required are the most likely factors. For PE respondents, the management team is indeed important, but so are inconsistent or declining financial performance and commercial factors.

With a very limited pool of potential buyers, ensuring the ones that enter a process stay involved is critical. If the process falls over because the reserve price hasn’t been met (often as a result of limited competitive tension), it is very difficult to reinvigorate it - perhaps even impossible in the short term in many cases.

Too often, processes are hurried and critical information is prepared too late or excluded entirely. While the seller may see this as something that any bidder needs to overcome, often the lack of detailed data can lead to such a significant breakdown in confidence that a bidder simply won’t continue in the process. june 2016 57

FINANCE

Redefining the DNA of the CFO

A

ustralian and New Zealand CFOs are increasingly being asked to take on more strategic and operational responsibilities, yet many feel that neither they nor their teams currently possess the capabilities this new role will demand, according to the findings of EY’s new global CFO study.

EY’s The DNA of the CFO 2016 report, based on a survey of nearly 800 finance leaders worldwide, found that digital innovation, the proliferation of data, new regulations and increasingly demanding stakeholders are combining to disrupt and reshape the CFO role.

80% of CFOs surveyed across Australia and New Zealand expect they will be asked to take on wider operational leadership roles, beyond finance, in the coming years – significantly higher than the global average of 64%. This trend towards increased responsibilities is already evident, with 58% of local CFOs surveyed spending more time defining and developing the overall strategy for their company than they did five years ago.

In this environment, it is concerning that 62% of local CFOs say the current finance function does not have the right mix of capabilities to meet future strategic priorities (compared to 45% globally).

Donal Graham, EY Finance Management Consulting Leader for Oceania, said finance staff need to be given access to much broader experience and greater development opportunities to help address this skills gap.

“In EY’s first The DNA of the 58 june 2016

CFO study, conducted in 2010, we painted a picture of a role that had already broadened to encompass not only traditional financial skills, but also more strategic and market-facing responsibilities. Six years on, our latest CFO research study has found that change has accelerated even more rapidly than many would have thought possible,” Mr Graham said.

“While this presents an opportunity for CFOs to really shape the contribution they make to the business, it also means that those who don’t proactively redefine their role may be at risk of failing to provide the financial and strategic leadership their organisation needs.”

“Australian and New Zealand organisations should be considering more investment and sophistication in the managing of finance talent and matching staff to the right opportunities to help equip them for more demanding and complex roles.”

Access to more data than ever before More than half (54%) of local CFOs surveyed said they are now spending more time providing analysis, such as data-driven analytics and strategic risk assessments, to support the CEO and senior leadership team.

“Finance chiefs are being required to evaluate their organisation’s investment in digital, challenging them to find new metrics to measure business cases and return on investment,” Mr Graham said.

“As they upgrade technology and move to cloud-based systems, finance departments have access to more data than ever before. However, it seems many local finance teams may not yet be particularly well-equipped to interpret this data and draw out insights to help truly inform strategic decisions.”

“In fact, 54% of Oceania CFOs admit they need to build their own understanding of digital, smart technologies and sophisticated data analytics. So this is clearly an area that requires further focus.”

The disruption of the CFO’s DNA “Pinpointing exactly what makes a successful finance leader is becoming increasingly challenging as the role continues to evolve, but it’s fair to say the traditional chartered accounting career development path is insufficient to equip CFOs for the new challenges they are facing,” Mr Graham said.

Risk management is key More than anywhere else in the world, Oceania CFO’s believe risk management needs to be more of a priority, with two-thirds (66%) saying this will be a critical finance capability in the future – compared to a global average of 57%.

“To some extent, local CFOs are acknowledging they need to catch up.

To date, Australia and New Zealand haven’t been subject to the same level of scrutiny around regulation and risk management as many other parts of the world – particularly the US, where the financial crisis placed an intense focus

on risk management,” Mr Graham said.

“However, local CFOs are starting to acknowledge that risk management needs to go beyond mere compliance and integrate more fully with the overall business strategy.”

“New corporate management technologies are enabling more sophisticated stress testing of business plans and associated risk weighting.

CFOs need to be able to leverage those tools to monitor assumptions in the strategic plan, and be ready to pivot the business strategy if the assumptions no longer hold.”

“In fact, the survey found a marked difference between the career paths of CFOs globally and those in Oceania. Only 40% of CFOs surveyed globally had a professional accounting qualification. This is in stark comparison to Australia and New Zealand, where the vast majority (88%) hold a professional accounting qualification. In contrast, global CFOs were more than twice as likely as Oceania CFOs to have MBAs.” “The business environment is more complex, interconnected and unpredictable than ever. Digitisation, data, stakeholder scrutiny and risk volatility are changing the rules of the game and CFOs, like all leaders, need to adapt to this increasing complexity, focusing on the attributes and skills that their companies will need to succeed in the future,” Mr Graham said.

“Finance leaders should be taking pre-emptive steps to future-proof their role and expand the finance functions capabilities, or run the risk of being marginalised from the senior decisionmaking circle. The most successful CFOs will be those who can proactively shape their role in response to the major forces transforming the business environment.”

How disruptive forces are changing the role of the CFO 80% of Australian and New Zealand CFOs expect to take on more strategic responsibilities Half of local CFOs say they need to build their digital understanding Traditional career paths are changing, with only 40% of CFOs globally being qualified accountants

june 2016 59

GOING GLOBAL

FuelLing Increased Electricity Production in the Emerging Economies of Asia

By Paul Baruya, Supply Transport and Market Analyst, IEA Clean Coal Centre -for the World Coal Association

I

n the wake of COP21, as the world focuses on climate change mitigation, it can be easy to forget other important energy-sector considerations. For example, the emerging economies in Asia are eager to shake off the currency crisis of 1997 and build a robust and prosperous economic region. However, driving this growth requires more energy. There are many options for energy, and they will all play a role, but coal power is expected to be the principal contributor to increasing electricity production in many countries growing their electricity capacity.

According to the International Energy Agency (IEA), Asia’s energy demand is expected to grow by 80% between 2013 and 2035, driven by a tripling of the continent’s economy and a 25% rise in population. More investment in generation, transmission, and distribution is required.

Aside from the 150 GW of new coal capacity already under construction in India and China, coalfired capacity in Southeast Asia—in the Association of Southeast Asian Nations (ASEAN)—

60 june 2016

will double between 2011 and 2020, to 80 GW, and then double again from 2020 to 2035, rising to 160 GW. Furthermore, Asia is embracing the new paradigm of state-of-the-art high-efficiency, low-emissions (HELE) technologies, capable of burning coal with far less NOx, SOx, particulate matter, mercury, and CO2 emissions.

ESTIMATING POWER COSTS Poverty is widespread among the nonOECD nations of Asia: 130 million people have no access to electricity in Southeast Asia, nor do 240 million in India, and although access in China

is nearly complete, up to 200 million remain in poverty. Increasing capacity while maintaining affordable electricity is critical to individuals as well as to industry.

While renewables, nuclear, and oil are all used for power in the region, new capacity is largely based on renewables, coal, and natural gas. Thus, coal and natural gas are largely in competition for most baseload and load-following power generation throughout emerging Asia.

In 2015, the IEA Clean Coal Centre researched the cost of coal and natural gas power compared in different regions in Asia. By estimating the levelised cost of electricity (LCOE) for coal and combined-cycle gas turbines (CCGT), it was possible to determine which fuel is most likely to win the race to provide new capacity in Asian power markets.

This article highlights the key findings from that study.

ESTIMATING ACTUAL COSTS Fuel costs are one of the most important considerations when assessing power station economics. Historically, the price of coal is much lower than gas, even after adjusting for differences in energy content. For example, the average cost of natural gas in China in 2013 ranged between US$500 and US$700 per tonne of oil equivalent (toe), compared

to coal, which was just US$160/toe. In ASEAN countries such as Indonesia, Malaysia, and Vietnam, however, domestic pipeline natural gas was less expensive than the average price of coal.

In addition to fuel costs, the LCOE cost per kilowatt hour is also determined by capital costs, which are impacted by the generating output of various plants.

Baseload plants such as coal, CCGT, nuclear, and geothermal generally recoup their higher capital costs much more quickly because they operate more hours per year.

Large gas-fired CCGT plants are quick to build, taking only two years to construct in Asia, compared to four years for a coal plant. The cost of capital expenditure for CCGT plants is around half that of coal on a per kW capacity basis, while in China and India some coal and gas projects cost almost the same (at about US$500–600/kW).

CHINA China is the world’s largest coal market, consuming 3900 Mt in 2014. LCOE analysis suggest that electricity generated via CCGT is twice as expensive as coal in China, almost entirely due to higher fuel costs. While natural gas prices can vary, and can be as low as US$9/ MMBtu for domestic gas, the cost of imported gas in 2013 was 3.5 times more expensive than coal on a per unit of energy basis. The prevailing gas price used was US$9–14/MMBtu, and would need to drop to about US$3/MMBtu to compete with a supercritical coalfired power plant, and even lower for more advanced coal-based plants. Lower gas prices in the future are possible in China, but such price levels will not provide an economic incentive to develop sustainable and profitable supplies from LNG and unconventional sources such as shale/tight gas.

Despite the favourable economics, coal still faces some challenges in China.

Three major zones, including Beijing and Shanghai, have moratoria on coal-fired plants in an effort to improve air quality.

In such locations, natural gas plants dominate the power-generating fleet.

Yet, China’s emission standards for coal plants are so stringent, a modern coal plant will be cleaner than any built in Europe—so metropolitan air quality would not be substantially affected by coal power, but rather by industrial facilities, municipal and residential boilers, and transportation. Pledges to reduce the role of coal in the power sector will slow growth, but considering the huge existing capacity and plants under construction today, it is unlikely that China’s reliance on coal-fired power will end soon.

INDIA: LEADING NEW GROWTH IN ASIA India faces severe power shortages on a daily basis due to insufficient coal and gas supplies, made worse by large losses in the grid. Like China, India’s power generation is dominated by coal. By 2035, coal-fired power plant capacity could approach 900 GW if the country can overcome its various investment and environmental challenges. The nation’s natural gas reserves are offshore and production is in decline due to the maturity of the fields.

Gas prices in India vary depending on whether the gas is domestic or imported, and whether the supplier is state owned or not. India is the fourth largest importer of LNG, although LNG prices remain high (at least three times higher than that of coal on an energy basis).

India’s coal reserves are sited in the eastern half of the country; in 2013 production reached 600 Mt, while net imports from Australia and elsewhere grew to about 100 Mt/yr. Imported coal

is priced at world levels while domestic coal is priced on a cost-plus basis, so prices are allowed to increase modestly with production costs. Coal remains relatively inexpensive (US$72/tonne at 2013 prices), but the coal production industry requires modernisation and the rising need for coal washing of India’s low-rank coal will increase the cost in the future. Similarly, gas prices in the past have been low (US$4/MMBtu for domestic gas), but market reforms will lead to rising fuel prices across the board to attract private-sector investment to develop new fields and LNG import terminals with costs closer to US$14/ MMBtu. Unsurprisingly, analysis of LCOE showed that gas-fired power was marginally more expensive than coal in India, although the difference was not as stark as in the estimates for China.

However, the lack of availability of natural gas, rather than costs, is probably the chief obstacle to gas power, and for this reason natural gas is unlikely to displace expansion of coal-fired power to any great extent.

In essence, looking at LCOE, energy security, and current trends for the power fleet in emerging Asia showed that modern coal power was competitive, even against the high efficiencies offered by CCGT. In some countries gas was, and still is, cheaper; yet paradoxically official strategies suggest coal power is more attractive for future developments, often due to limited natural gas reserves and the expectation that imported LNG will be necessary to fuel new power plants. For the long term, there simply is not enough inexpensive gas in Asia to fuel the rapidly growing demand, and security of supply of future energy sources is taken seriously in Asia. Thus, coal will be the foundation of growth for baseload and load-following power generation in some of the world’s fastest growing markets.

june 2016 61

OPINION

What awaits after the mining boom?

D

uring the current election campaign a frequent refrain from both sides of politics has been the importance of managing the transition from the ‘mining investment boom’ to a more diverse economy.

The implication that some have drawn from this narrative is that the mining sector’s contribution to the national economy has shrunk permanently and that something new is required to plug the gap. This is misleading.

The reality is that when we ponder what will come after the mining boom the simple answer is a much larger mining industry. The capital stock of the industry has grown nearly three-fold over the last decade. That is a lasting legacy for the national economy. As respected economist Henry Ergas has noted, the mining sector’s share of Australia’s capital stock has grown from an average of 5.3% in the years immediately preceding the boom to 12.6% today.

In short, the engine of the national economy is larger and much of the extra torque is being provided by the mining industry. It is a dividend that is already delivering economic growth to the national economy.

This contribution was highlighted by a turnaround in Australia’s productivity performance. Over the last decade productivity in the national economy stalled and even fell in many sectors, including the mining sector. That was due, at least in part, to the massive investment in equipment and people to meet the surging demand led by China’s unexpectedly rapid industrialisation.

But the focus is now on ‘sweating these assets’. Costs have been cut through a relentless search for savings. BHP Billiton chief executive, Andrew Mackenzie has 62 june 2016

By Brendan Pearson, Chief Executive, Minerals Council of Australia

estimated that $AUD5.55 billion of productivity gains for the world’s biggest mining company was achieved by “more than 4000 good ideas by employees at every level of the organisation, innovative thinking on everything from drilling to drones”.

The result is that productivity in the mining sector is growing again, at a robust rate. Productivity Commission data show labour productivity grew by 22.4% in 2014-15. At the same time, the industry’s multifactor productivity (MFP) increased by 5.5%, seven times more rapidly than in the economy’s market sector as a whole. According to the Australian Bureau of Statistics, this is the strongest growth for mining sector MFP since 2000-01 and the first positive MFP growth since 2006-07.

The broader economy is benefiting from this continuing strength in the mining sector. In the March quarter 2016, mining production was a significant contributor to Australia’s economic growth. In that quarter, exports (which grew by 4.4%) were the major driver of the March quarter growth rate of 1.1%, contributing 1.0 percentage point to growth.

Increasing exports were in turn driven by mining, which contributed 0.5 percentage points to GDP growth.

Mining production rose by 6.2% from the

December quarter 2015 and 11.2% in the year to March 2016.

The Australian Bureau of Statistics also notes that Australia’s largest export, iron ore, enjoyed its 15th consecutive quarter of growth. Iron ore mining increased 7.6% in the March quarter and 14.9% in the year to March 2016.

According to the latest Resources and Energy Quarterly from the Department of Industry, Innovation and Science, Australia’s iron ore and gold exports are forecast to increase 8% and 9% respectively in 2015-16, supported by a rapid increase in production in these commodities.

That means iron ore export earnings are forecast to reach $72 billion (in 2015–16 dollar terms) by 2020–21.

This represents a 29% increase in export earnings relative to 2014–15.

But it’s not just iron ore that underpins the Australian economy. Coal exports this year continue to grow in both volume and export value, contributing over $38 billion to the national economy. It is a major employer in rural and regional areas and invests heavily in local businesses, infrastructure and jobs.

These data demonstrate that the mining sector is making efficient use of the large capital stock built up during the investment phase of the mining boom.

EXPLORING OPPORTUNITIES FOR YOUR BUSINESS Quality magazine for national and international industry and business news, keeping you wellinformed on the latest policy updates and project news in the mining, oil and gas sector.

nationalresourcesreview.com.au - info@sagemedia.com.au

Opinion

Growing Aboriginal participation in the resources industry T

he recent Reconciliation Week celebrations coincided with the release of the Chamber of Minerals and Energy’s latest publication, highlighting Aboriginal employment, community partnerships and business initiatives in the resources sector.

Growing Aboriginal Participation is the third in a series of publications from CME highlighting the important contribution Aboriginal people make to the industry.

CME member companies and community organisations shared their stories to highlight the successful strategies and programs operating in the resources sector to grow the capacity of Aboriginal people seeking employment in the sector and to assist Aboriginal business to provide the necessary services to industry.

Some of the examples included in the publication include Woodside’s indigenous scholarship program which is run in conjunction with St Catherine’s College in Perth. The program, which began in 2014, now supports 20 out of 55 students currently enrolled in the college’s indigenous access program, known as Dandjoo Darbalung.

BHP Billiton Iron Ore’s Kworp Kooling Mining Traineeship program is also featured.

The Kworp Kooling program was developed

after the company identified a gap in the required skills and experience of Aboriginal people seeking jobs in the mining industry. It provides nationally accredited training to help people without experience become skilled mining operators.

These initiatives form part of resources companies’ broader strategies to ensure Aboriginal participation in the sector continues to grow.

The 2015 CME Diversity Survey showed the participation rate of Aboriginal people in the resources sector was 5.5%, up from 4.2% in 2013, a proud achievement by the sector which continues to be the biggest employer of Aboriginal workers in Western Australia.

With an excellent record in training and employing Aboriginal people, the resource sector also significantly utilises Aboriginal businesses.

From civil construction and environmental management companies to coffee carts, Aboriginal businesses are providing the goods and services that help drive the sector.

It is interesting to note that despite the number of jobs in the sector declining as the workforce transitions from construction to operational roles, the proportion of Aboriginal

Subscribe go to www.nationalresourcesreview.com.au

64 june 2016

people working in resources has grown.

This is just another way which demonstrates the industry’s positive commitment to Aboriginal people and communities.

With a diversity of operations across Western Australia, the resources industry recognises the value of working with communities to develop mutually beneficial, sustainable relationships.

Growing Aboriginal Participation has been developed with the guidance of the CME Aboriginal Working Group.

Respected Noongar elder and 2015 Western Australian of the Year, Dr Robert Isaacs provided the foreword and challenged other industries to take the approach of the resources industry.

“There is a great foundation to build on to ensure more Aboriginal people and Aboriginal businesses can benefit from the opportunities available in the resources sector,” Dr Isaacs said.

Growing Aboriginal Participation is available to download at www.cmewa.com Reg Howard-Smith Chief Executive The Chamber of Minerals and Energy of Western Australia

Greater insight on site

to National Resources Review

Drugs & Alcohol: Is your workplace at risk?

Medvet can help you implement a complete drug and alcohol program incorporating: • Policy Development: A clear, comprehensive, and enforceable policy to meet your obligations and the challenges of site safety • Training & Education: Educating your workforce on the impacts and implications of unsafe drug & alcohol use on construction sites • On-site & Laboratory Testing: NATA-accredited, reliable, and quality drug & alcohol testing services, on-site where and when you need

Medvet is the preferred supplier for leaders in mining, oil & gas, construction, and utilities – safety services you can rely on.

Medvet is a Registered Training Organisation (40379) and NATA accredited (Section 2 AS 4760 & AS/NZS 4308 including Appendix A) drug and alcohol testing company using Australian Standard compliant urine and oral fluid drug test devices and assessed and certified Collectors nationally.

AU801-QC

Safety Certified AU801-QC-SC

AS 4801:2001

ISO 9001:2008

Quality Certified

Contact Medvet for a Solution

1800 633 838

medvet.com.au