Consulting - the mining industry after the GFC

By John Buffington, general manager Australasia of Runge

An influx of foreign capital into the Australian mining sector investment has increased demand for due diligence and risk management type services. We are increasingly seeing the need to assist many non-Australian based customers to both successfully invest in the Australian mining sector and manage their investments.
Generally, the business outlook in 2010 is more buoyant and customers are now more focussed on moving forward rather than the holding pattern we saw adopted for a fair part of 2009. With improving commodity prices, industry sentiment is now picking up. The increase of feasibility study and due diligence work is evidence of this. As mining companies regain their confidence and start to undertake expansion projects, they are seeking systems and processes that assist with standardisation and control over their operations. Because the direction of the world economy continues to be uncertain in this market, the ability to assess, understand and react promptly to changes is a key focus for our customers going forward.
Another trend we are witnessing is that customers are recognising the need to focus on efficiencies across the overall business planning process where a collaborative workforce extracts more value from its mineral, human and capital resources. Having tools and processes in place, which capture intellectual property in mine business planning processes, is therefore essential.
In addition, there exists an environment with a gradually increasing level of capital raising and merger and acquisition activity where Due Diligence, Independent Technical Reviews and Competent Persons reports are an ongoing requirement.
From another aspect, by 2011 all operating and planned coal mines in Australia must report their fugitive greenhouse gas emissions from coal mining. Depending on the price attached to carbon, the coal producers could be liable for millions of dollars in carbon tax unless they reduce emissions through capture and utilisation. Whichever path the coal producers take, each requires an accurate assessment and auditing method from virgin coal exploration to the point of sale. Of the 81 operating coal mines in Australia, 50 are open cut mines, which to date have not had to test for gas. Now these open cut mines must test both the coal and host rock to a level of detail that demonstrates knowledge of the gas-in-place for annual emissions forecasting to the government.
In order to help mining organisations overcome these challenges and gain maximum efficiencies, we have been advising them on exploration; whether to progress with development; what type of production scenarios and tools are needed; gas composition testing; reservoir modelling; comparing investment in different resources; as well as helping to select the right equipment for running the operations. So the variety of work serves as a testament to resurgence in the market.
Be it the upturn or downturn of the commodity cycle, two of the fundamental issues for running a mining operation, productivity and cost containment, continue to provide us with steady demand for our services and products. The need for strong business forecasting tools combined with an ongoing shortage of mining professionals creates a solid market for both business planning systems and advisory capabilities.