Foundations first: driving growth in a challenging economic environment

Marcelo Matos, Chief Executive Officer and Director, Stanmore Resources

The mining sector, and in particular metallurgical coal producers, have experienced increasingly dynamic conditions in recent years, with global events creating economic uncertainty and volatility. Record high commodity prices gradually normalised through 2023 – 2024 amidst pressure on operating costs, as the post COVID-19 inflationary environment and Queensland royalty changes saw the mining sector battle cost inflation of approximately 50% over the two years to June 2023. There have also been shifts in risk, with the top concerns for 2024 being climate change, commodity price and social licence to operate.

How can organisations weather these dynamic conditions? By returning to foundational operating principles. This has proven an effective strategy for Stanmore Resources for fostering growth and sustainability.

So, what are our foundational operating principles?

• Simplicity and practicality

• Agility and flexibility

• Collaboration and continuous improvement

• Employee empowerment

Simplicity and practicality

There is enduring value in simplicity of operations — avoiding complexity for complexity’s sake. Focusing on practical, actionable solutions can deliver reduced costs, improved focus on core objectives and easier adaptability to external pressures.

With practical, streamlined processes and decentralisation, we have achieved a nimbler operating model, and this approach has helped us to execute a large capital investment program, including key projects such as our Mulgrave Resource Area 2C (MRA2C) Project at the South Walker Creek (SWC) mine, which is tracking well ahead of schedule and under budget.

MRA2C has been a significant accomplishment for Stanmore, with the 8.6km creek diversion and 6.5km of levee banks requiring more than 6.5 million cubic metres of earthworks over the last 14 months. Once complete, the project will deliver access to 58Mt of high quality run-of-mine coal at low strip ratios for an extended period, solidifying South Walker Creek’s first-class operating status in the Bowen Basin.

Agility and flexibility

Not only does having a simple and practical base achieve efficiencies, but it also enables organisations to pivot quickly by avoiding the delays and inefficiencies of overly complex systems. Being agile and flexible allows you to proactively adapt to change and leverage innovation for success. It delivers an improved ability to seize new opportunities, helps mitigate risks and enhances competitiveness in fast-changing environments.

Stanmore has managed to realise the benefits of agility and flexibility by leveraging proven technologies and innovations to enhance operations through projects such as the recently completed dragline upgrade at SWC to convert the rotating electrical components to Alternating Current (AC). The fleet of two draglines at SWC is responsible for uncovering approximately two thirds of all metallurgical coal mined and hence, is critical to the overall success of the operation.

Having recognised the significant benefits of AC conversion in the other dragline, Stanmore promptly identified the need to have a plan to convert the second dragline, which would mark SWC as the first mining operation in Australia to have a fully converted AC dragline fleet. The conversion program was completed in just 74 days — testament to the commitment and agility of our dedicated team. This upgrade solidifies long-term reliability, delivers improved production and safety, and lowers emissions. It also supports our ambitious expansion at SWC where we are aiming to increase annual production by over 10% to seven million tonnes within a year.

Collaboration and continuous improvement

We view collaboration and continuous improvement as ongoing pursuits rather than one-time initiatives. It has been our experience that these practices lead to shared knowledge, cross-functional innovation, and efficiencies that help us do more with less.

For example, collaboration between our SWC and Poitrel operations facilitated swift reinstatement of the SWC coal handling, processing and preparation plant (CHPP) when critical spares were sourced from Poitrel following lightning damage.

During 2022 and 2023, Poitrel sought year-on-year improvements on truck and excavator performance across site. This was achieved by enabling small incremental improvements collaboratively driven by multiple departments. From refuelling times to shift change, this approach proved itself successful and has ultimately culminated in a reduction in operational delays and production records in 2024.

In September 2024, Stanmore purchased from industry peers the rights to explore, study and then apply for a future mining lease to mine the open-cut Rangal measures on a tenement immediately adjacent to Stanmore’s existing Isaac Downs mining area (the Isaac Downs Extension project).

Subject to mining approvals, the addition of this tenement to the existing project area is expected to improve economics and extend the life of the overall operations beyond the currently mined Isaac Downs pits. The combined resources comprising the Isaac Downs Extension project provide a high-quality metallurgical coal and capital-efficient project that aims to utilise Stanmore’s existing CHPP capacity, dragline and associated infrastructure at the Isaac Plains Complex for years to come.

Employee empowerment

The success of an organisation is fundamentally reliant on its employees because they are the driving force behind innovation, productivity and stakeholder satisfaction. Empowered employees — those who feel supported, valued and equipped with the right tools — bring their best to work every day, fostering a culture of collaboration, creativity and accountability. When your employees are motivated and aligned with your mission, they not only deliver exceptional results but also cultivate stronger relationships, ensuring the organisation thrives in a competitive and ever-changing environment.

Empowering our employees is part of Stanmore’s DNA; it’s embedded in all areas of our operations. We utilise a site-centric operating model to drive transparency and accountability, granting our employees autonomy and valuing their insights.

An example of this is the work of our team at the SWC CHPP who reduced downtime and coal loss on the back of unplanned shutdowns by changing the way they bring water back into the plant. This is one of many examples of empowering our teams on the ground to take action and implement solutions to improve on issues that directly impact their area of work. This approach drove incremental and sustainable improvements, allowing our SWC operation to achieve its all-time production record in 2023.

A key area where we have seen significant benefit across our organisation from our empowerment approach is in health and safety, which is the most critical focus for us all in the mining sector.

At Stanmore, there is mutual ownership and accountability for health and safety outcomes. Our Leading Safety Program is guiding a shift from a compliance-led culture to one where our people feel psychologically safe and empowered to take action to ensure their safety and that of their workmates. As part of the program our leaders engage directly with employees and contractors to elevate health and safety into the forefront of our thought processes when planning and completing tasks across our operations. We have further embedded a safety focus by including health and safety targets in our short-term incentive program.

Proven outcomes of organisational growth and success

Returning to foundational principles is not just a response to current challenges; it is part of a forward-thinking strategy that ensures longevity and resilience. Stanmore’s results are indicative of this. In spite of operational impacts from adverse wet weather events in the first quarter of 2024, we recovered well and met Guidance. We ended September 2024 with strong saleable production supported by numerous production records, as well as healthy levels of product and ROM stockpiles across our portfolio.

This demonstrates that despite economic uncertainty, organisations with the right tools can thrive with solid foundational principles.