Business Review Australia & Asia - August 2016

Spotlight Africa / Singapore

August 2016

w w w.businessreviewasia.com | w w w.businessreviewaustralia.com

What are

China’s biggest companies ?

INDEPENDENCE GROUP Peter Bradford, talks diversification and investment for a bright future

Special reports: NSW Trains, Ergon Energy and QBCC

EDITORS COMMENT

HELLO & WELCOME to the August issue of Business Review Australia & Asia In June I was privileged to visit Singapore to explore how the small but mighty Asian Tiger economy of Singapore is working to build and deepen its trade links with a number of African countries. My article gives an informative overview of the current business relationship, as well as opportunities for future collaboration. Expect to see insight from Singaporean Government Ministers, as well as leaders from a range of both African and Singaporean companies.

We explore how to get the best return on your IT investment and also take a look at China’s ten largest companies.

Enjoy the read!

Nye Longman Editor Nye.Longman@bizclikmedia.com

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CONTENTS

F E AT U R E S

PROFILE

06

Increasing connectivity

30

Independence Group (Mining)

TECHNOLOGY

14

Independe

IT investments

LIST

00 22

China’s biggest Headline for companies the article

76

NSW Trains (Transport for NSW) (Supply Chain)

C O M PA N Y PROFILES MINING 30 Independence Group 54 Independence Group (Nova Project)

104

AXA Singapore (Technology)

SUPPLY CHAIN 76 NSW Trains (Transport for NSW) 92 DB Schenker

TECHNOLOGY 104 AXA Singapore

ENERGY

54

116 Solgen Energy Group 130 Ergon Energy

ence Group Nova Project

92

DB Schenker (Supply Chain)

130

Ergon Energy (Energy)

CONSTRUCTION 144 Queensland Building and Construction Commission 156 Total Construction

SPECIAL REPORT

Increasing

connectivity W r i t t e n b y : N Y E LO N G M A N

SPECIAL REPORT

African Business Review explores business links between Singapore and Africa, and speaks to a number of ministers and business leaders WHILE AFRICAN COUNTRIES only account for around 1.5 percent of Singapore’s total trade, the citystate is keen to ramp up its business with the continent. Businesspeople and ministers from both countries are realising more than ever that there are a number of opportunities to do business and develop both large and small projects. Following a meeting exploring trade links and opportunities between Africa and Singapore, African Business Review explores the current landscape, as well as what the future may hold.

Singapore: a model for African nations?

If you ever get the chance to take in the view from the restaurant atop Singapore’s historic city hall, you’ll be presented with an abridged history of the island nation. Emerging 8

August 2016

onto the roof from the country’s National Gallery, you’ll inevitably notice the sprawl of the Victorian cricket pitch and, beyond, the preeminent Marina Bay Sands – the world’s most expensive standalone casino. Pan right and you’ll see an impressive skyline where the towers of multinational companies dwarf the modest clubhouse below.

The story of Singapore’s rise from colonial trading outpost to first world Asian Tiger economy is well known and is told and re-told by everyone from cab drivers to Government Ministers. Dr Mohamad Maliki Osman, Senior Minister for Defence and Foreign Affairs says: “That’s the perspective of Singapore – we are friends with everyone and continue to build relationships.

“We have had a short period - by many countries’ standards – as far

INCREASING CONNECTIVITY

“Solutions that take into account the socioeconomic and political situation on the ground will ultimately be the most effective – not to mention the most profitable”

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SPECIAL REPORT

of our life span. Less than 50 years of independence. But 50 years of intense experience, starting from a low base, we would like to share.”

Singapore has developed solutions to issues that African nations have been facing for decades – housing, water, infrastructure and governance. There is an increasing number of Singaporean companies on the African continent working with both governments and local partners in order to begin solving these complex issues.

Much of the continent’s needs are similar those facing Singapore 50 years ago, but solutions that take into account the socioeconomic and political situation on the ground will ultimately be the most effective – not to mention the most profitable.

Dr Koh Poh Koon, Minister of State for National Development explains: “Some countries want to build high-tech industrial parks because they’re captured by the notion of high technology, but you’ve got to ask yourself if you’ve got the workforce for that. You cannot go on the same bandwagon as someone else in a different phase of development.”

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August 2016

Singapore’s top African trading partners 1) Liberia 2) South Africa 3) Egypt 4) Angola 5) Togo Total export value: s$8 billion Total import value: s$3 billion

African companies in Singapore The World Economic Forum’s Global Competitiveness Report listed Singapore as the world’s second most competitive country.

Furthermore, the World Bank also named the country as the easiest place in the world to do business for 2015 - INSEAD’S Global Innovation Index 2015 also ranked it as the most innovative country in Asia. But a company choosing to headquarter

INCREASING CONNECTIVITY

Top 5 Singaporean exports to Africa

Top 5 African exports to Singapore

1) Petroleum Oils 2) Shipping and Floating Structures 3) Electronic Integrated Circuits and Microassembles 4) Plant and Equipment 5) T elecommunication eqip.

1) Petroleum Oils 2) Electronic Integrated Circuits & Microassembles 3) Cocoa 4) Fruits and Nuts 5) Pearls and precious stones

Total value: s$8.4 billion (2015)

Total value: s$2.6 billion (2015)

there gains more than the business environment; Singapore’s location positions companies to trade and operate with the economic powerhouses of India and China, not to mention both the growing and established markets in Eastern Asia.

One example of a business recently engaged in this process is Adcorp – one of Africa’s largest workforce management companies.

Two years ago, the company

supported its regional expansion plans by headquartering all of its non-South Africa activities in Singapore and is looking to increase the depth of this presence.

Executive Director and CEO for International, Amitava Guharoy, says: “There are lots of advantages.

Singapore is now ranked third as a leading financial centre in the world. There’s a very strong community of people financing 11

SPECIAL REPORT

Africa-Singapore Business Forum 24-25 August 2016

international expansions – one of the first impressions was the ability to raise finance.

“The Government and its entities have been very supportive of our plans. We see this as a long term exercise – not just for short term benefits. There’s a strong business proposition to have our HQ here.

When I told my group CEO when he asked me how long it took to set up a corporate entity, I told him three days would be considered a long time - he nearly fell off his chair!”

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Since 2010, IE Singapore has been hosting the Africa Singapore Business Forum (ASBF) as a unique platform to further develop investment, trade and thought exchange between Africa and Asia.

ASBF 2016 will tackle critical issues and will highlight opportunities for the strategic growth of both regions through presentations, panel discussions, and networking. www.iesingapore.gov.sg/asbf

INCREASING CONNECTIVITY

Singaporean companies in Africa Africa presents the last investment frontier for many companies across the world. With expertise spanning oil and gas, logistics and manufacturing, as well as clean urban and infrastructure planning, Singaporean companies are naturally well-placed to find a range of opportunities on the continent.

While some African countries compare relatively favourably with more developed Western economies, a number of logistics challenges are present and are set to continue until infrastructure projects are delivered and political situations stabilise. None more pressing is the continent’s infrastructure gap which could cost as much as $90 billion a year for the next decade in order to address. Other industries face similar long term challenges but innovative solutions are afoot to combat the doom and gloom.

Ascent Solutions, for example, specialises in producing IoT technology for the logistics industry and for cargo security tracking. Its iSPOT™ solution provides continuous location, security and sensor-based tracking that not only helps to prevent cargo theft, but also reduces customs administration time and costs.

There are also cases where the growth of African economies is creating new areas of demand that Singapore-based companies are keen to fulfil. Recognising Africa’s growing affluent class, Star Publishing has found a new market in South Africa’s Free State, where it is delivering a range of hard copy and digital classroom materials to private sector schools. Singapore’s Institute for Technical Education is working on a number of vocational education projects across the continent.

The conditions in parts of Africa now and Singapore 50 years ago are clearly different, but the comparison does highlight what still must be done. Upholding the rule of law and developing a solid regulatory and governance body will go a long way to assure businesses that their assets and investments will be safe – a point Osman is also keen to stress. The value of a local presence supported, where possible, by local partners, is key. Given the sound business climate in Singapore, the fact that a number of companies from the nation state have chosen Africa as a place to do business should be an inspiration to others across the world.

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TECHNOLOGY

HOW TO GET

A GOOD RETURN ON YOUR IT INVESTMENT

Citrix ANZ director of technical services Safi Obeidullah shares his strategies to ensure your next investment is able to quickly deliver returns WRI T TEN BY: SA FI OBEIDULL A H

TECHNOLOGY

IMMEDIACY IS THE key and the bane of modern business life.

As IT has played an increasingly influential role within business, we’ve come to expect associated services be available 24-7 regardless of our location and the device we are using.

The benefits of this new world of work have been much discussed — from improved productivity to increased staff satisfaction — and we’re seeing organisations embrace 16 August 2016

new technologies, such as cloud platforms and enterprise mobility applications, enabling it.

Yet, a recent report from Citrix and Tech Research Asia suggests the benefits of business investments in cloud, mobility, and security, are yet to be fully realised. In fact, when asked about their effectiveness in supporting the business strategy, only 50 per cent of respondents stated mobility was making a difference, 40 per cent

said the same for security, and only a quarter (27 per cent) believed they were reaping the complete advantages from cloud investments.

In a world where we expect immediate results, this situation has the potential to create many frustrations — especially when you consider the sizes of the investments being made.

To ensure your next investment in IT is able to rapidly deliver returns,

support the overall business strategy, and meet expectations, it’s critical you make a number of important considerations along the way:

HAVE A CLEAR ROADMAP Careful and considered planning is the foundation upon which the most successful IT deployments are built. Similarly, IT investments having the biggest impact are those aimed at overcoming existing 17

TECHNOLOGY

business challenges or enabling new capabilities, rather than simply adopting the latest solutions for the sake of it.

As such, at the outset of each new IT project, you should identify the objectives and plot out the path to achieving them. Be sure to involve your workforce in this phase to ensure the project proposed will satisfy their needs.

This approach provides a clear overview of what needs to be achieved 18 August 2016

and by when, helping keep the project on track, and effectively managing expectations around it. For smaller deployments this journey may take a handful of weeks, while for larger transformations it might span a number of years.

FUTURE-PROOF YOUR IT Being able to respond to change is fundamental to business success today, and the same principles apply during IT projects. As such,

BUSINESS REVIEW AUSTRALIA

select cloud technologies that can be quickly scaled and upgraded to accommodate evolving business needs and market changes.

As a result, you will not need to make wholesale and costly IT changes to capitalise on each and every opportunity coming to market, which could also impact employee productivity. Instead, you will benefit from being able to rapidly rollout new technologies in a cost-effective manner, allowing you to realise the rewards well ahead of those businesses slow to embrace change.

ENGAGE THE RIGHT PARTNERS When it comes to selecting a new IT solution, you have unprecedented choice. In addition to the product itself, businesses seek guidance and support enabling them to tackle the complex IT environments.

Therefore, the partners you engage to help navigate this new world of IT are more important than ever.

During your IT deployment, look to work with channel partners that are specialists in specific sectors — such as mobility, virtualisation, and 19

TECHNOLOGY

20 August 2016

BUSINESS REVIEW AUSTRALIA

networking — and which offer tailored solutions specifically designed to help businesses rapidly optimise their IT investments.

HAVE PATIENCE The initial business gains of your IT deployment might only be incremental at the outset. This is not a sign the platform has not worked, and nor is it a reason to immediately make another investment in a similar solution promising immediate results.

Technology is changing business, and we need to adapt to this new world as individuals too. Be sure that within your roadmap you account for this “bedding in” phase, as well as offering employees access to training and support helping them quickly get up to speed with the new offerings.

For many businesses, having the right technology in place is the difference between success and failure. As such, it’s alarming to learn the majority of organisations do not believe their IT investments are fully supporting company goals and strategies, meaning there is potentially a wealth of opportunities remaining untapped. This is bad news for all the

organisations involved, as well as their employees and customers.

There’s no doubt cloud and mobility are two important pillars upon which successful businesses of the future are going to be built. It’s therefore critical to follow the four simple steps outlined to ensure your next deployment fully supports the business goals and has the desired impact on your bottom line.

Safi Obeidullah, Citrix ANZ director of technical services 21

TOP 10

TOP 10

companies in China

W r i t t e n b y : A L I C E YO U N G

TOP 10

The Chinese economy has seen a phenomenal growth rate since its 1978 market reforms. In fact, the World Bank says that GDP growth has averaged nearly 10 percent every year, ‘the fastest sustained expansion by a major economy in history’, which has lifted over 800 million people out of poverty. Here, we take a look at the top 10 Chinese companies from Forbes’ 2015 round-up – unsurprisingly the list is dominated by the banking and financial services sector.

01 ICBC Industrial and Commercial Bank of China was founded in 1984 and, in 2005, was wholly restructured to a joint-stock limited company.

At the end of 2015, total assets of the bank amounted to RMB 22,209,780 million, up 7.8 percent on the previous year. Also in 2015, ICBC opened new branches in Saudi Arabia, Myanmar and Mexico, becoming the first Chinese bank with a footprint in these areas.

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August 2016

02 CHINA CONSTRUCTION BANK CCB consists of three principal business segments: corporate banking, personal banking and treasury operations. Headquartered in Beijing and founded in 1954, CCB is well known internationally, with a global network of branches in Hong Kong, Singapore, Frankfurt, Johannesburg, Cape Town, Tokyo, Osaka, Seoul, New York, Ho Chi Minh City, Sydney, Melbourne, Brisbane, Taipei, Luxembourg, Macau, Toronto, Paris, Amsterdam, Barcelona, Milan, London, Zurich and Dubai. At the end of 2015, the market value of the bank reached US$ 173.3 billion, ranking fifth among all listed banks in the world.

C O M PA N I E S I N C H I N A

03 AGRICULTURAL BANK OF CHINA

04 BANK OF CHINA

Formerly known as Agricultural Cooperative Bank, the Agricultural Bank of China (ABC) was established in 1951. Areas the bank operates in include investment banking, fund management, financial leasing and life insurance. At the end of 2014, the bank had 23,612 domestic branch outlets and eight overseas. Since 2015, ABC has been innovating in its support for big projects and key customers, with project financing including the south-to-north water diversion, a rural grid upgrade and Beijing’s new airport, which is the biggest airport construction project in the China’s civil aviation history.

From 1912 to 1949, the Bank of China served as the country’s central bank, international exchange bank and specialised international trade bank. After 1949, it became responsible for managing China’s foreign exchange operations and provided vital support to the nation’s foreign trade development and economic infrastructure by its offering of international trade settlement, overseas fund transfer and other non-trade foreign exchange services.

It is described as China’s most internationalised and diversified bank.

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TOP 10

05 PETROCHINA The first non-banking company to make it into Forbes’ top 10 is PetroChina, oil and gas producer and distributor, and one of the world’s largest oil companies. It is involved in exploration, development, production and marketing of crude oil and natural gas; as well as refining, transportation, storage and marketing of crude oil and oil products; the production and marketing of primary petrochemical products, derivative chemicals and other chemicals; transportation of natural gas, crude oil and refined oil, and marketing of natural gas. China National Petroleum Corporation (CNPC) is the sole sponsor and controlling shareholder of PetroChina.

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06 CHINA MOBILE The leading telecommunications services provider in Mainland China was set up in 1987 and has the world’s largest mobile network and the world’s largest mobile customer base with a reach of 826 million customers. At the end of 2015, the group had a total staff of 438,645.

C O M PA N I E S I N C H I N A

07 SINOPEC Sinopec Group is a state-owned energy company, set up in 1998.

As well as oil, coal and natural gas products, Sinopec has developed many innovations including the specialised lubricant applied in Shenzhou spaceship and in Chang’e-1 lunar satellite.

08 PING AN INSURANCE GROUP Ping An is a personal financial services group in China, which has recently focussed heavily on its online offering.

By the end 2015, Ping An’s online user base had grown to nearly 242 million users, up 75.9 percent compared with the beginning of the year.

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TOP 10

09 CHINA LIFE INSURANCE As the largest commercial insurance group in the country, China Life Insurance has been listed for nine consecutive years on the Fortune Global 500 list, moving up from 290 in 2003 to 113 in 2011. It is also the first insurance company triple-listed in New York, Hong Kong and Shanghai and has become the largest public life insurance company in the world in terms of market capitalisation.

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C O M PA N I E S I N C H I N A

10 BANK OF

COMMUNICATIONS Founded in 1908, Bank of Communications (BOCOM) is one of four oldest banks in China and one of the early note-issuing banks of China.

It has a nationwide and international network, with branches and outlets in developed regions, central cities and international financial centres.

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RIDING the cycles Written by John O’Hanlon Produced by Andy Turner

Independence Group’s strategy to develop a diverse portfolio

Peter Bradford CEO

INDEPENDENCE GROUP (IGO)

Independence Group’s strategy to develop a diverse portfolio of assets positions it well to ride out the inevitable fluctuations in world commodities markets

I

n another article we discussed with Peter Bradford, MD and CEO of Independence Group (IGO), the significance of the company’s newest asset, the world class, low cost Nova nickel mine which will come on stream later this year.

The ability to fund this important development, though, has derived largely from the strategy the company has apursued in the 14 years since its establishment and listing on the ASX in 2002.

The Tropicana phenomenon By the time of its IPO the company

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had secured a 12,500 square kilometre exploration tenement on what is now known as the Tropicana gold belt (though at the time it was not known for its gold potential), at the western edge of the Great Victoria Desert.

Subsequent exploration and development was undertaken by AngloGold Ashanti, which farmed in to the project in the same year, IGO retaining a 30 percent interest. AngloGold discovered the Tropicana deposit in 2005 and the partners gave mine development the go-ahead in 2010 based on a feasibility study

MINING

based on mining the Tropicana and Havana deposits, and treatment of 5.8 million tonnes per annum (mtpa) of ore to deliver average gold production of 330,000 to 350,000 ounces per

annum over a ten year mine life.

By 2012, gold resources in the deposit had grown to 7.89 million ounces, establishing Tropicana as fourth

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AUSTRALIA INTRODUCES A DIVERSIFIED MINING

Headquartered in Western Australia in a state-of-the-art workshop complex of 55,000m3 and with company owned branches throughout Australia.

Head Office Pinjarra Facility 54 Munday Avenue, Pinjarra WA 6208

Kalgoorlie Office Branch 48 Kakarra Road, Kalgoorlie WA 6430

Head Office: +61 8 9550 5800

SERVICES PROVIDER WITH A GLOBAL FOOTPRINT

From Automation in Africa to Emission Control Solutions in Europe and Electrical Installations in China, the common thread is Murray Engineering.

ELECTRICAL MECHANICAL FABRICATION

Mt Isa Office Branch 4 Engineering Road, Mount Isa QLD 4825

Email: sales@murrayengineering.com.au www.murrayengineering.com.au

CONTROL SYSTEMS EQUIPMENT HIRE & SALES

Newcastle Office Branch 431 Masonite Road, Heatherbrae NSW 2324

SUPPLIER PROFILE

Murray Engineering is one of the largest and most diversified mining services providers in Australia.

It is headquartered in Western Australia with branch locations throughout the country. Its products and services are used from the face to the factory above and below ground and exported to 5 continents of the world.

One of the foundations of its business is in Mechanical Maintenance. Full mobile machine rebuilds are undertaken where the machine is disassembled into its individual parts and then rebuilt to conform with the latest manufacturer’s specification often in as little as 6 weeks turnaround. To minimise not having the use of a production machine whilst undergoing a rebuild, Murray Engineering will hire a machine from its rental fleet to augment their clients’ production.

Long term site-based maintenance and repair contracts are undertaken for mobile machinery with KPI’s undertaken for the client so as to guarantee machine availability, machine operating cost and agreed maintenance manning.

Shane Dunn, Mechanical Manager for Murray Engineering explains: “We have the advantage of 26 years of maintenance data on one of the largest underground mining mobile machinery fleets in the world. Risk sharing is facilitated through having such an enormous pool of historical data”.

The Electrical Division assembles, installs and maintains a vast array of Electrical Components to suit mining applications and includes a range from electrical distribution panels to 60 tonne transportable switchrooms.

“With decades of experience with mining applications worldwide, we often tackle those applications which clients place in the too hard basket. St Barbara approached us to lower a single stage 1400 metre suspended HV cable so as not to disrupt production. Notwithstanding the forces associated with 26 tonnes of suspended cable, the job was completed on time and budget without incident” cites Craig Shales, Electrical Manager.

The diversity of services provides clients with a unique availability of single sourcing. A recent pump station project in Asia necessitated the installation of wireless communications between dewatering pumps and controllers which was automatically activated by face-mounted water level and temperature monitors. The pump controllers were housed in a fully enclosed fabricated station. All was completed in house by the Automation, Fabrication and Electrical divisions of Murray Engineering.

Murray Engineering continues to expand due to its worldwide scale and diversity of services.

MINING

Annual

$500 million revenue largest gold mine in Australia. First ore was sent to the crushing circuit in August 2013, first gold was poured on 26 September, ahead of schedule and on budget, and the processing plant successfully achieved its ramp-up target of 95 percent plant availability at a throughput rate of 5.8 mtpa within six months. For IGO, Tropicana has been, and continues to be a fun ride, says Bradford. “Once the startup and first production were behind us we started to unlock additional value in the project. One opportunity is ongoing exploration along the Tropicana belt for the next Tropicana, so watch this space because we think it may be there. Another is by “drilling at depth

beneath the existing Tropicana pits, most of which bottom out on the lack of drill information, where we expect to be able to significantly expand the known resources through this drilling.”

Additionally, there’s room to optimise production. Work to expand plant’s nameplate capacity from 5.8 mtpa to more than 7 mtpa is coming to its final stages, he says. “The joint venture partners recognised that major items of equipment like the crushers, the high pressure grinding rolls and the ball mills all had spare capacity, this allowed us to expand capacity by working through the bottlenecks in the materials handling of the crushing circuit and

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INDEPENDENCE GROUP (IGO)

slurry circuits, upgrading conveyors and pumps.� All that remains is to complete the additional capacity in the carbonin-leach circuit, to bring residence time back to design levels, so that recovery levels are maintained at the higher throughput rate.

Tropicana is remote and that has meant that, till now, some 1,500 road trains a year have

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MINING

been needed to fuel its plant and vehicles. To derisk delivery of fuel and decouple the risk of fluctuating oil prices, in mid-2014 the joint venture partners committed to a A$140 million gas project. The Eastern Goldfields Pipeline, constructed and operated

by APA Group was commissioned in February this year cutting the number of road train movements down to

less than 500. “Changing to gas will reduce operating costs over the life of the project,” says Bradford. “We are in the process of transitioning the power house from diesel operation to gas, and we expect to finish that work by mid-year.” The joint venture works on a simple basis, with IGO writing a monthly cheque for its 30 percent share of capital and operating

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Barminco is an international leader in mechanised hard rock underground mining, delivering world best standards and productivities.

A COMMITMENT TO BEST PRACTICE AND DELIVERY OF VALUE

• • • • • •

Over 25 years of experience and knowledge Safety records that exceed global benchmarks Service excellence and flexibility supported by a ‘can do’ attitude Leading edge production information systems Proven maintenance and support practices State of the art fleet with over 300 mobile units

www.barminco.com.au

Supplier Profile

Nova Project bolsters Barminco’s already impressive track record Australian based Barminco is a specialist hard rock underground mining contractor and one of Independence Group’s closest partners.

The company has been delivering its production, development, drilling and support services to Australian and international mining sites since it began operations in 1989, underpinned by values of safety, excellence and integrity. In 2007 Barminco established African Underground Mining Services, a joint venture, to facilitate the expansion of its service offering into West Africa. ser Barminco’s track record is unrivalled in terms of safety, speed of delivery and output, often exceeding expectation and agreed terms with development records set on a number of the company’s projects.

Chief Executive Officer Peter Stokes comments: “Once we establish ourselves with mining companies we stay for the long haul and build deep, innovative partnerships, which is what is happening with Independence Group. We have been with them ever since they took over the Nova Project back in January 2015.”

Stokes adds. “This is very much a variable rate contract as opposed to fixed, meaning the productivity is up to us to deliver and we will ensure that both parties are rewarded. There is a real mutual incentive.”

Barminco has also been busy above ground, building a batch plant and investing in local infrastructure to help address the challenges caused by the sites remote location. It is also working with Independence Group to employ local people and support the micro-economy of the area.

The focus for this partnership moving forward is to maximise the success of Nova. Stokes says, “The real focus for both companies is to make sure that Nova is successful and keeps beating targets.”

By continuing to commit to a zero harm safety approach, operate with integrity and invest in excellence by driving continuous improvement through innovation and new technologies, Barminco is well-placed to support many underground projects and grow its portfolio.

Barminco has been involved in the development of the world class Nova nickel reserve in Western Australia from the very beginning, initially with Sirius Resources. Drawing on its state-of-the-art mobile equipment fleet and experienced teams, the project is several hundred metres ahead of expectation. Barminco has carried out all of the capital development work and is now moving full ca speed into production which is expected to start by the end of the year.

“The key to this work has been high speed development and making sure we do it safely,”

Peter Stokes - Barminco CEO

www.barminco.com.au

MINING

costs and receiving 30 percent of that month’s gold production. With gold prices on the upturn that means Tropicana contributed around 45 percent of IGO’s A$499 million revenues in the 2015 financial year, its first year of full production.

Spread betting Australia is enjoying good gold prices, and like other Australian gold producers, IGO is enjoying good margins from its share of gold production at Tropicana.

At the same time base metals prices have been weaker. IGO is diversified and has irons in both fires: “Nickel and gold are somewhat counter-cyclical,” says Bradford.

“Over the last twelve months nickel prices have come down by around 30 percent and as a result of that,

worldwide it is estimated that 50 percent of the nickel industry is losing money on a cash basis. It is a miserable time for the metal. However our Nova project combines high grade with low cost structures, therefore even at current low nickel prices we will achieve an average 40 percent cash margin on the project, which is outstanding. But this is at the bottom of the nickel market and with the commodity expected to be in a supply deficit this year we expect prices to start rebounding” When the company acquired the Long deposit from BHP Billiton 14 years ago it was perceived to be at the end of its life, with only a few months of reserves in front of it. It has been a remarkable achievement, through a combination of investment and exploration, to keep it producing. Long has yielded more than 100 tonnes of

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INDEPENDENCE GROUP (IGO)

“The lifeblood of any mining company is its pipeline” – Peter Bradford, MD & CEO

nickel since being acquired by IGO and the Company has been able to consistently replace production with new reserves. This is an underground mine, the ore being removed by trucks, stockpiled and then moved to BHP’s nearby concentrator for processing.

More recently, in 2011, IGO purchased the Jaguar copper and zinc mine 300 kilometres north of Kalgoorlie and close to the small town of Leonora. Today this operation, together with Long, gives IGO the other half of its revenues. Both mines continue to generate positive free cash flow margins, despite current low copper and nickel pricing. Both these assets are wholly owned and operated

by IGO. Jaguar is mined using a fleet

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of R1700 Caterpillar Load Haul Dump (LHD) trucks, 60 tonne Caterpillar trucks and other equipment. Ore is processed at the nearby Jaguar concentrator which produces both zinc and copper concentrates, the latter having silver and gold in it too. The concentrates are trucked to the port of Geraldton where they are shipped to IGO’s customers.

This year the business will be transformed by the advent of the Nova nickel mine. Instead of being split evenly between Long and Jaguar, and Tropicana respectively, more than 50 percent of future combined revenues will come from Nova.

This is not to deny the continuing significance of Jaguar and Long:

MINING

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The Mesh Experts, Australian Steel and Wire were established in 2007. Based in East Rockingham, Western Australia and Brisbane, Queensland, are well positioned to supply to the local Australian Mining Industry and the world with specialised Coal mesh, Hardrock mesh, Straps and excellent service.

THE MESH EXPERTS

Email: sales@aswhome.com Web: www.aswhome.com

4 Lodge Drive, East Rockingham, WA 6168 Ph: +61 8 9439 3778 | Fax: +61 8 9439

MINING

what it will mean though is that from 2017 onward we will see IGO emerge as a truly diversified, mid-tier mining company. “Gold, nickel and copper are all cyclical commodities. For single commodity companies: it’s fun at the top of the market with good operating margins being made but not much fun at the bottom! At the bottom of the market tough choices have to be made about what costs you continue to wear, and that can result in capability that is needed long term in the business having to be retrenched because you can’t fund it at that time.

Some discretionary expenditures vital to long term growth, such as exploration, have to be reduced.

Our strategy is to be diversified, with a mix of commodities in the portfolio, currently gold and base metals, so the risk to the business due to single commodity fluctuations in any one year is reduced.”

Natural hedging between the metals

means IGO is really unlikely to have all of the commodities it produces at the bottom of the market at the same time. In turn that ensures the regular cash flow required to keep capability within the company and to keep the focus on those long term growth projects that he always has his eye on.

People and places Bradford said he also wants IGO to continue to play its part in developing talent for the company and the industry at large. “We support scholarship programmes for degrees students and we have a programme of vacation work while they are studying to give them access to the industry.” The company also runs a graduate programme, taking people on two year internships and introducing them to varied aspects of the business and aiming to turn out fully functioning professionals.

Close to its operations IGO supports

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“By drilling at depth under the existing Tropicana pits, most of which bottom out on the lack of drill information, where we expect to be able to significantly expand the known resources” – Peter Bradford, MD & CEO

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Peter Bradford MD & CEO

Mr. Bradford is a senior mining industry executive with many years’ experience in gold and base metals mining operations, exploration and development within Australia and internationally.

Mr. Bradford graduated as a metallurgist at the Western Australian School of Mines and commenced his career with various gold, nickel and mineral sands operations in Western Australia and lead the development and early operational phases of a number of projects.

Internationally, Mr. Bradford has worked extensively in Africa, including Ghana and the DRC in a number of senior and chief executive roles for Australian, London and North American listed companies, providing leadership in the development of strategy and growth for many of these companies.

Mr. Bradford a fellow of the AusIMM and a member of the Society of Mining Engineers and a member of the AMEC Council.

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Delivering mining efficiency Since 2008, Deswik has been partnering with clients like IGO to deliver efficiency-focused solutions to the mining industry through our software, consulting, and training offerings.

Our customized, solution-driven consulting flows through innovation to our software providing our customers with additional benefits when they choose to work with Deswik.

CUSTOMER DRIVEN INNOVATION In May 2015, Stephen Rowles and Luke Waller from Independence Group NL began work at the new Nova Project in Western Australia. Tasked with setting up best-of-breed systems for the survey department, they worked with Deswik (whose solutions were already in use by the planning team) to extend the Deswik.CAD platform to meet the site’s needs and simplify the typical surveying processes.

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the community by funding leadership programmes in the schools and communities around its mining operations. We are also committed to building capacity and providing opportunities for the traditional owners in the areas we operate “At Nova, for example, we are putting in place a targeted training programme to improve the job skills of indigenous employees who may not have had the opportunity to do formal work before. They can then apply for jobs at the project. We want to have a lasting impact and leave a legacy so we’d like to help individuals and groups to form businesses. We have been working to support two different contracting initiatives that

provide opportunities for indigenous groups at Nova and Jaguar.”

Peter Bradford’s eyes are constantly looking outward to identify the next big project, a future Tropicana or Nova. “The lifeblood of any mining company is its pipeline,” he declares.

“We continue to be very active on the exploration side to discover the projects of the future.” One area of interest is the large tract between Nova and Tropicana, an underexplored geological province that has delivered two of Australia’s best gold and base metal discoveries in the last 10 to 15 years. “We are uniquely placed for investment and exploration of that province.”

In another part of Australia

“Gold, nickel and copper are all cyclical commodities: for single commodity companies, it’s fun at the top of the market with good operating margins being made but not much fun at the bottom!”

– Peter Bradford, MD & CEO

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Hardie Finance Corporation Pty Ltd the landlord of Perth’s premier non-CBD office and retail complex at 85 South Perth Esplanade, South Perth is very proud to have the highly successful and leading diversified mining company, Independence Group, as its major office tenant.

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Registered

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altogether, 400 kilometres northwest of Alice Springs IGO in a joint venture with ABM Resources with licences covering what Bradford describes as a 400 kilometre long, major continental-sized structure that can be discerned from space.

Initial drilling at the Bumblebee deposit has given promising results with gold, copper silver, lead zinc and cobalt. As he says, that is quite a suite, that will emphatically seal IGO’s diversity credentials. But, as he also points out, “this is just the first drilling on the first prospect on what is a prospective 400 kilometre long belt and many additional prospects have already been identified.�

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KEEPING faith with nickel

Independence Group’s Nova Project on the Fraser Rang Australia is a world class nickel mine comparable with C Voisey’s Bay – and it is coming on stream at just the righ

Written by John O’Hanlon

ge in Western Canada’s ht time

INDEPENDENCE GROUP (IGO)

Independence Group’s Nova Project on the Fraser Range in Western Australia is a world class nickel mine comparable with Canada’s Voisey’s Bay – and it is coming on stream at just the right time

W

ith nickel prices languishing below $10,000 a tonne compared to the end of 2010 when this key base metal was selling for nearly three times as much, you might wonder why anyone would be excited about a new nickel project. It’s hardly necessary to review factors like China’s growth slowdown and the fact of over-supply for the last three years, however nickel remains a vital commodity for industry. Some 2.0 million tonnes of nickel are produced and sold

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globally every year, of which 65 percent is consumed in the manufacture of stainless steel.

Another twelve percent is used in super alloys and non-ferrous alloys.

Peter Bradford, Independence Group’s Managing Director and CEO, who is driving forward with the development of the world class Nova nickel Project in Western Australia, is convinced that there are benefits building a mine at the bottom of the market, particularly when that project can be brought in at lower cost and can return a profit even at current

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prices. The minerals markets are cyclical by nature, and a mine with an initial ten year life like the Nova project, will certainly live through at least one peak and one trough.

Thanks to a combination of smart design, canny contracting and a programme of cost optimisation, when it comes into production towards the end of this year Nova will have an operating margin of 40% even at current depressed nickel prices.

The mine is slated to ship an average

of 26,000 tonnes of nickel a year once it ramps up to full production next year, plus 850 tonnes of cobalt and 11,500 tonnes of copper.

Perth-based, Independence Group (IGO) was formed in 2000 initially with a focus on gold. Soon after it diversified with the acquisition of the Long nickel mine in Kambalda, Western Australia that it acquired from BHP Billiton in 2002. Independence also has a revenue stream from its 30 percent interest in the Tropicana

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INDEPENDENCE GROUP (IGO)

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“Given the remoteness of the site, we invested in robust infrastructure” – Peter Bradford, MD & CEO

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gold project which it pegged at the time of its IPO in January 2002 and developed in partnership with AngloGold Ashanti. IGO then acquired the Jaguar copper and zinc mine near the town of Leonora in 2011.

“These are all great assets,” affirms Bradford who was appointed to lead the group early in 2014. “When I joined IGO, I immediately recognised that we needed growth assets, so we set about a strategy of identifying the best available prospects. That resulted in our entering discussions with Sirius Resources and acquiring the Nova project in September 2015.

We are now focused on bringing

that transaction to account and progressing construction at Nova and bringing it into production.”

Fast track to production Progress has been fast by any standards, when it’s considered that the deposit was only discovered in July 2012, only got its mining lease in August 2014 and, yet will be producing first concentrates by the end of December this year. This is a remarkable achievement for an underground mine, with all the infrastructure and construction work entailed in an operation that relies on a combination of sub-level stoping with

“This is the first discovery of its type in this new belt in Western Australia, and the first discovery of this style of mineralisation in the whole of Australia” – Peter Bradford, MD & CEO

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paste fill (derived largely from tailings) and longhole echelon retreat methods.

“Our rapid progress is attributable in part to the location of the orebody.

From an underground mining perspective Nova is quite shallow, with the 1,000 metre long orebody positioned about 200 metres from surface down to a maximum of 500 metres,” he points out. “It is a large flat-lying

orebody somewhat in the shape of a banana!”

Had it been deeper, shaft access may have been considered but given the proximity to surface the orebody is being accessed by declines which have been dug to accommodate the 60-tonne trucks that will bring out the ore. Thanks to being

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able to get the best contractor and the best contractor team to do the development work the pace of the development work has been better than planned with over five kilometres of development completed as at the end of May 2016, he says. “Our feasibility study projected progress rates of 50 metres a week on a single heading underground and we have been achieving 70-90 metres per week.

The rock conditions are good so we have not needed to immediately install the mass of ground support originally anticipated. We have been very fortunate in being able get what we believe are the best in class contractors in Western Australia.” Underground development is the province of Barminco while GR Engineering Services has been building the processing plant and associated infrastructure under

a lump sum EPC contract.

The ore will be processed in a plant with 1.5 million tonnes per annum (mtpa) capacity, comprising an open circuit SAG mill and a ball mill before separation into nickel and copper concentrates. All the copper concentrate and half the nickel concentrate will be shipped out through the port of Esperance, 380 roadkilometres to the south, the remainder of the nickel concentrate will be delivered to BHP Billiton’s Kamblada site 294 roadkilometres to the north. The site is remote, located on the Eyre highway 150 kilometres east from the small settlement of Norseman. “Given the remoteness of the site, we invested in robust infrastructure,” says Bradford.

“We built a 35 kilometre sealed road to the Eyre Highway and a two kilometre sealed airstrip to make sure we can reliably bring our employees in and

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INDEPENDENCE GROUP (IGO)

“There are a lot of benefits to building a project at the bottom of the cycle” – Peter Bradford, MD & CEO

out on a fly-in-fly-out basis.” They are accommodated in a 492-person camp designed and built by Kerman Contracting in the space of just eight months last year, he adds.

For the moment Perth is the primary source of people but one of his priorities is to focus back on the region. Population centers like Norseman, Esperance and Kalgoorlie have many skilled people with a great deal of mining experience and he believes smaller drive in-drive-out or fly-in-fly-out operations from those towns would be cost effective. “With lower commodity prices, there’s

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been a pullback in employment in the region, so there are skilled people available and we’d like to give them an opportunity. There are a lot of benefits to building a project at the bottom of the cycle,” he adds. “The best time to build is at the bottom of the market. All the materials and expertise needed to build the project are readily available. If we had tried to build this project five years ago we’d have been waiting in a queue

at the factory to have components built and all the best people and contractors would be tied up.”

Long term sustainability The Nova site has no mains services.

To provide the project with reliable water supply and management and waste water treatment, Tristar Water of Perth was brought in. Power supply was more complex. The power provider, a joint venture between

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INDEPENDENCE GROUP (IGO)

Zenith Pacific and Solea of Germany, is providing a state of the art hybrid generating station under a buildown-operate-maintain contract that means IGO will bear no capital cost.

The first phase of a 20 MW diesel-fired plant was commissioned at the end of March. The second phase is expected to come on stream in October, and at the same time work will commence work on a 7MW electro voltaic solar plant. The use of solar power will save 8,000 tonnes of CO2 a year as well as more than three million litres of diesel and the associated road trains to bring it to site. In all, the power component of the Nova nickel mine will set the

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standard for future remote hybrid power stations. This is the first time a project of this nature in Australia has been commercially viable and not reliant on subsidies or grants.

Christmas this year will be a significant milestone for Independence Group as it celebrates first production from Nova, and as the deposit’s full name is Nova-Bollinger there’s no prize for guessing how Peter Bradford, his teams and contractors will toast it. But the mine’s slated ten year life is far from the end of the story.

The Long nickel deposit was all but exhausted on acquisition but is still productive more than a decade later,

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which should tell the world that IGO know how to optimise an asset. “We believe the prospects for extending Nova’s life are very good,” Bradford says. “That is one of the attributes that attracted us to the project. This is the first discovery of its type in this new belt in Western Australia, and the first discovery of this style of mineralisation in the whole of Australia. It has features in common with Canadian deposits like Thompson, Raglan and Voisey’s Bay. We have opportunities to extend the mineralisation immediately around Nova, and also to look for additional occurrences further afield on the Fraser Range-Tropicana belt.

This underexplored province has delivered two of Australia’s best gold and base metals discoveries in the last 10-15 years and we believe that there are more discoveries waiting to be made” So expect IGO to be very active on all these fronts.

“By drilling at depth under the existing Tropicana pits, most of which bottom out on the lack of drill information, where we expect to be able to significantly expand the known resources” – Peter Bradford, MD & CEO

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Transport of delight Written by John O’Hanlon

Produced by Erika Kracer

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NSW TRAINS (TRANSPORT FOR NSW)

Transport for New South Wales is the responsible body governing all modes of transport in Australia’s most populous state: in the last three years it has been transformed from a behemoth to a responsive and agile public service provider

I

t was in December 2012 that the Minister for Transport of New South Wales, Gladys Berejiklian, announced a complete review of transportation services in the state, paying particular attention to the State rail provider RailCorp. This was at the time the largest asset owner in the whole of Australia, employing upward of 15,000 people, and its size and complexity were causing problems; in particular it had become highly Sydney-centric.

All the decisions were made in the capital city, and timetabling was arranged to meet the needs of Sydney citizens and its commuters.

However the needs of a traveller on a 40 minute commute and another on a six hour train journey are very different, and the minister wanted a better service for upstate citizens.

It was decided to replace RailCorp

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with two new rail agencies: Sydney Trains, which would look after all the suburban services of Sydney, and NSW Trains to manage the network in the rest of New South Wales, including coach services to reach the many communities not reached by rail. In fact today NSW Trains is also the largest coach operator in Australia, running 600 different services a week It was NSW Trains’ good fortune to secure the former CEO of RailCorp Rob Mason as its CEO when the new companies started operating on July 1 2013. His brief was to improve the lot of intercity and regional passengers who had been given a lower priority.

Another key appointment at the new organisation was that of Chief Procurement Office (CPO).

There was a serious reputational

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NSW TRAINS (TRANSPORT FOR NSW)

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problem within the industry. Apart from having fallen into the traps that affect large organisations in the public Supply Chain from silo thinking to a job-for-life culture and union strangleholds, a series of enquiries had revealed that long term suppliers had become entrenched, discouraging new entrants, and that money had changed hands to keep things like that.

to regional customers,” he says.

The company runs express passenger train (XPT) services linking Sydney, Melbourne, Brisbane, Dubbo, Grafton and Casino. One of the complexities of running these services is that NSW Trains leases the track from private companies which derive 95 percent of their income from goods not passenger operators, explains Johny.

“For an XPT to go over a Embedding certain speed the track ethics has to be maintained Siju Johny took up more regularly and this post in June to a higher standard.

2013, and faced the We are a public Number of employees at job of establishing service organisation NSW Trains (Transport world class supply having to work with for NSW) chain procedures private organisations for the organisation at whose driver is profit.” the same time effecting profound Passengers complain to the cultural change and establishing operator if the service is slow, confidence in a sustainable and but that’s not the only metric and ethical sourcing policy. The eyes the last three years have seen a of the ministry, the employees, the massive improvement in customer supply chain community and above satisfaction. This has been achieved all the travelling public were on the through customer surveys that new team. “The focus has changed identified ways to make their

2000

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NSW TRAINS (TRANSPORT FOR NSW)

experience better. He cites safety as a key concern. More police presence on the trains and the introduction of CCTV on the guards’ uniforms are among the steps that were taken as a result. Another major procurement operation was an A$120 million investment in new buses to give a much better service to remote communities. The new fleet has enhanced facilities including toilets on board. As the first really big procurement exercise for the new company, it signalled that

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the company intended to pursue a more transparent policy than before.

It was a proud moment for Siju Johny when in April 2015 NSW Trains became the first public organisation to be awarded the corporate ethical mark by the Chartered Institute of Procurement and Supply (CIPS). “Reputation was important to us.,” he says, recalling the days when suppliers were more incubi than incumbents. “The reason I sought that certification was that we are independently audited organisation and I wanted to be able to show we are now adhering to the best international practices.”

An example of the new approach was breaking a 15-year contract and appointment of a new catering provider on the long distance trains. In June last year Gate Gourmet, known as the world’s premier airline catering company, was named as the new supplier.

“By doing that we assured the wider supplier community that from now we are putting quality and value for money first.”

KEY PERSONNEL S U P P LY C H A I N

Exciting times Each year NSW Trains holds a supplier conference, and the people Johny has invited as keynote speakers reflect his determination to cement the new culture of openness.

In 2013 he brought in the Managing Director of CIPS; in 2014 the group was addressed by the head of the Independent Commission against Corruption (ICAC) and last year the Transport Secretary Tim Reardon used the occasion to announce that TNSW would over the next five years be making the biggest investment ever made in the State – A$107 billion to upgrade road and rail infrastructure. “These are exciting times for us,” says Johny.

Exciting indeed. The minister also announced a A$1 billion investment in diesel trains, and at the time of writing a A$3.8 billion contract is on the point of being signed with the successful bidder for 65 new trains to replace the ageing Intercity fleet which date back to the 1980s.

Train replacement is a once in a generation activity, he says, and it

Siju Johny Chief Procurement Officer Siju Johny is the Chief Procurement Officer for NSW Trains and got the full responsibility for Strategic Procurement, contract management, supplier relationship management, Probity and governance.

He joined NSW Trains in 2013. Under his leadership NSW Trains was awarded as the first Public organisation in Australasia to be certified for Ethical Procurement by CIPS. Prior to joining NSW Trains Siju was with Singtel Optus as Group Strategic sourcing manager. He has also led the successful implementation of various SAP modules in different organisations. Siju has also worked for blue chip companies such as Westpac, Veolia, Portland Group, Caltex etc to establish procurement teams in Greenfield operations as well as transformation project in established functions, developing teams, skills uplift, systems process and policies, implementing strategic sourcing, category management and setting the long term strategic direction for the function.

Siju has extensive knowledge of the different procurement and supply chain environments in both direct and indirect areas. He has also been the key note speaker in various international procurement conferences and presented and conducted procurement training across AUS&NZ. Siju holds a master’s degree in Business Administration and is a qualified Charted Accountant. He is also a member of Charted Institute of Procurement and Supply (CIPS). In recent years Siju’s efforts in Procurement was recognised through Best Procurement Initiative in Australia award by CIPS and Most Successful SAP Implementation Project by SAP.

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“ We are a public service organisation having to work with private organisations whose driver is profit” is a boost to his entire team to be involved in such a huge procurement exercise. This is a team which many more responsibilities than simple purchasing. Most organisations would split procurement, contract management and supplier management but at NSW Trains these are integrated. “I want my team to be responsible for an end to end process of sourcing, strategy development, contract management planning, supplier relationships and ongoing KPI management.”

The person coming up with the strategy, he says, ought to be responsible for its implementation and operational and financial outcomes. “I strongly believe procurement is a service provider.

Sometimes in the public Supply Chain procurement is a tickbox activity, but it is really about how you are adding value to the business. My aspiration is to have

a team of strategic people.”

The creation of a procurement board made the rethinking official.

Johny sits on this subcommittee of the main board or Executive Management Committee (EMC), together with the CEO, CFO and the director of engineering. “It is a reflection of the confidence of my CEO, who takes all the decisions to the EMC for sign off. This came about because he has seen over the last three years how our business unit helps the wider organisation achieve savings targets and ensure that statutory commitments are met.” Unlike the old days, he adds, numerous independent audits have thrown up precisely no issues for investigation.

And now NSW Trains is becoming a benchmark for good procurement practice. The NSW Department of Finance requested all its 33 public procurement departments

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to get independently accredited against 147 different criteria. Siju Johny’s department came out in the top three, and he was then invited by the Ministry of Justice to submit a review report on its procurement processes to the Minister of Corrections and the same service was requested by Australian Tax Office(ATO) – an assurance that NSW Trains is on the right path.

Poised for progress Two big projects that will occupy the team over the coming year. The first is an SAP implementation across TNSW, which will bring transparency to every activity across the transport cluster. It’s an opportunity to redesign the ERP to suit the current organisational structure, he says. There won’t be so much impact on NSW Trains, which already operates the Ariba ERP, recently acquired by SAP, but in other parts of the organisation that haven’t been using Ariba it will be more full on. The benefits will be a one stop shop for all information relating to transport, greater discipline and again, greater transparency.

The second is integrating the new trains, which are to be operated on a completely new model, with the operator just providing the crews. The new supplier will manage the service and be responsible for on-time running, cleanliness and all train facilities. “It is a game changer” says Johny, “with the third party provider bound by a

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contract managed by my team.”

July 2016 will see the manufacture contract awarded. In January 2018 the first train will be delivered with the remainder being supplied at a rate of one or two a month till all 65 are in service by 2019.

Innovative contracting of this sort is the way forward. As NSW never permits a public Supply Chain contract of more than five years’ duration but Johny believes that in key supplier areas the model should be a limited number of strategic partners, incentivised by viable

margins. One of these is Amadeus, the world’s largest airline booking provider, and he stepped out of line by offering this key partner an eight year contract, though he was able to show that it would save up A$8 million over the contract period.

Not only did the NSW government sign off the deal – it liked it enough to cite it in its annual summary of best procurement processes.

Not prepared to stop there, he is working on the NSW government through the Procurement Leadership Group, which meets monthly, to

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NSW TRAINS (TRANSPORT FOR NSW)

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reform its purchasing practices.

“NSW is the biggest purchaser in Australia, spending A$20 billion a year on goods and services alone, but because it is done on an individual agency basis we are not making the best use of our purchasing capacity. We are working toward an approach where the NSW government is the purchaser, not the agency.”

From the state level it’s a short step to the federal. “In the public Supply Chain you are accountable

to the whole of society not just the shareholders. I always do succession planning. I will be a guest speaker at the upcoming CIPS Asia Pacific Conference in Melbourne in July, where I will be talking about the changes we have made in our organisation. We are working with the federal government to make procurement a formal provision in Australia: at present it is lumped in under general finance.”

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Perfe logisti changin Written by Wedaeli Chibelushi

ecting ics in a ng China Produced by Charlotte Clarke

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DB SCHENKER

China is rapidly developing - the supply chain sector must keep up. Logistics service provider DB Schenker has accepted the challenge, so we ask them about the opportunities and setbacks present in the Chinese business climate

D

B Schenker in China is modifying to fit the “new normal”. According to CEO North/Central China Thomas Lindy Sørensen, China is experiencing negative growth in traditional industries (e.g. coal and steel) “whereas industries that are more consumer-based, like the automotive industries or the luxury goods industries are really growing”. How can DB Schenker, a logistics service provider, adapt to this change?

Supply Chain Digital talks to Sørensen to find out.

Sørensen knows the Chinese business landscape well. “I joined Danish shipping company Maersk Line 25 years ago and worked in various finance functions for a few years. Then, I was expatriated

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overseas to China. I worked in Beijing and Shenzhen back in the mid-90s. I worked for Maersk Line until 2013, then I joined the DB Schenker organisation in Korea in 2013. About a year and a half later, I joined here in China as the CEO of DB Schenker North/Central region.”

Operating in China Sørensen finds the pace of business development much faster in China than in Europe. He explains how DB Schenker operates in this everchanging climate. “The organisation is split in two, I run the centre in North China and my counterpart runs South China. For North and Central China, we have 40 offices and for South China another 20”, he comments.

Sorensen’s remit covers Shanghai,

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$xxx billion Annual Revenue

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plus west, north east and east China.

In terms of services, DB Schenker in China conducts air freight, ocean freight, contract logistics, warehousing and land transportation.

“Land transportation covers domestic distribution, rail transport to Europe, domestic rail and domestic trucking down to Vietnam, Laos, Thailand, Malaysia and Singapore”, he adds.

DB Schenker’s operations in China also owes to many partnerships.

The company has many strategic Number of employees at DB Schenker globally

95,000

partners, including GLP, Goodman, Ningbo Port Southheat Logistics Group, Shanghai E&T Intl-Trans Co and AirBridge Cargo.

Investing in e-commerce To keep up with the departure from traditional business, DB

Schenker focuses on e-commerce.

“We see this as a growing way of doing business”, Sorenson says.

He explains that with traditional business, goods are imported into China, they are stored in a warehouse, then transported to a distributor or a store. The consumer then buys the product from the store. DB Schenker is involved in importing, warehousing and distributing to the stores.

The new e-commerce model differs. “It doesn’t go through the stores. Sometimes, the goods come straight from overseas, in which case we are not involved, but in many cases the goods are distributed within warehouses in China”, Sørensen explains.

“If you are a fast fashion retailer and you sell goods online, the consumer will go online on Tmall or the company’s own website and then buy something. The order triggers a message to our system in the warehouse. We will pick the items, package them and prepare them for delivery. When

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there are special online sales events in China it can happen that we need to handle more than 500,000 orders in 24 hours!”, he says What about express delivery? “We don’t do the physical delivery to the end consumer, we outsource this to domestic express companies. But we do the warehousing part”, Sørensen clarifies.

Sørensen moves on to demonstrate the advantages of e-commerce. According to Sørensen, it is mainly the Eastern part that is developed in terms of retail set up (besides certain tier 2 and tier 3 cities in the West). DB Schenker’s involvement in e-commerce allows everyone with a working internet connection to order practically anything. “Essentially it gives the seller access to the full market of China, i.e. access to a greater market without the investment in physical stores”.

Additionally, e-commerce allows consumers outside of big cities to access a wide range of goods.

Inspiring employees Involvement in the growing e-commerce industry requires a team of well-trained employees. DB Schenker has set up a Logistics Academy to ensure this. The academy uses both third party and internal expertise and is offered at various locations in China. Modules include logistics concept, continuous quality improvement, logistics

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controlling, project management and conflict resolution. The company aims to develop employees over the long term. DB Schenker also aims to keep them, which according to Sørensen, can be a challenge.

“In China there is generally a relatively high staff turnover. It is quite a hot labour market so there is a relatively high turnover”, he says.

However, DB Schenker gives its employees a reason to stay. “A lot of our people, especially our young people have a great chance to advance their careers relatively quickly”, Sørensen comments.

Furthermore, DB Schenker gives staff members the opportunity to take on big roles at a young age.

Challenging competitors “If we are looking at domestic distribution, we are way ahead”, Sørensen replies when asked about competition. “We have developed a number of what we call ‘e-solutions’ - ways by which we can interact with all of our customers and create visibility so a customer

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knows when the truck will show up at their door. They know in real time when the goods are coming.”

DB Schenker covers about 400 cities across China. Sørensen tells us that among their international competitors, they are the biggest domestic network in China today.

Caring for customers Within this network, Sørensen identifies individual customers: “We do business with an American fast fashion retailer here in China.

Every year there is a big sale on 11th November called Singles Day. It is a big e-commerce sales day. All the different websites (Tmall, Alibaba etc.), they have big sales. The revenue of that day now exceeds the revenue of black Friday in the US. What we do for this specific American fast fashion retailer, we assist them with a fulfilment for their customer”.

Sørenson tells us about how last year, the American customer got more than 500,000 orders of 1.5 million items in 24 hours.

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“Our direct customer sells its products to someone and they’re the ones who won’t be happy if the goods don’t arrive on time” DB Schenker has to despatch orders within a very short period of time. To manage this amount of orders, the company hires a thousand extra people.

“This is quite exciting and it shows the scale that you now have in China. Our customer this year expects to double that number, so the expectation this year is that we will get three million pieces, or roughly one million orders.”

When the customer makes an order, it goes into DB Schenker’s warehousing system. The warehousing system interacts with the company’s transport management system. After the order is despatched, the customers can then track their order.

“Ultimately, the customer we

have to serve is our customer’s customer”, Sørenson concludes.

“Our direct customer sells its products to someone and they are the ones who won’t be happy if the goods don’t arrive on time”.

Moving forward DB Schenker is working hard to adapt to China’s “new normal” – its focus on e-commerce and sustainable recruitment is testament to the company’s efforts.

As Sørensen aptly summarises: “It is about adapting to the winning industries. We make sure we understand where the future growth is going to come from so that we can not only meet the growth of the market but also exceed the growth of the market”.

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Digitalis

bringing bus closer to th Written by Dale Benton Produced by Mariana Lee

sing dreams

siness services he customer

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AXA SINGAPORE

In the modern financial services industry, the key to success is bringing the business closer to the customer.

That’s the primary focus of AXA Singapore as the company is currently undergoing a digital transformation, with the end goal of providing a better service to its customers

“

Our mission is to help customers protect their world and build their dreams,” says DJ De Villiers, CIO of AXA Singapore.

“You might be trying to protect your health and wealth but also live a certain lifestyle, save for education, retirement or buy a house, dreams you have for your future. That’s what we help people do, our core business is risk, helping people understand and navigate risk.”

A current trend across the financial services industry is simplification and data transformation and this is something that De Villiers recognises - customers across all industries are much more in control.

De Villiers points to Uber as

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the perfect example, where the power has shifted completely from the taxi drivers and into the hands of the passengers.

“In order to stay relevant and competitive it is essential, as a matter of survival, for large established financial services firms like AXA to get out of our comfort zone and go out there and meet our customers and give them what they want at their fingertips, which is what customers expect today,” says De Villiers.

“Customers are much more knowledgeable of the products available and everything is more accessible. They want more relevant services and products and they are not willing to wait for them anymore.”

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New challengers in the market Bringing AXA’s services and products closer to the customer is the driving force behind the company wide transformation, but there are both internal and external factors that brought upon change – namely, new entrants.

“The rise of new entrants in insurance space has applied pressure where we’ve recognised that there are more and more smaller companies now starting to come into the space. I think in the past there were very big barriers for entrants,” says De Villiers.

“What’s been happening is with the rise of technology companies on the internet, specifically about Fintech, those barriers are much lower. They may not require as much capital; they can more rapidly get a very big distribution footprint.

So the only thing they really need is an understanding of insurance products and risk. Those companies come with a better understanding of what customers want and how to have a good customer experience.”

With an easier pathway into the market for new entrants, how does a company like AXA stay ahead of the game to remain the number one insurance brand worldwide?

“As a company, every year we identify the priorities and things we’d like to do for our customers and our distributors. There were already a number of initiatives that we had launched that had something to do with customer centricity, digitisation and simplifying our products,” says De Villiers.

“I think the digital transformation is really the coherent umbrella, that ties all of the initiatives together with specific outcomes and specific timeframes.”

A culture of change Undergoing a digital transformation process brings with it certain challenges and changing the ways of working throughout the whole company is no easy process.

“Internally, cultural change is very important,” explains De Villiers. “We’ve got a lot of people

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who have been working here for a long time that have certain ways of working and it takes a lot of work to get all of those people thinking outside-in from the customer’s perspective, as opposed to inside-out from the insurer’s perspective. They’ve been working a certain way for 30 years, what we are trying to do now is put the customer at the centre of what we do.

“We are approaching problems from a whole new angle and that takes a lot of patience and a lot of encouragement. It’s very important to us an employer that we are attractive and relevant for the younger generation. We want smart bright energetic young people to come and work for us, so we need to have a balance in our workforce between the people with years of insurance experience but we need those smart tech-savvy people to work hand in hand with our existing workforce.”

Cultural change involves the people, but another challenge which presents itself is the use of legacy systems. Historically, AXA Singapore has followed the concept of core IT – big complex systems.

De Villiers concedes that these legacy systems slow down the process of getting products to market.

“Large and complex core IT systems for financial institutions need to be very stable and well governed,” he says. “This slows us down

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“As a matter of survival, you have an obligation to yourself to stay up to date, research, and read. A lot of IT people are where they are by looking for training opportunities and educating themselves continuously.”

Powering cybersecurity transformation Cyber threats pose significant new business risks and challenges in today’s digitally driven world.

What can you do to protect your business from cyber attacks?

• Treat cyber risk as an opportunity to look closely at your business and align cybersecurity strategy with business goals • Evaluate cyber maturity across key areas that must be able to work together, such as leadership and governance, human factors, information risk management, technology and business continuity • Establish a cybersecurity program, leveraging on industry practices such as ISO27001, NIST, and SANS Top 20, to meet the challenges of the evolving cyber threat landscape • Prioritise which critical information and assets to protect, strengthen cyber defence, and implement cyber detection and response measures • Know and understand the cybersecurity threats that your organisation faces through use of threat intelligence How can KPMG help?

At KPMG, we inspire confidence and empower change by helping you transform your organisation’s capability to manage cyber risk and respond to cyber threats, effectively minimising harm to your customers and business operations. Visit us at kpmg.com.sg/cybersecurity or drop us an email at cybersecurity@kpmg.com.sg © 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Singapore.

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with regards to taking things to market, but it is necessary to maintain stability. The challenge is balancing that with the need to be more agile and flexible.

“The closer we are working to the customer and the distributor the more flexible and agile we need to be.”

Technology: power at the fingertips Moving the business closer to the customer and responding to the increasing demands placed on the business through innovation and technology has seen businesses make the move to mobile and tablet devices.

“Banks went through the process years ago of moving out of the branch and closer to the customers, through online and particularly mobile phones. In a way they are ahead of insurers,” says De Villiers.

“It’s the same with insurers, we need to move closer to customers and distributors in terms of the services that we are providing – being right there when needed

on the device that they want.”

AXA is already in the mobile app market, but De Villiers believes that there is soon to be too many mobile apps. This is where AXA is streamlining its apps into one place.

“It’s not always clear which apps customers need and where to go when they need certain services,” he adds. “Part of what we are doing is bringing it all together, instead of 10-20 apps with different user experiences we will have one app and one experience. Leveraging what we have built into one place, putting together a more integrated customer experience around it.”

Recruiting the right people Moving forward, it is the recruitment of those smart young technology focused people that is crucial to the success of the business, believes De Villiers.

He says: “When I am interviewing people to join my team I always ask ‘When was the last time you learned a new technology?’

“As an IT professional it’s a given

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that you have to stay current and I don’t think you can work somewhere and expect people to spoon feed you the new stuff. As a matter of survival, you have an obligation to yourself to stay up to date, research, and read. A lot of IT people are where they are by looking for training opportunities and educating themselves continuously.”Recruiting the right people is a representation of the wider AXA brand. As the number one insurance provider in Interbrand’s Best Global Brands, the AXA brand is built on trust.

“We have a strong brand, both externally and internally. Customers and partners believe our vision and are keen to work with us. Perhaps more importantly, the brand is very strong internally. Myself, my team, people who work within the company believe in that vision and go the extra mile to serve customers,” concludes De Villiers.

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DJ De Villiers CIO DJ de Villiers is Chief information Officer at AXA Singapore, for both the Life and General Insurance businesses. He has been with AXA Asia since 2009 where he led the General Insurance regional target operating model transformation prior to his current role.

Before joining AXA, DJ worked in Enterprise Architecture at retail and investment banks in Australia and prior to that he spent 10 years in IT consulting, giving him exposure to multiple industries and multiple cultures. He started his career as an Army officer, then later worked as a software developer in the Netherlands after graduating with a B-Sc Computer Science from the University of Stellenbosch in 1997.

DJ is an accomplished Touch rugby player and active volunteer in the Singapore Touch community. He lives in Singapore with his wife and teenage sons, where they enjoy an active, outdoor lifestyle.

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W elcoming

a new era of clean energy With technological advances moving the renewables industry forward at lightening-speed, there’s never been a more exciting time to be in energy. Solgen Energy Group, positioned at the forefront of the industry’s evolution, has much in store to capitalise on the innovations at hand

Written by Sarah Megginson Produced by Josef Smith

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W

hen compared to more mature industries, solar is a relatively new energy. This means the amount of opportunity in renewable energy is almost unsurpassed – and the possibilities for the future are endless.

This was the line of thinking when rooftop solar installer Mark Group joined forces with commercial solar business Solgen Energy in late 2015. The merged company became Solgen Energy Group, in a strategic collaboration designed to capture the leading share of Australia’s booming solar market.

Today, advanced technology, engineering and people are at Solgen’s core, says CEO David Brown, who is steering the ship as the business aims to shape a new, participatory era in clean energy.

“The amount of new technology

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David Naismith Executive General Manager Commercial, Industrial & Government

coming online and the pace at which they’re running is exciting, so it’s an extremely interesting time to be a part of this industry,” Brown says.

“We see massive opportunities to match renewable energy solutions with optimal financial packages for our customers and commercial clients.

Restructured around several new divisions, Solgen Energy Group can now offer solutions for a range of clients, including residential customers on a house-by-house basis, through to larger developments, commercial complexes and industrial businesses.

“Our new operating model has a dedicated business model to suit the SME space, given the huge

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“The sorts of quality components that are coming through are really making solar a great proposition and the sophistication in technology is making it more affordable for a broader segment of the market” – David Naismith, Executive General Manager Commercial, Industrial & Government

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opportunities there, along with a home division and commercial division, which is a comprehensive spread across all segments of the market,” Brown says.

“But our key point of differentiation has been introducing a dedicated new team, our ‘new ventures’ division. This allows us to dedicate resources solely towards developing and researching new technology, so we can stay on the leading edge of the changes that are coming into the industry.”

Sophisticated advancements in solar tech In recent years we have witnessed incredible growth and change

in the renewable energy Energy, with solar in particular becoming a huge part of everyday life for an increasing number of Australians.

Indeed, Australia leads the world in household solar panel installations, with the Energy Supply Association of Australia reporting that around 15 per cent of Australian homes have solar panels.

“The Australian market overall is known for being very fast adapters of new technology. The uplift of solar in Australia has been incredible compared to the rest of the world and strongly supported by government subsidies and the like,” Brown says.

Further growth will be made possible through further

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advancements in technology around efficiencies and output that have been “quite amazing”, Brown says.

“I recently witnessed, first hand, many examples of the latest technological advances from around the globe at Intersolar in Munich. Manufacturers of panels, inverters and of course storage systems are investing heavily in improving functionality, capacity and efficiency and this will all result in better outcomes for our residential customers and commercial clients.”

“For example, we’re now using panels that have up to 25 years’ warranty and operate at 95 percent efficiency. The sorts of quality components that are coming through are really making solar a great proposition and the sophistication in technology is making it more affordable for a broader segment of the market,” he explains.

They’re also enabling operators like Solgen Energy Group to tailor solutions to businesses on a much larger scale.

“The benefit of having a group as

broadly based as ours means we have a broad array of opportunities.

For instance in the SME space we work with a lot of schools and many local councils across several States,” Brown says.

“We worked with the Redlands School, which is preschool to year 12, where we installed a 25KW system. At the time it was one of the largest installs in all Australian schools, so that will tell you how much times have changed in terms of the scale of projects now.”

Last year they also managed a major solar install for Tyrell’s Wines, which added a 350KW PV system to its site to generate almost 40 percent of the winery’s energy requirements.

“It was one of the first commercial solar installations under a Power Purchase Agreement in Australia and we’re very proud of it. New purchasing models for commercial solar are developing rapidly in the Australian market and we want to ensure we are at the forefront,” Brown says.

The NBN rollout provided another opportunity to demonstrate their

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expertise on large-scale projects, as Solgen successfully completed a contract to install 1.75kMW across many sites nationally.

Earlier this year, they also completed a large solar project at Adelaide Airport, installing just short of 1.2MW. “It increased their solar power generation by 10 times and now every time you fly out of Adelaide Airport, you can see almost 4,500 panels glistening on the roof. Our bespoke design was quite leading edge for the industry and our guys did a fantastic job delivering that project.”

Solar storage: A new age in renewables With plenty of projects both large and small behind them, Solgen are well aware of the next frontier to conquer in renewables, Brown confirms: energy storage.

At present, homeowners and businesses can harness the sun’s

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energy to power their immediate usage, but any energy they don’t immediately use is sent back to the grid, often for a nominal return.

Solar batteries, which offer the opportunity to capture and store unused energy for later use, are going to be the next gamechanger in the industry, which is why Solgen are already trialling a number of products in this space.

“Storage is on everyone’s mind.

We have a range of storage options that we’re trialing and testing. Some are batteries, but some are beyond that, and are focused more in relation to the way people manage their power,” Brown explains.

“The main thing that has slowed it down has been cost, but through our strong relationships with financing partners, for example our Classic Finance partnership servicing residential customers, we’re able to offer our customers a very real

ENERGY

Arnulf Fuglestein Executive General Manager Group Operations

Joe Coco Executive General Manager New Ventures

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and solid solution in relation to being able to relieve the burden of a single capital outlay and still reap the financial benefits of solar.”

While there is a lot of activity in the solar storage space at present, Brown expects it will continue, “particularly over the next 12 Augusts”.

“We’ve seen the introduction of the Tesla battery, which has been a very high profile entry in the market globally,” he adds. “We’ve started to put Tesla batteries on

houses, which is very exciting.”

Their partnership with Tesla is one of many that is proving to be a mutual success, as Solgen has been successful in helping a number of key businesses across Australia in reaching impressive renewable energy targets.

For instance, they have a strong relationship with councils, including Gosford City Council and the City of Sydney.

At the latter, they have very

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ambitious energy targets of a 70 percent carbon reduction, and producing 25 percent of their energy needs from renewables, by 2030.

“We have a comprehensive relationship with them and we’ve installed solar solutions over 30 sites, including sporting grounds, community theatres and office blocks, to help them achieve these targets,” Brown says.

“There’s an array of projects like this that we’ve undertaken over the

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last couple of years that really display our broad range of engineering capabilities. But the great thing about the industry is that while the technology is extremely high tech, it’s getting better and better all the time. We’re leveraging our engineering expertise and our breadth across the country with a great team behind us to take an active role in the direction of the industry. As it matures, we intend to play our part –it’s definitely an exciting time to be in solar.”

ENERGY

Matt Purvis Executive General Manager Home

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Networking to po

ower the planet Written by John O’Hanlon Produced by Vince Kielty

ERGON ENERGY

Ergon Energy could be called the heart of Queensland, but it is not content to be a local electricity generator: it is grabbing the attention of the energy industry in many parts of the world as they realise that the business models they inherited no longer work in the face of disruptive technology

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T

he sheer size of Queensland at 1,852,642 square kilometres it is larger than Alaska but with six times the population – presents a big administration challenge, not least when it comes to energy provision.

It is well known internationally for its tourism, surfing and the Great Barrier Reef but is currently coming to the centre of global attention as its capital Brisbane prepares to host the Commonwealth Games in 2018.

It’s known as the ‘Sunshine

State’ for its beach culture, but that name is highly apposite as the world moves, largely unpreparedly, from fossil fuel reliance to a more renewable mix. Queensland gets a great deal of sun and has the highest average maximums of any Australian state. Ergon Energy, owned by the Queensland government, both distributes and sells electricity to Queenslanders at prices regulated by the State. Distribution is over a network of some 160,000 kilometres of powerlines supported by a million poles and pylons. It also owns and

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ENERGY

operates 33 standalone power stations serving some of the remote communities the grid can’t reach, as well as the Barcaldine gas-fired power station which supplies power to the main grid.

The company was formed in 1999, from six regional Queensland electricity distributors and their subsidiary retailer. In some ways its legacy allies it to the entities that have grown up across the planet to address the new economic and technical landscape, but for a number of reasons it stands out from its peers. Its experience in reaching out to isolated communities, including a number of islands, is highly relevant to energy businesses in the many places that face similar problems, particularly in emerging economies but also in the great land masses of America, China and India. What it does to ‘provide safe, reliable, efficient and sustainable energy solutions to support our customers and the Queensland economy’ is just its daily bread.

This is a company that is taking a holistic view of the future energy landscape, taking into account technology, economics, business and market models that work as well as global imperatives like climate change and population growth.

Peter Nimmo has the enviable job of driving forward the future agenda. As Ergon’s Director of Effective Market Reform, he wants to see Ergon Energy becoming recognised not just in Australia but globally as a benchmark future network provider.

Economies that adhere to old fashioned models

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of investment in baseload capacity, whether nuclear or fossil fuel, fail to step back and consider wider macroeconomic models for network planning, he says. “That is where I see Ergon playing a big role. We have the highest residential rooftop solar saturation on the planet climbing to 40 percent in our network, as against significantly less in the rest of Australia.� Hand in hand with this level of technical innovation goes the innovation opportunity for business model evolution, he adds. Ergon is

currently merging with its long-term joint venture partner Energex, based in Townsville in the north of Queensland to create the largest network and energy operation in Australia.

The goal for the expanded company is to become what he calls an intelligent distributed network service provider (DNSP) that embraces digital solutions, big data and systems integration. In other words, while the grid will always be with us, and there are a host of ways to make it smarter, there has to be

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“Analytics from Space-Time Insight via a proof of concept is also helping us capitalise on the opportunities inherent in energy market reform and certainly to seek better ways to serve customers and perform better as a company. Such analytics allows us to fully integrate distributed energy resources into the grid to continue to deliver reliable, sustainable and affordable power to customers but also improve choice” – Peter Nimmo, Director of Effective Market Reform

a way to make it work as part of a growing ecosystem of alternative and independent energy sources, microgrids, renewable projects and the like, all united under a business model that puts sustainability, the consumer, energy security, the climate and the national interest at the forefront. This concept of a resilient ‘transactive energy’ network is being considered at Ergon by Peter Nimmo and his team with an eye on the wider implications. “Ergon is a diverse business under a single shareholder:

our consumers range from domestic to small business to major industries like mining, agriculture and of course tourism. And we have plenty of experience facing the challenge such as our remote communities.” Many of these are on the mainland, like the Birdsville geothermal power station 1,600 kilometres west of Brisbane, which powers the town’s mini grid, but the Torres Straits islands are also part of Queensland and require isolated generation, increasingly with renewables in the mix. For

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example the 4,000 inhabitants of Thursday Island used to rely entirely on diesel generation but now has a $25 million wind generation plant that saves up to 600,000 litres of diesel and 1,700 tonnes of greenhouse gases each year.

Innovation is only useful if it is developed in line with future demand.

Everyone gets excited about electric vehicles (EVs), and Nimmo has spent a lot of time travelling to countries like the USA, Taiwan and the UK helping develop EV models. As we spoke, he had just returned from Ergon partner Mitsubishi in Japan

for discussions about the second generation Outlander 4x4 hybrid. “We were talking about range extension, battery recycling and battery life. In Australia we have growing numbers of EVs and PHEV’s on the road: in five years’ time we can expect a multiple of those battery packs coming back and we can make use of these. They have potential use in the grid, people’s homes or in industry if we ask the questions about how they can be repurposed.”

The current regulatory framework in most countries is not keeping up with technology, he warns. The

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real challenge is business model innovation around the technology so as to unlock its full potential and value.

“We are trying to unite our collective strengths and our people and our markets in a transition that allows us to continue to bring products to the customer that they actually value.” The old models are being disrupted not by being directly challenged (they still have their place in the mix) so much as by a process of ‘regulatory arbitrage’ which involves reform processes from the bottom up. “MicroGrids are a case in point,” he says. “They are an important part of the energy

system but not fully connected: the existing system can’t fully cater to them because there’s no mechanism for the regulator to interact with them for the entire value they offer.

Hence the need and desire to look at transactive and dynamic energy components.” He points to the UK, where optimising renewable energy or bringing in products to the market that are clearly beneficial, perhaps because of customer uptake, results in innovations which are rewarded more favorably by the regulators.

We can do no more here than point out a few of the ways that Ergon

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Energy may transform the market, its consumers and the industries that connect to it. The idea though, according to Peter Nimmo, is to deliberately position the company as one that is moving from an enhanced to an intelligent energy business model. “We aim to not only deliver better product to our customers but also a better solution to cater to the challenges technology innovation that lie ahead.” To take that forward Australia’s Energy Networks Association (ENA) and the national science body, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) are producing a network transformation roadmap (NTR). This acknowledges that the way consumers use and value energy will evolve over the long term. In 2013, CSIRO completed its Future Grid Forum which considered the decade 2015 to 2025. Both this and the roadmap are collaborative

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ventures in which all stakeholders can get involved. ‘Collaborative’ is a word Peter Nimmo uses frequently when describing his vision for growth: “It is a progressive story about innovation and using local resources and underlying capability, both physical and human but also relying on and collaborating with global partners with innovation. We

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can start in local towns in Australia, by trying to work out new models here we can solve the problems locally, then scale up to address the national debate on energy security and energy transition, enabled by renewable technology and the greater transition to a low carbon economy.�

This is how he hopes to realise the vision he has for a sustainable

energy model in Queensland that can lead Australia to attract international attention for energy providers – and regulators – looking for better ways to partner and to collaborate to help transition into a new energy market whilst supporting the broader social implications and scale facing other emerging economies.

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Peter Nimmo Director of Effective Market Reform

An ethical executive whom values economic strategies and principals to build success through new Leadership. A true value innovator and leader that delivers. Peter is a Specialist in global convergence and strategic response, an influencer and team builder for quantum leaps that translates complex concepts into real opportunities that enroll people into a common vision for success. Peter is skilled at opening the minds, and the unlocking of hidden talent with underlying resources to create the next opportunities whilst offering high levels of passion, drive and vision. Peter’s worldly knowledge is sought after in the energy, transport, water and leadership sectors.

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“At Ergon we are trying to unite our strengths and our people and our markets in a transition that allows us to continue to bring products to the customer that they actually value” – Peter Nimmo, Director of Effective Market Reform

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Digita pays d

al transformation dividends

Written by Sarah Megginson Produced by David Kulowitch

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Well overdue for a digital overhaul, the Queensland Building and Construction Commission had a huge job ahead of itself after identifying the need to revamp its processes from the inside out.

Eighteen months later, the Commission has almost concluded its digital transformation – and QBCC stakeholders are already reaping the rewards

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s the state’s building and construction industry regulator, the QBCC has evolved into the thriving and multi-disciplined public service operation it is today. Every builder and contractor in Queensland performing building work must be licensed by the QBCC, which operates other core business services around dispute resolution, insurance and compliance.

When Ben Ward stepped into the role as its CIO in 2015, he inherited aging equipment, sub-optimal systems and complicated processes in need of serious reform. For instance, many QBCC applications were not configured effectively, or were under-utilised, or duplicated with other ‘like’ applications,

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meaning many of the key applications were not well aligned with critical business processes.

Across its licensing, dispute resolution, insurance and compliance divisions, the QBCC knew it had the potential for improvement through the adoption of new technology and processes.

So, the QBCC zeroed in on two major areas for reform – digital transformation and technology transformation – and quickly got to work.

“Over the past 18 months, we’ve undergone a digital transformation that has fundamentally shifted service delivery to QBCC customers,” Ward shares.

“Under the vision and drive of the Commissioner and Executive

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Director of Customer Service, with the PMO and Information Services enabling the transformation to happen, a digital transformation strategy and a three-year technology roadmap were developed.”

Bringing overlooked risks to the forefront The QBCC immediately identified the opportunity to streamline its processes into one single service delivery platform, Salesforce, in a transition away from multiple legacy systems. Currently, it has four different systems in the back end that can be time consuming and inefficient for QBCC to operate and support.

Bruce McGregor, Executive Director of Customer Service sponsored and drove the digital transformation initiative. “We are in the process of moving away from these legacy systems, and transitioning to Salesforce. By using a single platform we’re able to provide a more seamless service to customers, along with improved access to customer

“By using a single platform we’re able to provide a more seamless service to customers, along with improved access to customer information across the business and faster response times to customers” information across the business and faster response times to customers,” McGregor says.

“This has allowed us to identify trends across the state and respond quickly with information. It’s lowering our training costs too, as we will only have to educate our staff on one system; once they’re across it, they have the ability to move more easily to different internal departments without extra training and support.”

It wasn’t just the software

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and training that required streamlining and reworking, however.

Shortly after he began working at QBCC, Ward initiated a 10-week review of IT, which revealed that more than 50 percent of its core infrastructure and desktop equipment was over five years old and out of warranty.

“As well as this, our disaster recovery times were poor, backup restorations were inadequate, and we identified some security vulnerabilities and non-compliance with security standards,” Ward says.

“To combat this, we’ve implemented security enhancements, developed security frameworks and policies and we’re implementing security awareness training.

We’re also implementing an infrastructure migration project across three phases.”

In the Information Services team, a huge and over-looked risk to the business was the fact that it relied on a heavy roster of contractors to perform essential IT functions, many of whom had been contracting to the company for several years and therefore had acquired years of operational knowledge.

“We’ve undergone an entire information systems restructure, so we’ve halved the number of contractors and invested heavily in training and upskilling. This

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“ We’ve undergone an entire information systems restructure, so we’ve halved the number of contractors and invested heavily in training and upskilling. This has included hiring more new, permanent staff, but without increasing our overall headcount” has included hiring more new, permanent staff, but without increasing our overall headcount.”

Improving customer service through new digital channels Improving internal systems has been a massive undertaking at QBCC, and it remains an ongoing process to move towards an efficient and effective set of processes.

Another key area of digital transformation has been its external offering, in terms of investing in and delivering new digital channels to its stakeholders.

With a goal of encouraging inspectors, contractors and workers to access and complete paperwork, check projects, and

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access file history, it launched online access to forms and resources as part of its digital revamp. Since launching the first stage of the digital transformation, the business noticed a 38 percent swing towards online.

McGregor adds that partnerships are “integral to this process of transforming to digital channels”, including both the internal collaboration and teamwork between PMO, IS and Customer Service, and the relationship between QBCC and external vendors.

“Those relationships have been critical. As part of the digital transformation weekly meetings were held between internal and external stakeholders

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to keep everything moving forward,” McGregor says.

The Commission’s heavy focus is already beginning to pay dividends, with customers increasingly using online methods rather than traditional, resource- and personnelheavy transaction modes, like faceto-face and phone calls. This is allowing the QBCC to engage with builders, contractors, homeowners and other users more efficiently and effectively through digital channels.

Their improvements in service delivery and efficiency aren’t going unnoticed, with the QBCC recognised by the Australian Service Excellence Awards; it was named the 2015 National Winner and the 2015 Queensland Winner for achievement in service excellence, for a state or federal government agency.

This is particularly satisfying, McGregor says, as public sector agencies “don’t have a great track record of agile delivery or successful service transformations”.

From a technology transformation perspective, Ward adds that: “In creating the three-year technology roadmap we’ve developed a number of metrics and benchmarks to assess and measure our progress and achievements, and we’re having some fantastic wins already.

For example, we identified cost savings of more than $1 million in the first six months of rolling out our technology transformation plan, and we have a strategy to decrease spending year-on-year,” he says.

“We’ve also decreased helpdesk support queue numbers six-fold, from 300 down to 50, as we’ve been able to increase service response times through improved systems and processes in our back end. The whole process is still ongoing; it’s a strategic initiative aimed at delivering superior customer benefits and customer service so it’s not a quick transformation, but it is steadily becoming a successful one.”

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Energising the smart building revolution Written by John O’Hanlon Produced by Tom Venturo

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Total Construction’s two decades as a leader in both general and niche construction are a sound basis for it to now emerge a natural partner for developers that want to use technology to achieve low cost and green credentials

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rban development is not, alas, a joined up process.

Developers, planners and business owners all tend to treat each project as an island. They may secure LEED or comparable accreditation on their office complex, hospital, factory or apartment block but till recently they have not tended to consider energy in the larger context of the precinct, industrial area – or even an entire city. These economies of scale, in association with the incentives and technology advances driving the growth of

renewable energy solutions, have presented one of Australia’s largest private construction companies with an opportunity to lead the field.

Total construction was founded in Sydney in 1994 by Steve Taylor and Bill Franks who remain as active owners while the business is led by Jeff Jones as CEO. From modest beginnings it has grown to a turnover of some A$120 million and employs a staff of 110, a structure makes for an agile approach and fast decision making.

In the last 21 years it has developed a portfolio of projects large and small in

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most sectors from schools, factories and commercial buildings to airport and infrastructure. It has carved out for itself a special niche in the field of health and aged care, a booming field given that more than 15 percent of Australia’s population is now over 65 and also that of food and beverage manufacturing. These two sectors are specialised, complex and closely regulated: Total has become the go-to construction or fit-out provider in each, having completed more than 40 health

or aged care projects, and worked on ready meals facilities, dairy production lines, bakery facilities, waste treatment facilities, abattoirs and boning rooms.

Jeff Jones CEO

Mark Ardouin NSW General Manager

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The green energy alternative The company adopts an ‘inside out’ approach, working closely with its clients and making a point of identifying itself with their business.

“We like to do things that are a bit more difficult and complex!” says James Bolton, General Manager of Total’s

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most recent division, Renewable Energies established in 2012.

“Renewable energies were a natural extension of the skillsets we have already, particularly in the food and beverage area.” And, he adds, food manufacturers are large consumers of energy so understand the need to cut costs and the opportunities presented by on-site power generation.

As he grows the division, Bolton is encountering different reactions to renewable energy. There’s still

an ‘old school’ mentality, reluctant to change and unable to see the relevance of new technology to their business. There are also a lot of what he calls ‘tyre kickers’ who commission studies and costings, look at the business case but for one reason or another don’t proceed. Luckily he is also finding many renewable energy champions who are primed with enthusiasm, push the project through and make it clear they want to include renewable solutions in their

Mark Varnam NSW Construction Manager

James Bolton Renewable Energies Manager

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Annual

$120 million revenue overall business and project: he calls them ‘leaders’. No prize for guessing which ones he likes best: these are smart businesses ready to adopt leading edge technology, and looking to partner with a construction company that can deliver it.

Benchmark partnerships One example of a definite leader is Frasers Property, developer of Sydney Central Park development, home to Total’s first renewable energy project and very much a benchmark for future partnerships.

“Frasers made it clear they wanted the greenest, most energy efficient project on the planet and have incorporated everything imaginable to get that status – hanging gardens, green walls, recycled water, smart metering systems are all designed in.”

The keystone of Central Park’s green aspirations is undoubtedly the Central Thermal Plant (CTP), a gas fired trigeneration plant that provides electricity, chilled and hot water to the entire project. The A$44 million contract to build and install the plant was granted to Total in 2012, and work started in

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“Being a diverse builder allows Total Construction We want to be judged on our ability to meet clients Our main aims are simply to work smart, and prod projects and investing in capability to deliver rene – Jeff Jones, CEO

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n to respond to a variety of client challenges. s’ needs in the long term beyond just the price. duce a quality outcome for the lifecycle of our ewable energy projects is aligned with this�

T O TA L C O N S T R U C T I O N

“Frasers made it clear they wanted the greenest, most energy efficient project on the planet” – Jeff Jones, CEO

November that year. It was split into two stages, explains Bolton. “In the first stage of the project, completed in 2013 we were required to complete the design of the plant and undertake the procurement, construction and commissioning of the plant to supply heating and cooling and power to four buildings, out of an eventual eleven, which were completed at that time.” Thanks to the complete success of Stage 1, Total was then awarded Stage 2, which includes design, procurement, construction and commissioning. The entire project was delivered on time and within budget in December 2015.

Trigeneration is twice as energy efficient as coal-fired generation. The two 1.1 MW gas engines will save greenhouse gas emissions of up

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to 190,000 tonnes over the 25 year design life of the plant, equivalent to taking 2,500 cars off the roads each year it’s operating. Chilled and hot water piped to the 2,100 apartments and 50,000 square metres of office and commercial space in the complex delivers a considerable saving when compared to the conventional installation of individual plant rooms and equipment. Instead of 21 chillers, for example, there will be just seven high efficiency chillers saving on capital cost, space, and reducing total power consumption and emissions.

Extending the networks The CTP won Total Construction the 2014 award for Best Co-generation or District Energy Project in the National Energy Industry Awards, Australia’s

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top awards for energy efficiency and excellence in performance, leadership and innovation in the sector. On the back of this project the company expects to get involved in many more district energy projects. The CTP has already attracted neighbouring properties and Total is developing an extension project to connect chilled water to the adjacent University of Technology Sydney. It has also been brought in to increase the capacity and network of an existing trigeneration facility at the headquarters of Australia’s leading airline, beside Sydney airport at Mascot.

Now Total is involved in another ambitious mixed use urban renewal project, in scale to Central Park but located at the nearby city of Parramatta. The A$2 billion contract to develop Parramatta Square was

awarded to Walker Corporation last year. It aspires to be the first of its kind in Australia to utilise smart city technology, will be built to a 5 Green Star rating of the Green Building Council Australia. Benchmarks will be set for sustainability and liveability at the precinct level. This type of development is driven by scale and at Parramatta there is again plenty of scope for extending the network beyond the six buildings in the precinct. Total investment in buildings at Parramatta Square and across the Parramatta region is estimated to reach A$ 8 billion.

The establishment of a trigeneration facility in an industrial or mixed use area will always attract the attention of neighbouring businesses keen to reduce their energy costs, and the client will always have an eye on

“Renewable energies were a natural extension of the skillsets we have already, particularly in the food and beverage area” – Jeff Jones, CEO

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the opportunity for expansion, says James Bolton. “Connecting to UTS was always part of the master plan at Central Park, and at Mascot we are going to connect with new offtakers on the airport.

Once the

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next door neighbour finds others are connected, it creates an eagerness to join!”

While keeping abreast of district energy projects across Australia will take up a lot of his time he is also very keen to apply renewable solutions in some of Total’s core areas of business. Aged care facilities, he points out are often in extensive premises with a lot of flat roof area and an air conditioning load that lends itself to solar installation. It would

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help the private care providers that bring their new build and extension projects to Total Construction an opportunity to bring their costs down, and if they are not as forward thinking as they should be, they may be pushed to renewable thinking by their residents. These belong to the baby boomer generation, he points out, and expect high standards in food, and are environmentally aware.

Food and beverage manufacturers too are coming to him with their

enquiries about environmentally friendly waste water treatment or anaerobic digestion to create biogas for on-site power generation.

Bolton looks forward to integrating more solar photovoltaic or thermal elements in future district energy schemes. It will be, he thinks, an important element in establishing Total Construction as the leading smart builder in Australia, partnering with the most forward looking clients.

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