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February 2011 | Australian Resource Focus


Editor’s Pick At some point, one has to wonder, when is enough enough? In 2006, seasons of drought threatened Australia’s agriculture, environment, water table, and commodities production. In 2008, a global financial crisis hit - hard - and brought with it economic ripple effects which are still being felt to this day. In 2009, the state of Victoria was set ablaze by as many as 400 individual bushfires, leaving 173 people dead and over 400 injured. In late 2010, a New Zealand coal mine experienced a series of catastrophic explosions, resulting in the tragic loss of 29 lives. In December of 2010 and January of this year, devastating flooding rendered three quarters of the state of Queensland a disaster zone. Not one week ago, in stormed Tropical Cyclone Yasi, causing an estimated AU$3 billion in losses. And now, as I write this, wildfires near the Western Australian capital city of Perth that have raged since Sunday - destroying more than 60 buildings - are at last under control.

Located in the Pacific Ring of Fire, Papua New Guinea is a nation rich in minerals such as silver, copper, chromite, cobalt, gold, nickel, and molybdenum. It is this latter metal that drew Marengo Mining to the region in 2005. Eager to gain a toehold in the region, Marengo has established the Yandera Project, with support and participation from local residents. In contributing editor Robert Hoshowsky’s feature, Exploring the Ring of Fire, we take a closer look at this dynamic company. Hon Stephen Robertson is Queensland’s State Minister for Natural Resources, Mines & Energy. In this month’s Queensland - Mining the Future, he sits down with ARF’s John Boley to discuss issues in resources, the environment, and the flooding faced recently by the region.

The recent flooding and storms have had a particularly strong impact on the Resources sector. Mine flooding has shut down a number of resource operations in the state of Queensland, impacting not only the mining sector itself, but also reducing the quantity of fuel available for such tasks as steel production. Business and shops, large and small, have found themselves - literally - under water, and many have been forced to suspend operations during the recovery process. Orders and obligations have been put on hold while the more fundamental tasks of repair and safety take precedence. Yet the very process of rebuilding may yet place a premium on such resources as steel and coal, as repair efforts spur the need for new material. The inherent vulnerability of the sector may draw attention to the need for increased investment in Australia and Australians in the form of skills training and regional projects. And the shared experiences of risk, recovery, and loss will almost certainly continue to bring out the very best in the Australian people - tenacity, resilience, a sense of community. The firms we at Australian Resource Focus profile for you this month embody all of these qualities. With appropriate government intervention, patience - and a little luck - these and other leading edge resource firms may emerge from these most recent events with their feet planted once again on dry and solid ground, ready to face a new day. Tim Hocken Australian Resource Focus | February 2011

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Production Editor Tim Hocken Creative Art Director Kulvir Singh Director of Business Dev. Robert Chambers Head of Research Lorne Moffat Research Manager Cameron Walsh Caleb Richard

GHD

Director of IT Christian Cooper Contributing Editors Jaime McKee Robert Hoshowsky

06 News and Events

Contributing Writers Aleisha Parr Jen Hamilton John Boley Melissa Thompson

Jeff Hocken Publisher

8th Floor, 55 Hunter St Sydney NSW 2000 GPO Box 4836, Sydney NSW 2001 Phone: 02 8412 8119 ABN 93 143 238 126

Industry News and Events

14 GHD

Local Skills for Global Solutions

22 Fuel Tank & Pipe

The Driving Force in Bulk Fuel Storage

28 Stephen Robertson

State Minister for Natural Resources

34 Marengo Mining

Exploring the Ring of Fire

44 ABM Resources

Drill Early, Drill Deep

52 Flooding Impact

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February 2011 | Australian Resource Focus

Counting the Cost of Australia’s Flooded Mines


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Counting the Cost of Australia’s Flooded Mines

State Minister for Natural Resources,

Flooding Impact

Mines & Energy

Minister Stephen Robertson

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58 Orontide

Madco: Machining At Its Best

66 QRC

Telling the Story

74 Icon Engineering

Under Pressure

80 Powertrans

Robust and Resilient

66 Marengo Mining Australian Resource Focus | February 2011

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February 2011 | Australian Resource Focus


Australian Resource Focus | February 2011

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6th Annual CTL & Coal Gasification February 28 – March 1, Novotel Brisbane, QLD For an overview of the CTL & UCG industries at both the national and international level, updates on projects from companies such as Cougar Energy and Ambre Energy, and information on advancements in technology, attend the Annual CTL & Coal Gasification Conference. The conference will also cover the market outlook for coal and the challenges facing these industries: converting Australian lignite to crude, water disposal, and securing land access. Delegates can also expect ample networking and exhibition opportunities. For more information visit: www.informa.com.au/ctl

Clean Energy World February 28-March 2, Hilton Sydney, NSW There are many questions related to the clean energy sector: How can renewable projects become commercially viable? How can renewables be incorporated into current supply chains? How can clean energy projects stimulate investment and secure government funding? Find answers to these questions and many more at Clean Energy World 2011. The present and future prospects of a diverse range of energy projects will be considered, from wind to solar, biomass, geothermal and gas-fired. Also, strategies such as trigeneration and making existing power stations cleaner will be explored. For more information visit: www.terrapinn.com/2011/clean

Collision Avoidance in Mining March 8-9, Novotel Brisbane, QLD Safety is a number one priority when dealing with the massive, often quick-moving vehicles and automated equipment used in mining today. With the help of the Collision Avoidance in Mining conference you can find out how to reduce this risk thereby reducing the risk of injury, equipment damage, and lost time. Presenters will discuss implementing collision avoidance technologies, ensuring road safety, promoting risk awareness, eliminating sources of human error and the unique challenges of collision avoidance in underground mine sites. For more information visit: www.iir.com.au/collision/dm

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February 2011 | Australian Resource Focus


GIS in Mining and Exploration March 8-9, Holiday Inn, Brisbane, QLD Advance your knowledge base regarding the use of GIS in exploration targeting, prospectivity mapping, and mine advancement. Learn how 3D Modelling and 3D GIS can aid in regional exploration. Examine mobile capabilities, data quality and accuracy, using GIS to monitor environmental impacts, best practices in the industry and much more. Plus, take advantage of the inclusive masterclass which includes presentations and hands-on exercises to outline the procedures used in GIS-based mapping of mineral prospectivity. For more information visit: www.gisinmining.com.au

Mine Site Automation and Communication March 15-16, Chifley on Lennons, Brisbane, QLD Discover how to cut costs, increase productivity and conserve resources with the latest mine site automation and communication technologies. This conference will not only reveal the benefits of automation but will also help you determine the technology best suited to your mine site, maximise the return on your investment, implement reliable communication systems, and understand future trends in mine automation and wireless communication technologies. Use the two interactive workshops to further your understanding and to discuss different perspectives with your colleagues. For more information visit: www.mineautomation.com.au

The 14th Annual Global Iron Ore & Steel Forecast March 21-24, Perth Sheraton, WA This comprehensive four day event has something for everyone involved in the iron ore and steel industry. Choose from masterclasses focused on iron ore processing, and on blast furnace and alternative ironmaking, as well as pre-conference workshops teaching ocean freight techniques and commodity price benchmarking. Conference presentations will cover industry forecasts, emerging projects, pricing mechanisms, and Brazil’s and China’s iron ore markets. The final day will focus on manganese and other steel additives. For more information visit: www.globalironore.com.au

Australian Resource Focus | February 2011

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Pike River Coal Min

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xperts at the recent inquest into last November’s disaster at the Pike River Coal Mine have determined that miners died immediately or soon after the first explosion that claimed 29 lives. Chief Coroner, Judge Neil MacLean, said the men – aged 17 to 62 – were believed to be in different areas of the Pike River mine, with up to half of them trapped in one area. The causes of death were due to the initial explosion, a lack of oxygen, and exposure to high levels of methane and carbon monoxide. A medical expert stated the miners likely fell unconscious and into a state of acute hypoxic hypoxia immediately after the initial explosion. Death likely resulted within three to five minutes, and oxygen levels – at just 1.1

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February 2011 | Australian Resource Focus

per cent – would have been much lower than the 8 per cent needed to sustain life. The first explosion took place at the New Zealand mine on November 19, 2010. At the time, levels of toxic gases were considered lethal for rescue crews to enter. After searching with cameraequipped robots failed to find the miners, a second blast occurred on November 24, followed by a third and a fourth soon after. Although no bodies have been recovered from the site, death certificates will be issued for every man who perished in the disaster. At this time, it remains uncertain if the bodies of the miners will ever be recovered.


ne Inquest Later this year, a Royal Commission will be held to look into a number of issues surrounding the disaster, including the cause of the explosions, mine safety and legislation, and rescue and recovery operations at the Pike River Coal Mine. Although it has only been a few months since the miners lost their lives, there are calls for an open cast mine at Pike River from Grey District Mayor Tony Kokshoorn. Closed since the November blast, Kokshoorn said an open cast mine would improve the economy and create much-needed jobs for those in the West Coast and New Zealand. The mining would take place on conservation land in the Paparoa Ranges, and entail the removal of 150 metres of rock to reach the coal seam. The extracted coal could be worth around $6 billion. Some, like Energy Minister Gerry Brownlee, have said they will wait until the upcoming Royal Commission findings into the disaster are released. In the meantime, Pike River Coal remains in receivership.

Controversial Wilderness Exploration

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ozens of protesters recently congregated outside Parliament House in Adelaide to protest the recent renewal of an exploration licence for Marathon Resources. The licence will allow Marathon to explore the Arkaroola Wilderness Sanctuary in the Flinders Ranges, a move strongly criticised by conservation groups who insist the area needs to be protected. The decision is a controversial one. Adjacent to the Gammon Ranges National Park, the private Arkaroola Wilderness Sanctuary was declared a sanctuary under the National Parks and Wildlife Act by the State Government in 1996. Known worldwide as an eco-tourism destination, the manager of the Arkaroola Wilderness Sanctuary says conditions for exploration were made without her input. In addition, Marathon’s rights to explore for uranium had been suspended for three years. In February of 2008, the company was found to have significantly breached its licence for inappropriate disposal of exploration drilling waste in the wilderness, and was required to clean up several dump sites. The company has agreed to a number of conditions imposed by the South Australian Government regarding exploration for uranium. Some, like Mark Parnell, Greens member of the Legislative Council in South Australia, state the importance of the Arkaroola Wilderness Sanctuary cannot be underestimated, calling Arkaroola “just too precious to mine.” Australian Resource Focus | February 2011

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Australian Miner Considers Seizing Cargo

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after three Chinese customers defaulted on sales contracts. In the midst of the global financial crisis, one of the defaulting customers was Rizhao Steel, who was ordered to pay Mount Gibson $114 million (U.S.) for breach of contract by an independent arbitrator last year. To date, Rizhao has not made any repayment, and continues to purchase iron ore Back in 2008, Mount Gibson was affected from other Australian miners. fter having a number of customers default on their sales contracts, Mount Gibson Iron says it may have to seize iron ore cargo to recoup some of the millions of dollars the company is owed. The ore, belonging to a Chinese steel mill, was bought by Rizhao Steel Holdings.

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February 2011 | Australian Resource Focus


India’s NMDC to Gain Australian Iron Ore Mines

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he National Mineral Development Corporation (NMDC), India’s largest iron ore miner, will acquire two Australian iron ore assets this financial year. It is reported that NMDC will have 51 per cent and management control of both assets, expected to be considerably large investments.

NMDC recently inked a deal with OAO Severstal – Russia’s top steel producer – for the creation of a two-million tonne plant in Karnataka, and is in the process of setting up a three-million-tonne steel plant in the central Indian state of Chhattisgarh, close to rich iron ore mines at Bailadila, an area first mapped In addition to the two assets in Australia, around 1898. NMDC is also investigating four additional coal and iron ore assets in Mozambique and Albania. As India’s top iron ore miner (by output), NMDC is making moves towards diversifying into steelmaking. Coking coal and iron ore are crucial elements to steel production, and it is estimated that about 98 per cent of all iron ore is used for steel production. To fuel their supply of coking coal for steel-making, Indian companies import a great deal of the raw material from Australia and New Zealand. Australian Resource Focus | February 2011

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February 2011 | Australian Resource Focus


-By John Boley Australian Resource Focus | February 2011

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F

rom its genesis in Melbourne in 1928 as a water and sewerage specialist, GHD has grown to be an international network of engineers, architects and environmental scientists serving clients globally in water, energy and resources, environment, property and buildings, and transportation. With a total of more than 6,000 staff worldwide and revenue in the financial year to mid2010 of $998 million, in Australia GHD was ranked 38th in the 2010 Business Review Weekly Top 500 Private Companies listing and was one of the five finalists in the magazine’s 2010 Private Business Awards for companies with revenues over AUD100 million. According to its chairman, GHD endured a “challenging year”, due not least to the effects of the global financial crisis. According to Phil Baker, environmental business leader, Mining and Oil & Gas, “we have been cautiously optimistic all the time – I’d like the market to see we set good objectives and we have maintained those, and we have still got some cautiously optimistic growth patterns projected. We believe we will achieve those and we believe the focus [for them] will be China, Australia and north America.

tralian-owned company, not publicly listed. We are proud of our heritage. So we have some very deliberate strategies about what we want to achieve and how we want to go about it. We are looking forward with cautious optimism to the next year or two, looking at around 15 percent growth (across the total business), which is strong. Part of that will “We are a large organisation but we’re be underpinned by the resources secproud of the fact it’s a staff-owned, Aus- tor.”

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February 2011 | Australian Resource Focus


GHD Environment There remain some very significant challenges facing the resources sector in Australia, says Mr Baker. One of them is finding skilled people at a time when “our country is experiencing unprecedented growth levels in mining.” You only have to look at the statistics from the big conglomerates, he says, to see the capital spend and growth numbers that are being recorded. “We see a situation where they are shaking their

heads wondering where they are going to get the key resources from to help them deliver these projects and meet the growth objectives they are looking at.” Which skills are in short supply? “Probably about everything! That’s not being coy, it’s a frank response.” GHD is doing something about it. There’s the GHD Business School, a branded approach Australian Resource Focus | February 2011

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GHD Property & Buildings

“We are a large organisation but we're proud of the fact it's a staff-owned, Australian-owned company...we are proud of our heritage.� - Phil Baker, environmental business leader, Mining and Oil & Gas

GHD Energy & Resources

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February 2011 | Australian Resource Focus


to training, learning and development across all its operations, now entering its seventh year. With a core curriculum of over 140 programs, the school delivered more than 2,600 face-to-face programs in 2010. It also expanded its programs to develop the technical, job delivery and client relationship capabilities of staff and introduced a range of e-learning programs in five languages.

also interested in skilled professionals with Mandarin speaking and readingwriting skills that can help particularly with our Chinese investment clients.

“I have worked in China. I was there for quite a while and I have immense respect for the Chinese education system. Their professional skills are really excellent and it’s just a matter of getting people that can cross the language and In addition, GHD is “looking beyond cultural boundaries.” borders. We have quite a cosmopolitan professional suite of people in our With China’s strong economic growth organisation. We have had some very and insatiable demand for iron ore, coal deliberate recruitment efforts in the UK and gas, there are bright prospects for recently; we are speaking to quite a few Australian and Chinese businesses to people from South Africa; but we are create commercial partnerships. GHD

Australian Resource Focus | February 2011

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GHD’s operational model of working globally and delivering services locally is particularly advantageous... as it enables GHD to provide the right resources at the right time and in any geography.

GHD CityCat Terminals has been working closely with a number of Chinese organisations to facilitate resources projects in Australia, including the Shenhua Group, China Metallurgical Group Corporation (MCC) and energy operators involved with the Port of Gladstone expansion. Gavin Becker, Mining & Metals business leader, believes GHD’s operational model of working globally and delivering services locally is particularly advantageous to Chinese corporations, as

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February 2011 | Australian Resource Focus

it enables GHD to provide the right resources at the right time and in any geography. “We can offer clients access to our innovation, experience and capabilities, in both China and elsewhere. We have a strong track record in a number of key mining and resources projects around the world and have the ability to provide multi-disciplinary teams to address our clients’ mining, resources, water, port infrastructure, power and environmental requirements. We have four offices in China and numerous Chi-


GHD Transportation nese technical specialists located in our global operations to assist with the cultural and language ‘bridge’ needed to streamline project execution.” Mr Baker adds: “Something we are very proud of is that GHD has maintained quite an aggressive graduate intake over the last couple of years.” The company assessed its activities during the GFC but came out “confident we were doing things right” and instead of applying the handbrake like many com-

panies, actually let it off a bit to build momentum. “We had a 2009 graduate intake of some 145 graduates, and in 2010 around 150 – of which a substantial proportion is female.” The pressure is not only on skills and resources, says Mr Baker, but also on infrastructure and infrastructure management, which he believes “is another way in which organisations such as GHD can play a big role in helping Australia build its position on the world stage.” Australian Resource Focus | February 2011

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February 2011 | Australian Resource Focus


-By Aleisha Parr

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fter an extensive investment in Information Technology services and systems, Fuel Tank and Pipe is now able to provide its clients with a full turn-key bulk fuel storage service. This up-andcoming Western Australia company’s services include the design, fabrication, construction, and maintenance of critical bulk fuel storage, liquid storage, ammonia storage, and associated infrastructure to the mining, resources and water sectors nationwide.

ticated content management system, Fuel Tank and Pipe has enhanced its efficiency and quality capabilities in the field.

“The new website is the culmination of 12 months of investment in IT to provide Fuel Tank and Pipe with a state of the art system that enables a best practice approach to data management and design systems,” explains Sean Roche, IT Manager for Fuel Tank and Pipe. “Our systems provide both a secure and staWith its recent IT advancements hinged ble platform for our design staff and a on the development of its new website, communication network for our remote providing a locally designed, sophis- construction and installation team.” In

Australian Resource Focus | February 2011

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As members of the Petroleum Industry Contractors Association (PICA) and the Association of Consulting Engineers Australia (ACEA), Fuel Tank and Pipe is emerging in the industry. The company has experienced solid growth throughout the past five years and has become a preferred supplier with many mining companies and Engineering, Procurement, Construction Management (EPCM) companies including Rio Tinto, BHPB, Worley Parsons, Bilfinger Berger, Lycopodium, Citic Pacific Mining, and Leighton Contractors. conjunction with this investment has been a continuous training program for all of Fuel Tank and Pipe’s employees, aiding in the company’s pursuit of ISO 9000 accreditation. The company was incorporated in 2006 by Des Roche, as a culmination of Mr Roche’s diverse but connected experiences in the bulk fuel industry. With a resumé boasting experience as a Construction Superintendent for a privately owned preferred Mobil Australia supplier, a Specialist Advisor for commercial and industrial fuel and oil installation design and construction, and significant

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February 2011 | Australian Resource Focus

industry experience with Shell and Mobil, Mr Roche was committed to providing a one-stop-shop for the industry. To help in this process, Mike Raine joined the team as Director and Engineering Manager. The company employs eight engineers and CAD/Solid Works operators, and a full fabrication and construction team based in Perth and in the Pilibra. This diversity allows the growing company the ability to oversee the entire lifespan of a project from design through to maintenance, ensuring a high quality result to clients, while maintaining strong budgetary controls.


gins with the use of its state-of-the-art CAD systems including 3D solid modelling, virtual reality modelling, finite element analysis (FEA), computational fluid dynamics (CFD), pump performance & pipe system modelling and Pipe flexibility analysis compliant to ASME IX B31.3, AS4041 and AS2885. Through this technology, the company is able to provide preliminary studies, scopes of work and full system design to support all construction activities; compliance audits with the relevant Australian Standards for “Storage and Handling of Dangerous Goods” AS1940 and National MeaFuel Tank and Pipe’s design process be- surement Institute (NMI); and systems As members of the Petroleum Industry Contractors Association (PICA) and the Association of Consulting Engineers Australia (ACEA), Fuel Tank and Pipe is emerging in the industry. The company has experienced solid growth throughout the past five years and has become a preferred supplier with many mining companies and Engineering, Procurement, Construction Management (EPCM) companies including Rio Tinto, BHPB, Worley Parsons, Bilfinger Berger, Lycopodium, Citic Pacific Mining, and Leighton Contractors.

Australian Resource Focus | February 2011

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design for storage and blending of bio- logistics tools to ensure each project diesels and ethanol to meet emerging is not only built to the highest quality standards, but on time and on budget.� State legislative requirements. Additionally, the company is capable of producing designs for: API 650 compliant welded steel storage tanks up to and exceeding 20ML; the repair, inspection and relocation of welded storage tanks to API 650; small tank storage from 10kL to 110kL based on bullet, self-bundled and containerised storage tanks; and ammonia storage tanks. Fabrication begins, with the company able to provide welding in compliance with AS4041, AS3992, AS1554 GP and SP, and AP1650. With its full staff of welders, fabricators and construction staff, Fuel Tank and Pipe is able to undertake any scale project through the actual construction phase. “The company owns and operates all of its own construction equipment, trucks, cranes, and other sundry

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February 2011 | Australian Resource Focus

Able to provide bulk fuel, hydrocarbon, water and liquid storage with tank volumes from 50kL to 25ML, as well as mechanical handling systems for sand and ammonium nitrate, the company also offers fuel terminals and storage facilities including rail loading and rail unloading services. It boasts industrial fire-fighting systems; heavy vehicle and plant workshop mechanical lubrication infrastructure; and waste-water and sewage treatment plants, including oily water treatment plants. As part of its turn-key approach, Fuel Tank and Pipe further provides planned and corrective maintenance of major mechanical plant and infrastructure and annual inspections for registered plants. It offers full metering calibration


and compliance auditing to AS1940 for out the entire tank construction prodangerous goods, as well as other rel- cess, Fuel Tank and Pipe was proud to report that it had no incidents or lost evant Australian safety standards. time during the high risk confined space Safety is an area of great interest for work. Fuel Tank and Pipe, a past recipient of the Sino Iron Contractor of the Month With such attention to safety and qualAward. The company was recognised ity standards alongside its comprehenfor its proactive management of work sive service offerings, it is not surprising undertaken in confined spaces and that Fuel Tank and Pipe is on the rise at heat stress during the construction of the beginning of 2011. Having endured the CPM 4.8ML Bulk Fuel Farm in Cape - and in fact grown throughout - the rePreston. The heat stress management cent GFC, the company’s future looks program utilised by Fuel Tank and Pipe good. on this project involved a buddy system to ensure that a host of safety proce- “Fuel Tank and Pipe’s unique offering dures were being observed, including which combines design, construction, proper fluid consumption, regularly en- and maintenance provides our compaforced rest breaks, regular temperature ny with an opportunity to contribute to monitoring and the use of ice vests and the upswing in activity at the beginning hats. Prior to the closing of the project’s of the curve,” says Mr Raine. “It promtanks, a trial evacuation was carried out ises to be an interesting year for Fuel with the assistance of the CPM onsite Tank and Pipe, and for the West AustraEmergency Response Group. Through- lian economy as a whole.” Australian Resource Focus | February 2011

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Stephen Robertson State Minister for Natural

Resources, Mines & Energy

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February 2011 | Australian Resource Focus


ON THE QUEENSLAND FLOODING The total cost to the nation in rebuilding efforts is currently estimated at about $10 billion, or one percent of GDP. An accurate assessment of the impacts will not be known for weeks or even months I expect the resources sector will be among those that will lead the way in helping the state get back on its feet as soon as possible. It is vitally important that the resource operations get back to full production quickly and continue to employ some of the thousands of Queenslanders who have been affected by the floods. I am also happy to see resource companies have led the way in donations to the Premier’s Flood Relief Appeal and have contributed many milAustralian Resource Focus | February 2011

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lions of dollars. The foods have been devastating, but Queensland is sending a clear message to the world and that is “we are open for business.” 29 mines declared “force majeure” because of flood inundation. Some have been impacted worse than others and may take longer to get back to full production. For some mines it will be a matter of weeks but we have to be realistic and understand others may not be back to

full production for up to three months. The impact on CSG operations was minimal, the Minister added. Existing extraction processes were not overly affected and in fact gas proved to be a valuable backup for some industries when power was cut off. Recently approved CSGLNG projects are in planning and design stages and timelines for construction and development are expected to recover very quickly.

ON THE ENVIRONMENT I think 2010 was the year when the views of landholders and rural communities have really been brought to the fore. Certainly as a government we understand some of the concerns that have been expressed and we have responded to them; and it’s also fair to say that as part of our response we have also brought the industry along with us to ensure that they understand they need a social licence to operate. They can get all the approvals they like from government to operate, but there also needs to be a level of consensus with the communities in which they operate; and they can only do that by demonstrating good behaviour and a strong commitment to environmental values. What we’ve seen (in 2010) is that the coal seam gas industry has been moving into parts of Queensland – rural Queensland – that have never had, or have had only a very passing, relation-

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February 2011 | Australian Resource Focus

ship with the resources sector, unlike other parts of Queensland where that relationship between the agricultural sector or pastoral industry and the coalmining industry is a very mature one. That brings with it challenges of ensuring that questions that landholders have – and express – are taken seriously and responded to appropriately by both government and the industry.


ON A MINING TAX

I’ve always been a very strong believer that the resources of this state and indeed of this country are owned by the people of the state and the country and therefore we have a right to expect an appropriate return for the exploitation of those resources. Yes, we understand that companies need to be profitable – that’s how investment is generated – but the people of the state and the country also have a right to expect a return from those resources. The challenge is always how you get that balance right. I certainly understand that we live in a global economy and that Australia needs to retain a level of competitiveness against other resource destinations, and that’s very much at

the heart of the current debate. The difficulty I think is that the Commonwealth is moving into an area where traditionally they haven’t had a role to play because the states have been the destination of royalties to date. Constitutionally it’s been the states who have been responsible and the owners on behalf of the people of these natural resources. So I think some of the difficulties the Commonwealth is going through is perhaps as a result of moving into areas they have traditionally not played in. Nevertheless I would hope these issues are being worked through in a way that, at the end of the day, a good balanced landing point is achieved. Australian Resource Focus | February 2011

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ON RELATIONS WITH CANBERRA It’s not a political hot potato in Queensland but certainly it’s an issue the industry is very concerned about. We’ve made our views known to Canberra before in terms of our concerns about how these new taxes might be applied. I would like to think that part of the balanced landing point achieved also recognises that we can’t stifle exploration towards the next generation of mines that we need to develop to ensure that the resource industry remains a strong part of not just my state but Australia as well. They have their responsibilities under the federal Environmental Protection and Biodiversity Conservation (EPBC) Act. That oversight occurs after the project proponents go through the state process which is similarly rigorous. So while

I guess the project proponents would like to see those processes go through in parallel... the Commonwealth have interests on a national basis as well and it’s appropriate that they add their layer of oversight in addition to the state’s.

ON THE SURAT BASIN It wouldn’t surprise me that only half the total spent is with Australian companies. There is nothing unusual about the make-up of the consortia that are currently going through the approvals process – they are a mix of Australian and overseas companies that not only bring capital, they bring to the table access to markets and long-term contracts for the energy that is produced – and that’s an important part of getting these

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February 2011 | Australian Resource Focus

projects to a bankable level. Ultimately, if there are concerns about the composition of the consortia, that’s a matter for the Foreign Investment Review Board to take into account and that’s why we have the FIRB at the Commonwealth level to ensure our nation’s interests are protected and we are strong supporters of that. [It’s a very beneficial project for the


state]. Without a doubt. And in terms of looking ahead to the challenges of operating in a carbon-constrained world, the fact that we can use the development of the coal seam gas industry as a transition fuel both domestically and overseas is an important component of how we can move to a cleaner energy future.

ON SKILLS SHORTAGES

It’s the number one challenge we are facing. While the Queensland government has been working hard to ensure that the necessary infrastructure for education and training is in place at both state and industry level, obviously there is a role for the Commonwealth government to play in understanding the level of demand for a range of skills and qualifications and how that may be achieved also by a targeted skilled migration programme. The resources sector is an important contrib-

utor to the overall Queensland economy. Around 20 percent of the state’s economic output comes from it either directly or indirectly. The challenge is always how we achieve an appropriate return to the people of Queensland from the exportation of those natural resources. We have in place royalty regimes – they’ve been in place for many years – that provide an immediate dividend to government that allows us to invest in social infrastructure. Australian Resource Focus | February 2011

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-By Robert Hoshowsky

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February 2011 | Australian Resource Focus


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lush land situated north of Australia and east of Indonesia, Papua New Guinea (PNG) occupies the eastern half of the island of New Guinea, along with hundreds of smaller islands. Rich in culture and tradition, many of Papua’s residents live in rural villages dotting the coast, or in the mountainous areas and rain forests. Since gaining independence from Australia back in 1975 and becoming an independent member of the British Commonwealth, some locals have migrated to urbanised areas like Port Moresby, the capital of PNG, while others work in some of the country’s rich mining regions. Located along the area known as the Ring of Fire – sometimes called the Pacific Ring of Fire – PNG is known for its active volcanoes, shifting tectonic plates, and vast mineral resources, including silver, copper, chromite, cobalt, gold, nickel, and molybdenum. A hard, silvery-white metallic element with properties similar to chromium, molybdenum (Mo) is a malleable metal used to strengthen steel alloys. Able to withstand high temperatures and pressures, the strength of molybdenum and its resistance to corrosion makes it idea for manufacturing aircraft and automobile parts, and to create corrosion-resistant pipelines, among many Australian Resource Focus | February 2011

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other uses. Considered by many to be the metal of the 21st century, molybdenum is one of the valuable minerals being mined at the Yandera Project, an initiative of Marengo Mining Limited.

the Yandera Central Porphyry System has seen approximately 80,000 metres of diamond drilling (over 240 drill homes).

“It really has an interesting history. The locals have been using molybdenum particularly as face paint for traditional dancing for probably hundreds of years,� says Les Emery, Managing Director of Marengo Mining Limited. Containing one of the largest undeveloped porphyry copper-molybdenum-gold deposits in the south-west Pacific region,

The long history of mining in PNG goes back to 1878, and has produced worldclass gold and copper mines. In the 1970s, several companies, including BHP Limited and Kennecott Copper, came and went until the 1980s, when a geologist who had been there many years earlier – and who always felt the project was underestimated or under-

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Over 130 Years of Mining


valued – decided to resurrect exploration in the area. “I decided after looking at it that the project really was what we were after, and that it was a companymaking asset,” says Mr Emery of Marengo, who negotiated entry into the project in 2005, bought its partners out, and acquired 100 per cent of the project in 2006. Listed on the Australian Securities Exchange (MGO), the Post Moresby Stock Exchange Limited (MGO), and on the Toronto Stock Exchange (MRN), about $90 million has been raised. Marengo also boasts a number of wellknown major shareholders, including

stock investor, businessman, and zhilanthropist and chairman of Soros Fund Management LLC George Soros, who holds 20 per cent of Marengo. Another 27 per cent is held by Sentient Global Resources Fund. Prior to his involvement with Marengo Mining, Mr Emery had almost four decades’ worth of first-hand experience with the Western Australian mining industry, in the areas of exploration, mining, and corporate administration. A former Managing Director for Lynas Corporation Limited for 15 years, Mr Emery was Australian Resource Focus | February 2011

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mines, so I’ve always been involved,” he says. instrumental in transitioning Lynas from explorer to gold producer with the Lynas Find Gold Mine. In addition to his experience with Lynas, Mr Emery has also served as director for a number of listed Australian resource companies, worked for Australia’s Department of Mineral and Petroleum Resources.

Unlike some other places around the world, investment in mining exploration and development in Papua New Guinea is growing, with many sound reasons. The location in the Ring of Fire makes PNG a mineral-rich locale. As a former Australian territory, it is a Commonwealth country, and retains a British background of Parliament. Described by Mr Emery as “very miningfriendly,” PNG also has advantages over other mining countries – like those located in the former USSR – with stronger, structured mining laws and legislations, which are just some of the many reasons Marengo has chosen to focus its efforts on PNG.

“A lot of the challenges you’ve got in other countries – uncertain legislation, “I started working on government interference, local interferunderground gold- ence, security risks, violence, and the Australian Resource Focus | February 2011

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the rarest elements in the Earth’s crust, with a high melting point exceeded only by tungsten and carbon. To date, low availability and high demand make rhenium one of the most expensive industrial metals, and it is often used to in the production of gas turbine engines, with At present, Marengo’s sites in PNG are a very high tolerance to heat and wear. accessed through helicopter, and there are plans to construct a major access By the end of this year, Marengo will road as part of the mine development. have completed about 70,000 metres of To date, copper, gold, and silver have diamond coring, and “we will be pretty been found, along with rhenium. Sil- close to finishing the feasibility study on very-white in colour, rhenium is one of the project, so we’ve come a long way like – we don’t experience that in PNG,” says Mr Emery. “We’re there at their invitation, and we can actually develop a mine that’s going to give good return. And we can do that, not at the expense of the locals or the nation.”

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in six years,� according to Mr Emery. At present, there are five drill rigs in operation, and two full-time consultants at the Yandera Project, which is expected to yield about 100,000 tons of contained copper and copper concentrate per annum, along with 1,500 tons of contained molybdenum, and 50,000 ounces of gold, along with silver and rhenium.

and extending over about 100 km of the Bundi Fault, a geological structural zone. Crush and grind will be done on site, about 100 km southwest of Madang, a sea port. The area’s proximity to growing Asian markets and the high quality of concentrate make the Yandera Project of great interest to organisations wishing to secure long-term access to molybdenum and other minerals.

Proximity to Growing Asian Markets Along with mining, respecting the naLocated 95 kilometres south west of the provincial capital of Madang on the north coast of PNG, the Yandera Project consists of a number of exploration licences, covering over 1,900 square km United Pac Drill - 1.2 page ad 17/12/10 1:52 PM Page 1

tives of Papua remains a chief priority for Marengo. At present, almost all of the 80 full-time staff are locals, and the company also hires day labourers to help keep the five drill rigs running alUnited Pacific Drilling

UNITED PACIFIC DRILLING (PNG) LIMITED PO Box 108 Madang,Papua New Guinea Tel: 422 2411 Fax: 422 2830 Email: wkh@upd.com.pg Website: www.updpng.com United Pacific Drilling (PNG) Limited, Fiji Branch Email: wkh@upd.com.pg Servicing the MIning and Petroleum Industry in Papua New Guinea continuously since 1969 Man Portables Drill and Blast Services Geotechnical Drilling Geological Drilling Underground Production Drilling Engineering Services Air Core Site Investigation Drilling Mine Site and Remote location operations Reverse Circulation PROFESSIONAL PERFORMANCE CONSISTENT PRODUCTION

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most 24 hours a day. “We employ most able-bodied people in the village, and that will continue when we go into production,” says Mr Emery. “The bulk of our staff will be PNG nationals, and the bulk of the semi-skilled and unskilled labour will be locals, both down at the concentrator and on mine sites. So we’re very focused on hiring locals because of the harmonious workforce you finish up with, and the relationship – you’re not importing thousands of people, and it’s the right thing to do.” In addition to hiring locals, the company spends a great deal of time on community relations and keeping locals informed about the site, and dealing with any issues as they arise – after six years in the field,

it has developed a relationship of respect with locals, which will continue. “We know them pretty well, and they know us pretty well,” says Mr Emery. “Too many companies focus purely on the technical aspects of a project, and not on the soft issues, like local communities and cultural issues. We are a very people-related company.” Named after Napoleon Bonaparte’s faithful horse Marengo, the company bearing the name of his steed will continue to develop the Yandera Project for years to come. “Marengo served his master well for 35 years, so hopefully we can do the same for our shareholders.” Australian Resource Focus | February 2011

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-By Aleisha Parr

For many companies, the path to success is careful and slow. For others like ABM Resources, it is aggressive and fast. As Australia’s largest landholder for junior gold exploration, this company’s big picture view and vigorous approach have proven quite lucrative. With gold prices soaring to record highs, ABM Resources is enjoying its hard-earned success as it unlocks the final frontier of gold discovery in Australia.

ABM Resources

“We’re about drilling holes and lots of them - opening up new terrains and new discoveries,” says the company’s spirited Managing Director, Darren Holden. “We’ve seen some Australian companies head overseas, to explore places like West Africa, with some good success. There seems to be this belief in Australia that there aren’t major gold discoveries left in this country. There are - you just can’t expect them to be Australian Resource Focus | February 2011

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The ABM Board of Directors overlooking the Buccaneer Porphyry discovery.

sticking out of the ground. You need to go in early, drill early, drill deep. Understand your systems and turn over lots of targets.” This aggressive methodology is supported by the company’s exploration team, a group of relatively young geologists who are prepared to spend a lot of time in the field, thinking creatively about their work. In the field, they must work closely as a team and endure difficult conditions. “I’ve intentionally gone for a rather young and dynamic team,” says Mr Holden, “who don’t mind roughing it a bit, and getting out to what is the final frontier for gold discovery in this country.”

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With an extraordinary mindfulness to environmental concerns, ABM Resources maintains its operations through the creation of all-tent camps for its exploration team. This eliminates the need for the construction of buildings, which would have a negative impact to the environment, especially in the more remote regions where the company operates. “It can be a little uncomfortable for our explorers, the teams out there, but what it means is that after we pack up and leave, it’s been virtually untouched in that area. Obviously, there are some ground disturbances that have to occur, but we try to minimise that impact.” ABM Resources is also committed to exploration Best Practises and to the stan-


Managing Director Darren Holden and Project Geologist Luke Forti panning gold.

ABM Project Geologist – Mr Luke Forti standing atop gold bearing quartz veins at Old Pirate Gold Prospect.

dard Rehabilitation processes for every project it undertakes. As most of ABM’s projects are in areas where native title is granted, this process is overseen by the Central Land Council, with whom ABM Resources has developed an excellent relationship. Says Mr Holden, “We’ve found that they’ve been very supportive of what we’ve been doing this year. It’s been a good 2010 and we aim to continue to grow that relationship.” Central to ABM Resource’s winning strategy is its approach to exploration: “We’re not out to discover a few hundred thousand ounces and trying to Australian Resource Focus | February 2011

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Plan view of the Buccaneer Porphyry Prospect showing drill hole locations and geology. Map includes inferred composite contour at various grade cut-offs from drilling projected from various levels to surface i.e. does not represent single level plan-slice.

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build a mining company, we’re out to discover multi-million ounce deposits. We’re targeting systems that we believe have the potential to be three to five to ten million ounce systems.” In order to accomplish this feat, the team focuses on drilling more holes and drilling them far deeper than other exploration companies might; where others drill approximately 30-40 metres down, ABM Resources drills an astounding 300 or so metres. The rewards of this approach can be seen in the company’s recent work in the Tanami Region, one of Australia’s most under-developed gold terrains. In particular, the exploration company has been focusing on the Twin Bonanza Project, approximately 22km south of Tanami Road and 14km east of the border between Western Australia and the Northern Territory. With two very different discoveries within this region, the project is a significant discovery for This second finding was quite unusual, ABM Resources and its key Shareholder, having previously been overlooked in the early gold rush. Tanami Gold NL. The first finding, named the Buccaneer Porphyry, is a low-grade, bulk-tonnage target, comparable to many successful gold findings around the world. What sets it apart is its uniqueness in the region. The second finding, termed Old Pirate, offers high-grade quartz vein deposits at the surface with visible gold.

With the area currently in its wet season until March, ABM Resources is hard at work compiling its findings from last year and pouring over its data bases to prioritise targeting for the year ahead. “In 2011, we’re not just going to focus on the Twin Bonanza project,” says Mr Australian Resource Focus | February 2011

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Plan view of the Buccaneer Porphyry Prospect showing drill hole locations and geology. Map includes inferred composite contour at various grade cut-offs from drilling projected from various levels to surface i.e. does not represent single level plan-slice.

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Holden. “We are going to do quite a lot of work in that area, but we are also going to do some follow up on the Hyperion project and also down on Lake Mackay, which is one of the more remote areas of Australia. We have some quite interesting surface geo-chemical anomalies where we’re not only seeing copper and gold, but as well a whole lot of other pathfinder elements that indicate it is a potential IOCG (iron oxide copper gold) System.”

its alliance with Tanami Gold NL. As for his own inspiration, Darren Holden cites his recent experience overseas. “I spent quite a bit of time in Canada and have seen how the Canadians are going about their business over the last few years, not afraid to drill deep holes, drill early, drill deep. Step away from the old mines and into grass roots or greenfields type areas and have a generally more aggressive approach to exploration and testing deep.”

“It’s been a very big 2010 and I hope an “There’s been a general lack of significant even better 2011.” new discoveries [in Australia] over the Revitalised just a little over a year ago af- last five to ten years. There have been a ter the company struggled through the few, but not as many as there should be GFC, ABM Resources has a fresh lease on to support this industry in Australia golife thanks to a new Board of Directors ing forward,” explains Mr Holden. “We’re and key staff, including Darren Holden. focused on providing that high target of Additionally, the company has gained in- discoveries to ensure that the industry in dispensable expertise and support from Australia continues to go strong.” Australian Resource Focus | February 2011

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Counting the Cost of

Australia’s Fl -By Robert Hoshowsky

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looded Mines

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For several months, the biggest news story out of Australia has been the relentless flooding that has plagued the nation. In contrast to the devastating droughts Australians dealt with for years, heavy rains and flash floods resulting from the weather phenomenon known as La Nina drenched Queensland starting last September, affecting threequarters of the state. Torrential rains have devastated much of the country, costing many their lives, destroying houses, property, and crops, washing out roads, and virtually cutting off entire towns from the rest of the world. By the end of December, the flooding had already reached historic proportions, with Brisbane recording the last month of the year as the rainiest in over 150 years. Many resource sectors have been hit hard by flooding, not least among them the coal mining industry. Across Australia, many mines have been rendered inoperable due to flooding. Recent estimates state that in Queensland, a mere 15 per cent of the state’s 57 coal mines are fully operational, and that the financial cost to the industry as a result of the damaging floods is already into the billions of dollars. Mines which are operational are under restrictions, and those which have suffered from the incessant rains will have to deal with not only flooded coal pits, but other factors, such as ruined rail lines and closed trans-

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port ports. In many cases, coal supplies stockpiled in advance were also soaked by heavy rains. Open pit mines have been affected most by the flooding, as many have become submerged lakes.

Limited Production The mine flooding has impacted the in-

dustry in a number of ways. Many mines are still unable to extract coal and are far behind schedule. It will take several months to return to normal, full-capacity production. Many experts predict that resuming lost production will take longer this time around than it did after 2008’s flooding. Long-term effects from


the most recent floods will undoubtedly mines have to pump large quantities be felt by the mining sector for months, of dirty water from their mines. Under if not years normal conditions, environmental regulations require that this water is first Around two thirds of the world’s sup- stored and subjected to treatment. The ply of coking coal comes from Australia, degree of flooding, however, has forced and most of it from Queensland, making a number of mining companies to seek it the nation’s largest export. This cok- exemptions. Realising the urgent economic need to get the mines up and running as soon as possible, Queensland’s Department of Environment and Resource Management has granted a number of mines permission to pump out untreated floodwater. One of the associated dangers to the environment comes from salt accumulation in this water: the longer the water remains in the mines, the more salt it will contain. The environment must remain a consideration when it comes to removing water from flooded mines. Some government officials favour “controlled releases” of salinated, potentially contaminated water over dumping large volumes directly into waterways, since the latter would mean the mine water could end up in environmentally-sensitive areas including the Great Barrier Reef. ing coal is converted to coke and used in blast furnaces for iron ore smelting, and Increasing Coal Costs huge firms like Xstrata, Rio Tinto Ltd, and When it comes to lost coal production, BHP Billiton Ltd are actively involved in the fundamental principles of supply and Queensland’s coal mining industry. demand have come into play; less available coking coal from Australia means higher prices, which have already risen Environmental Impact In order to resume operations, coal above $300 (U.S.) per tonne, gaining 35 Australian Resource Focus | February 2011

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per cent since the flooding began. It is likely that prices will remain inflated as long as the nation’s mines are flooded and production is low. Prices for coking coal are set quarterly (unlike daily traded commodities like gold and copper), which means most prices were set for the first quarter of 2011 before the floods. The prices coal will reach in the next few months is not known, but if supply remains limited and demand is high, coal prices will likely continue to increase. This puts other coking coalsupplying countries, like China, Russia, and Indonesia, in a winning position, as buyers pay premium prices to these other sources. The supply of coking coal may be drastically reduced, but the need from steel manufacturers continues to grow. As long as the raw material used in production remains in short supply, steel prices and global steel production costs will continue to climb. How much of this increased steel cost will be borne by the consumer remains to be seen. The flooding has forced a number of Australian coking coal mines, unable to fulfill their contracts on time, to rely on force majeure clauses in contracts. At the present time, at least half a dozen coal mine companies have declared force majeure, since the floods have

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made access to mining coal difficult, even impossible in a number of cases, in the wake of water-filled mines. Adding to the coal mining woes, meteo-


Getting Back to Business The question remains: when will production be restored to normal? A few fortunate mines can be emptied in weeks, yet some experts have stated that it could take up to six months for the bulk of Queensland’s mines to return to full operation, as pumps are furiously working to remove water around the clock. Coking coal mines are not the only ones suffering from the floods, as Australia is also the world’s second-largest exporter of thermal coal, used in power stations. The largest exporter remains Indonesia, which has seen profits rise as a result of Australia’s inability to supply sufficient quantities of thermal coal for export. The United States, another large coal-producing nation, has also seen its share prices increase.

rologists have predicted higher-than-average rainfalls into March. The transportation of coal has also been disrupted, adding to the many millions of dollars’ worth of lost production and product.

To date, approximately 75 per cent of Queensland's coal production has come to a stop. Even as pumps work overtime and production begins to resume, there will be other issues to deal with, ranging from mine repair to restoring damaged railway lines. Industry experts predict that once clean-up operations are fully underway, there will be a shortage of labour to handle the work. When production will be fully restored is anyone’s guess, as Mother Nature remains as temperamental as ever. Australian Resource Focus | February 2011

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-By John Boley

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T

he Orontide Group had its beginnings in 1979 as a family business run by Serge and Sophie Madrigali. The first operation was Madco, based at Henderson, south of Perth. Madco was originally focused on Serge’s legendary machinist skills but soon evolved to provide maintenance and repair services to a wide range of industries. In 2002, Madco opened a Kalgoorlie branch to

better serve mining industry clients in the area. In the same year, Madco Marine was formed to deliver specialist services to the marine and defence industries. Soon after, Orontide purchased Blast Works which was later developed into AlphaBlast. Collectively, the businesses provide complementary maintenance and support services for the mining, defence and oil and gas industries.

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Streamlining for Success As of December 2010, the entire Orontide group, with around 300 employees, has been restructured. The Orontide Group has four subsidiaries – Madco, Madco Marine, Robil Engineering and Wovodich Engineering – all of which operate in a similar sector of engineering and fabrication, while Orontide Industrial Services (formerly called AlphaBlast) comes under the heading of ‘industrial services’. And as general manager Kim Twiggs explains, it’s all about ensuring clients are able to access all aspects of the business services on offer. “Five separate companies within Orontide have been realigned to form two business streams. It’s business as usual for us – the change doesn’t affect our quality or the service provision, but it does allow us to bring in a greater skill set” because it’s now easier to call on other skills within the group. Kim now has an extra responsibility for ‘integrated services’ – spotting where there is an overlap for related services within the group. “That’s about being able to understand when you need to talk to someone from a package respect, in terms of being able to provide a more varied scope of services integrated as a seamless package rather than a single discipline. I am able to take clients through the full spectrum of a project – from design through to fabrication to hookup and installation work and then eventually into life-cycle maintenance, preservation and integrity-based activities.” However, Kim stresses the need to be aware of when a client wants a full package and when it wants just a single service. “What you’re selling at the end of the day is convenience.”

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workshops in Henderson or Kalgoorlie or on site, 24/7 if necessary. Madco offers a wide range of services such as turnkey solutions, whole of life maintenance services, modular equipment manageMadco has developed a large number ment services and EPCM services. of innovative engineering solutions for companies across the mining, offshore In 2004 the group established divisions oil and gas and construction industries, of AlphaBlast and Madco Marine in Sydand is focused on maximising customer ney to work primarily on naval vessel reproductivity. This is achieved by maxi- fits at Garden Island (Woolloomooloo, mising the productivity of equipment, Sydney), and purchased its first ultra ensuring equipment operating efficien- high pressure water equipment, complemented by a full vacuum recovery cy and reducing downtime. system that provides an environmenThe company is committed to a flexible tally acceptable method of coatings reapproach and can carry out work at its moval. Madco specialises in the repair and maintenance of rotatable equipment, primarily engaged in the areas of overhaul, machining, fitting and fabrication.

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Madco facilities are carefully maintained to ensure productivity and safety at all times. These include the machine shop, the fitting shop, state of the art fabrication and welding equipment and rotatable spare manufacture, installation and storage. Examples of Madco’s projects include: producing high quality components for mining companies, often aimed at solving equipment life problems caused by extreme environmental conditions in the titanium oxide industry; maintaining and servicing a nickel refinery, and providing principal off-site repair services for two major refineries (nickel and min-

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eral sands); fabricating and assembling crucial components for major offshore gas and oil piping; and supporting and manufacturing components for several national and international oil and gas companies. When working with leading national and international companies, Madco understands that downtime costs money, and that the efficient operation of equipment contributes to profitability. That is why the team at Madco does everything possible to minimise turnaround times, including carefully examining client needs, scheduling work to meet those needs, employing highly qualified staff,


COMPANY INTRODUCTION Fremantle Hydraulics is one of Australia’s leading marine and industrial hydraulics manufacturers. We provide our clients with an end-to-end hydraulic service, from the design and the manufacture, to installation and the repair and servicing of complete standard or customised hydraulic systems,, including • • • • • •

Pumps Motors Hydraulic cylinders Hydraulic directional valves Winches Power packs Cranes

Our large range of available products and integrated services means we can meet all our clients’ hydraulic needs under one roof, including customised components and full range of hydraulic solutions.

Established over 18 years ago to support the marine and industrial hydraulic industry, Fremantle Hydraulics has the knowledge and experience to develop a solution to suit our client’s hydraulic needs. Strategically located in the Australian Marine Complex in Henderson WA, means we are ideally situated to supply and service equipment to local and national industries. From our fully equipped workshop, containing the highest quality machinery, we can; design, manufacture, install, repair, overhaul and test all hydraulics components, including cylinders, pumps and valves. Our highly skilled and professional team work round the clock on our client’s projects to ensure their downtime is kept to a minimum and productivity levels are maintained. The combined expertise and experience of the Fremantle Hydraulics team means that every member has the knowledge and training to undertake each and every client project to the highest degree of accountability. With a working lifetime of experience in the hydraulic industry, the Fremantle Hydraulics team can offer a hydraulic service based upon vast experience and qualifications which is second to none.

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Top Management Keith Jones - managing director: Keith has 20 years’ experience within the mining industry, having worked for Hamersley Iron, Alcoa (Pinjarra, Wagerup & Kwinana) and Argyle Diamonds. He has worked in engineering, operations and maintenance during this time. Prior to joining Madco in 1998, Keith was the process plant maintenance superintendent at Argyle Diamonds. Tony Lutzu - general manager: Tony has 20 years’ experience in the manufacturing and mechanical engineering field. He has worked with Madco for 14 years, servicing the WA mining industry, as well as fixed plants and off site repair maintenance contracts. Tony currently oversees Madco’s Perth and Kalgoorlie operations, ensuring the business units are meeting their business plan targets and outcomes. Keith (David) Jones – manager, Kalgoorlie: Keith has a vast knowledge of steel fabrication and its practices having worked many years in management with companies such as Cimeco Pty Ltd, PIHA Pty Ltd and G&G Steelworks. Keith has supervised and managed quality fabrication projects for clients such as Alcoa, BHP, Fortescue Metal Group and Ravensthorpe Nickel. Keith manages Madco’s Kalgoorlie division, ensuring consistent quality services and continued growth. Chris Sayer - mechanical engineer: Chris has more than 30 years’ experience in the design of mechanical and electrical equipment. He formerly worked as senior design engineer with Orbital Engine Company, where he was involved with production design of a number of products. He spent a period in Orbital’s US facilities and was also involved with improvements to wireline drilling equipment in Australia.

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and ensuring rostered staff are on call 24 hours a day, seven days a week. Based in the Henderson Industrial area, Madco occupies a modern factory facility of over 3,400 square metres that includes a fully equipped machine shop, dedicated fitting shop, segregated fabrication area, and the capacity to utilise the Group’s additional Protective Coatings division. Madco boasts full machining capability up to 5 tonnes and 1.5 meter diameter and computer numerical controlled machining. The company has developed extensive and mutually beneficial relationships with its subcontractors and suppliers (including those overseas) to manufacture technically challenging components with high tech castings requirements and exotic materials.

ronment, as well as the importance of integrity and sound business ethics. The company’s approach to this is straightforward and is reflected in all its activities. All Orontide’s processes and procedures form part of an integrated management system which is measured against set benchmarks, ranging from continuous scrutiny through internal assessments and communication to feedback from third parties and customer audits. Orontide’s divisions hold the following external accreditations: Quality Management (ISO 9001:2008); Occupational Health and Safety Management (AS/NZ 4801:2001); and Environmental Management (ISO 14001:2004).

Throughout all its various operations, Orontide has always recognised the importance of quality, safety and the enviAustralian Resource Focus | February 2011

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With three quarters of Queensland receiving disaster zone status after the extreme flooding which began in December 2010, the state’s resource sector has had a slow and difficult start to the New Year. Many businesses have been operating from remote locations until access to primary workplaces can be regained, while production at most mines and worksites has been stopped due to the rain and flood inundation. Despite all of these challenges, 2011 could yet be a promising year for the state’s resource sector, says Michael Roche, CEO of the Queensland Resources Council (QRC). “It’s been an interesting start to 2011,” he notes, “but I am feeling very good about 2011 because I feel confident that throughout the calendar year we will see the go-ahead to a number of major projects.” -By Aleisha Parr

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As CEO of the QRC, Mr Roche has a full appreciation for the state of Queensland’s resource industries and how easily they can be affected by these types of events – in fact that is his specialty. Developed in 2003 from what was originally the Queensland Mining Council, the QRC represents the interests of businesses working within the resource sector and those whose business helps support the sector. This range of firms includes mining and processing operations, exploration companies, oil and gas and power generators, as well as a host of support services including - but certainly not

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limited to - transportation, legal, accounting and financial. With over ninety Full local members and about thirty Explorer members, the Council plays a significant role in the development of the resources industry. Of recent interest has been the Federal Government’s original proposal of the Resource Super Profits Tax (RSPT), which would have been levied at 40% on all “super profits” from the extractive mining industry in Australia. This was a huge wake up call for the industry, who banded together with the help of


“Think what the Queensland economy would be like if some of our opponents would have their way and shut us down overnight; that’s 21% of our economy under threat, and over 1/8 of all jobs. That’s the stark message that we do want to bring home.” - Michael Roche, CEO, Queensland Resources Council.

the QRC to fight this drastic tax proposal. Although the Council’s efforts were successful and the RSPT was withdrawn and replaced with the much more appropriate Mineral Resources Rent Tax (MRRT), it was clear that the industry needed to be better promoted and understood for its important role throughout Queensland communities. This led to the creation of the 2010 report “What Are Queensland Resources Worth to Me?” produced by the QRC. In it, the Council provides a variety of resources and first-hand testimonials

which help to communicate how fully the Queensland economy depends on its resources sector to deliver significant benefits throughout the state through taxes and royalties paid to governments, shareholder returns and spending, both direct and indirect. The report, undertaken in association with Australian public policy think tank Eldos Institute and the Central Queensland University, provided some ground-breaking revelations. Most remarkably, that over 90% of postcodes in Queensland received some expendiAustralian Resource Focus | February 2011

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People in Resources Glenda Bell - Mine Employee As a retired jockey, Glenda has embraced a more relaxed lifestyle, choosing to work shifts at the Central Highlands’ mines in Emerald and spend her spare time training and riding her own horses for personal enjoyment. “The biggest thing working in the mine has given me is security – security in my current cash flow, and security for my retirement,” says Glenda. “I plan on being a self-funded retiree, and my mining job is making that possible.”

Phil Abernethy - Managing Director – Absorb, Brisbane Phil’s company, Absorb Environmental Solutions, provides both the training courses and the physical solutions to ensure resource sector companies are compliant with environmental legislation. “The training we provide gives the participant the knowledge to understand their obligations and the impact of their own actions,” said Phil. “People assume it’s just common sense, but it’s not - it’s learning the right behaviour. After you have learnt, it just seems like common sense.”

Paul Tucker - Mine Contractor Employee As a trade qualified boilermaker with twenty years’ experience, Paul travels to a variety of mines across Central Queensland. “What I like in my job is the flexibility of choice – I choose how much I work, and if I want to take a month off to finish a home project, or go away camping with the family, I can,” Paul explained.

Joe and Jay Misau - FIFO Mine Employees “We work together. We’re in the same crew. It suits us, and we both like the work. And yes, we’re still married,” laughs Jay. The couple has worked their way up in the mining industry together, and love the fly-in-fly-out (FIFO) lifestyle they now enjoy between Queensland and WA. Working together enables them to plan holidays together, work on home renovations or visit with their three children.

Loretta Gaudron - Partner – Russel’s Auto Electrics “Depending on the conditions in Emerald, we employ up to six staff. If the mines were not here, we would still be in business, but it would just be a husband and wife operation, working from home. Here, we are in business premises, and we are looking at moving,” Loretta explained. Further, Loretta’s business provides significant flow-on effects to the local economy, helping to support other local businesses and community events.

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ture by a resource company and that in the state capital of Brisbane, 22% of the work force relies on the resources sector, either directly or indirectly. Says Mr Roche of these findings: “I think that came as a sort of surprise, so our job now is in promoting that story... we want to tell the stories of the individuals that both work in the industry directly, or who make their living by servicing the sector, and the lifestyles that they are

sources Worth to Me?” report was so powerful. The website devoted to this report (which can be found online at: http://www.queenslandeconomy.com. au/) allows for visitors to see the influences of the resources sector for any postcode entered, making each visit a personal and relevant experience. With maps highlighting the amount of money spent, jobs created, and royalties generated for each area of Queensland, the site clearly illustrates how important

Surat Basin coal seam able to achieve, the flexibility in work arrangements that they are able to achieve and the fact that they get paid well. So we’ll increasingly be, in 2011, aiming to tell the story of the resources sector, not just around the big numbers – and they are big – but also around the people’s stories.”

the resource sector has been and will continue to be to the state economy.

The take-home message here is an eye-opener, reports Mr Roche. “Think what the Queensland economy would be like if some of our opponents would have their way and shut us down overnight; that’s 21% of our economy under These individual stories are precisely threat, and over 1/8 of all jobs. That’s why the “What Are Queensland Re- the stark message that we do want to Australian Resource Focus | February 2011

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bring home.” The QRC will have a busy year, continuing forward despite the setbacks that the last month and a half of rain and flooding has brought, and into a new phase of rebuilding and renewing. Even with last year’s successful campaign against the RSPT, there are always new challenges ahead for the Council. Of particular concern are recent issues arising in communities surrounding land taxes, whereby concerns over traditional agricultural areas must be addressed, and accommodations agreed upon. Further, a new debate has been raised over a possible carbon price implementation. “We think we’ve dealt with the resource rate tax debate;” explains Mr Roche. “What’s now proposed is broadly acceptable to the industry - it’s not

going to kill projects like the Super Profits Tax was going to - but our next challenge in Australia, for our industry, will be the Federal Government’s proposal to implement a carbon price. We don’t oppose a carbon price, but we will be wanting to tell the community about the dangers of a carbon price applied to trade-exposed industries at a time when our competitors are not facing the same carbon price arrangement, because it will actually become another resource tax.” Through all of this, the QRC remains faithful to its members’ interests, advocating policy issues, providing access to relevant information and resources, and most importantly, sharing the stories of individuals affected by the resource industry so that the interests of the industry - and the Queensland economy – may be best represented and served. Australian Resource Focus | February 2011

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-By John Boley

I

CON Engineering is an oilfield service company, founded in 1997, based in Perth and offering a range of services to oil companies and major oilfield contractors. Core services include facilities engineering services from concept through to construction, offshore installation and contracting, drilling rig upgrades and speciality oilfield equipment supply. So with the current state of the oil and gas industry, surely business is pretty good? Not so, says ICON director Garrick Aberle, a founding partner with a strong technical background in offshore oil and gas facilities design and construction. “No. It's a common misconception.” With great big projects like Gorgon “floating around,” he explains, huge subcontracts are awarded to “very large multinational companies who in turn cascade work packages down, and that's done on a global basis, and at the moment with the strength of the Australian dollar what's Australian Resource Focus | February 2011

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ICON’s speciality is its passive heave compensator. As Garrick Aberle explains, “Chevron have commissioned the building of a brand new floating drilling rig that will spend the first five years of its life drilling wells for Gorgon and they are working in community with Atwood Oceanics (the Houston-registered owner and operator of nine rigs which plans to take delivery of the latest, Osprey, this year and another in 2012). Chevron is having a fair say in the specifications of the rig, etc, which is being built up in Singapore.

Passive Heave Compensator

“It has an active heave-compensating drawworks, as all the big new state-of-the-art rigs have, but Chevron wanted an extra form of insurance. During certain phases of well drilling, the rig is essentially pretty rigidly connected to the seabed and you rely on the rig’s heave compensation system to allow the rig to ride up and down on the deep ocean swells without snapping anything. “Now if that compensation system fails or locks up

building billions of dollars of LNG plants, and all the design is being done on the other side of the world, when you come to operate these plants where is the expertise? Well, it's on the other side of the world. The Australian companies are getting to design the sewerage treatment plants and the temporary accommodation and that's about it.” He laughs, but it's quite evident he's not amused. As a Perth-based company Garrick poses a question. “If we are “we are actively pursuing lots of work happening is that engineering is being done usually anywhere other than Australia. So projects such as the Gorgon LNG are being designed in London and [elsewhere around the globe]. Engineering in Houston at the moment is, relatively speaking, cheaper than engineering in Perth.” So a lot of local companies are missing out on much of the business.

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for any reason, you can have a rather nasty failure of the riser or whatever is connecting the rig to the seabed and the well. So they have elected to procure a second heave compensator, which is what we are building for them, which essentially sits on top of the derrick and normally minds its own business but cuts in if the rig system fails. “The key to it is having its control system configured so that it won’t try to interfere with the normal routine. It will only invoke when a lock-up is sensed – so it has to have a pretty high-speed reaction time.” Garrick knows there are other companies around the world who manufacture basically similar systems. “But you know, when you approach them for bits of kit like this, you’re usually told to take a number, get in line and you’ll see your goods in 24 months’ time – and that sort of didn’t fit Chevron’s time frame.

“We are able to be a lot more responsive; we have built a few of these, typically we have always built them in a hurry – because people always work out they need them at the last minute. “We were referred to Chevron by individuals within the drilling industry who had dealt with us on previous situations and knew what we were capable of doing. You have to be [ fast to react] or you die. Any small company in servicing oil and gas, you have to have a niche, and typically a core value you can bring is if you can respond to people’s requirements quickly. “That said, there are limits to what can be done in a short time-frame and if you push that too far or if you take it as the norm you can come unstuck badly. It’s a dodgy game, it’s just another form of pressure on this part of the industry.”

in Southeast Asia; the amount of work “It's about as far away from easy money that gets done in Australia is very small”. as you can get,” says Garrick, who has been involved in such areas as evaluatICON has a strong presence in Malaysia, ing business opportunities, progressing Indonesia and Thailand. “Mechanical major projects through from concept equipment we sell through Singapore, to construction, installation of minimal that's where the shipyards are, we are facilities, offshore structures, and conmarketing actively to shipyards in Chi- ceptual field studies. “The engineering na... We certainly have to be outwardly business is extremely competitive. We focused. Small engineering companies don't own a big lump of specialist plant; aren't seeing massive opportunities in anyone can start an engineering consultancy with very little capital so it's Australia.” Australian Resource Focus | February 2011

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very easy for competition at our level to bulk engineering to cheaper locations”. Despite such pressures, ICON has sucspring up.” cessfully executed hundreds of projects Whenever you are bidding for work spanning the world’s major oil regions there is always downwards pressure on including Australia, Malaysia, Indonethe pricing from the client due to the sia, Thailand, New Zealand, Papua New competitive nature of the business, Gar- Guinea, USA, Canada, Singapore and rick says, but on the other side “the hu- the UK. The company’s experienced man resource – which is the fundamen- management and personnel boast an tal of the business – is always seeing pay impeccable safety record, and focus on rises left right and centre because they executing projects from the study phase are a highly sought-after commodity. through to completion, resulting in a So as a business you are forever being broad company knowledge base. ICON squeezed by both sides – it's not a com- personnel have skills ranging from exfy spot.” As far as staff are concerned, ploration, drilling, and conceptual and Garrick sees, it's essentially a seller's detailed design through to construction, market, dog-eat-dog as all the compa- hook-up, operations and maintenance. nies share the same hunger for expertise. “Anyone who's good is contacted on average once a week by headhunters or by other companies who are desperate for staff.” In a project worth nearly a billion dollars, Garrick explains, with a planned engineering expenditure of a mere five million dollars, it's easy to allow that to overrun to get the job done on time. So, he says, the big players in the epic contracts are offering to increase the wages of good staff by 50 percent to get the job done – it's virtually money-no-object at this level. Also, “the big engineering houses tend to do their high-level engineering in Australia but send all their

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Exporting its knowledge and skill set to nearly every corner of the globe, ICON has set some significant engineering firsts, such as installing more offshore platforms with drilling rigs than any other company worldwide, and carrying out the deepest deployment of flexible flowlines from a semi-submersible drilling rig in Australia. The firm is also a leader in the supply of conductor tensioning systems for jackup drilling rigs, and is renowned for completing difficult upgrades to drilling rigs in remote offshore locations. ICON’s growing equipment division also sells state of the art equipment internationally and focuses on developing specialised machinery to

support construction and drilling operations. Though the pressures of competition facing ICON - and indeed the industry itself - are far from insignificant, the company’s long track record of providing cost effective and practical solutions, novel equipment for drilling applications, and innovative facilities designs aimed at reducing risk may yet place the firm in a strong position to weather the growing storm of market saturation. With its solid depth and breadth of technical expertise, the company’s slogan - “Legendary Innovations, Practical Solutions” - clearly speaks to its skills, capabilities and drive.

Australian Resource Focus | February 2011

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Australian Resource Focus | February 2011

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February 2011 | Australian Resource Focus

Energy Power Systems


A

ustralian-owned company Powertrans specialises in designing and manufacturing innovative haulage systems to service the mining industry, both regionally and internationally. Producing a range of products, the firm is able to offer the industry low cost, high productivity alternatives to conventional large mining trucks.

of models to serve both its key sectors, and has proven that its machines can hold up in the most demanding of conditions. Between 2001 and 2008, the firm produced 40 underground trucks, 12 heavy haul mine spec tractor/prime movers, 100 powered trailers and more than 250 non-powered trailers and dollies. Designed with longevity in mind, these machines, taken together, have accumulated over 600,000 engine operating hours. With a comprehensive inventory system for parts across the nation, onsite training for drivers, supervisors, and mechanical staff, and available 24hour field service, Powertrans clearly stands behind its product long after the commissioning process is complete.

Specialising in creating robust, operator-friendly mine vehicles, Powertrans bases its designs on its patented Powertrailer™ system. In this system, up to two powered trailers in addition to the prime mover are capable of being placed within a “road train” combination - just one example of the innovative engineering that goes into Powertrans’ designs, and that ultimately sets the Underground Systems company apart from its competitors in Powertrans’ underground haulage systhe field. tems are designed to be both robust and manoeuvrable. Capable of ascending to Established in 2001, Powertrans focus- the surface at far greater speeds than es its product line on two key areas: sur- conventional haulers, the vehicles can face applications and underground min- greatly ameliorate the efficiency of uning applications. Priding itself on quality, derground mine operations. The T930 safety, and reliability, the company sees Underground Truck, or Powertruck™ its product through from inception, to can tow up to two trailers, and utilises manufacture, to maintenance. Capa- proven, off-the-shelf components to ble of providing all necessary support ensure both a reasonable cost and relithrough its in-house services compris- ability of service. ing engineering and design, fabrication, assembly and field commissioning, The Powertrailer™ can be incorporated Powertrans’ repertoire includes a range into use with the Powertruck™ using the Australian Resource Focus | February 2011

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same drive train, and utilises a 430Hp, for more efficient travel over ground as six cylinder Detroit Deisel turbo charged compared with typical rail, conveyor, or engine, providing abundant power for off-highway transport systems. hauling up steep grades. With the potential to reach loaded Powertrans’ latest haulage system is its speeds of 55 km/h and unloaded speeds T1244 underground Mine Development of 75 km/h, Powertrans surface haulTruck™, a versatile truck designed for ers can offer buyers a far more flexible both material removal and infrastruc- and low-cost operation than that which ture development during the mine de- they’ve typically grown accustomed to velopment phase. This innovative design in the industry. offers both higher speeds and reduced up-front and operating costs than do Powertrans’ line of surface haulage systems includes the Pit Hauler, T1250 traditional dump trucks. Tractor, Powertrailer™ , Powerdolly™ , Towtrailer™ , and Dolly™ . Surface Systems Similarly, Powertrans’ surface mining haulage systems also offer a cost- The Road Ahead effective alternative to conventional In addition to its top-quality products, resource machinery. With light earth- Powertrans also focuses on building moving tyres, readily available and ser- solid relationships with its clients and viceable parts, and smaller, more robust its suppliers. Providing the highest level chassis, Powertrans surface units are of service both before and after the sale able to make good use of existing road has resulted in many satisfied custominfrastructure. This allows for both re- ers, while the high degree of integrity, duced deployment time at start-up and accountability, responsibility and ethics

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to which the management and staff at Powertrans hold themselves has earned the company a reputation as a true partner in the industry. Focused on building a quality product that doesn’t compromise on safety, Powertrans has truly found its niche in a competitive market. Based in Brisbane, the company’s centre of operations has unfortunately been subject to the country’s recent flooding. With a shop under 2.5 metres of water, the company has had to centre its efforts on recovering and rebuilding, all the while focusing on meeting its obligations and the needs of its clients. Australian Resource Focus wishes Powertrans the best as it undertakes this process, confident that such an innovative and resilient firm will emerge on the other side, strong and ready to continue serving the resource industry. *information obtained from Powertrans Pty Ltd website, http://www.ptrans. com.au/index.htm Australian Resource Focus | February 2011

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