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Australia鈥檚 Longwalls: Three years ago, respondents remarked on the growing role of consultants in strategic decisions in Australia's underground coal mining industry. How has the role / use of consultants changed over the last three years with the mining sector consolidation? How do you see roles developing in the future?
IMC : Industry consolidation has led to a general trend for more internalisation of strategy and a tighter reign on information. In part, this is the nature of the new owners and their particular focuses, and in part this is due to international strategy not necessarily being conducted from within Australia. Despite these changes, companies with major offices in Australia have persisted with use of key consultants in regard to advice on decisions within the Australian industry. The recent upswing in the industry has led to engagement of more company and consultancy resource in the area of strategy and new project development. Considering the potential downswing at the foreseeable end of the current cycle, there is a convincing case for use of consultants in the roles of both strategy and new business development in order to avoid companies engaging a surplus of employees and provide the particular skills for this area of work.
How competitive do you see consultancy rates vs costs for permanent employees? What are the key factors determining why consultants are used and how do you expect these factors to change in the future? How will these changes impact the way consultants do business and the nature of consulting?
IMC : The annual salary equivalent of consultants ranges depending on the particular consultancy, their overheads structure, experience / skills of particular consultants used on the assignment and the type of work for a particular job. This may range from operational support, site management issues, feasibility studies and planning, management / organisational development and restructuring and audit / legal functions. This leads to a range in fees between different consultancies.
There are a range of comparators against which consultant fee levels can be gauged, ranging from site operational staff, site management, corporate office staff and legal / accounting firms.
In regard to this issue, a number of aspects require consideration, including ;
路 skills and experience required for the job
路 the availability of appropriate skilled labour in the market or within internal company resources
路 the level of resource and timeframe required for the job (e.g. part person/s and full time persons)
路 the value added by the consultant versus other means of job completion
路 ability to terminate a permanent employee and life cycle cost of employees against the ability of periodic / as required use of consultants
While full time use of consultants may not be a preferred option, use to fill immediate resourcing needs, oversee and train new incumbents or junior staff / mentoring roles, complete particular time / skill constrained projects and support corporate roles in business development and project audit / assessment are certainly areas for cost efficient application of consultants.
Future focus will be on the key staff and skill sets held by consultants in meeting these needs of the mining companies.
AL: An emerging issue is the impact of increased professional indemnity insurance premiums on consultant鈥檚 鈥榣icense to operate鈥�. Some smaller companies have chosen to operate with no cover. What is your company position on this issue and how has it affected your company?
IMC : Our company continues to hold PI insurance as it is a requirement of the majority of mining houses. Of course, this means that this cost is passed on to our clients as part of overheads. In order to minimise this cost, there are some means available to reduce / limit the expense. These means impact the type and nature of work that will typically be pursued and require shopping around for the best deal to meet requirements. IMC maintains a base level PI insurance resulting from these considerations, and may opt to take additional or top-up PI insurance for particular jobs as required by the client.
AL: Please comment on the impact on consultants of corporate governance protocols that mining companies are introducing.
IMC : There has not been a significant impact on our business as our accredited quality system has generally required the majority of elements of corporate governance of mining companies to be addressed in the process of proposal development, project authorisation, project management and records. There has been some increased delay between time of proposal submission and award for very large jobs, and a degree of more participative communication to management in regard to results and findings of studies. There has also been more independent audit / review / challenge of work completed.
AL: How has the issue of 鈥榮ustainable mining鈥� impacted on your business? And what impact has it had on your clients?
IMC : The impact has been observed most noticeably through more detailed consideration of environmental and social issues, particularly in strategy reviews and feasibility or operational review studies.
AL: What has been your experience with regards to international vs Australian work? How do you see this trend going into the future?
IMC : IMC is an international consultancy, with offices located in the traditional mining nations including the UK, South Africa, Australia, Russia, USA and Canada. IMC continues to receive assignments across the globe on a year in / out basis. Major coal contracts include the planning and development of the Tabas project in Iran, and projects in Bangladesh and India. In the past year, IMC鈥檚 Brisbane office has additionally undertaken projects in coal in Indonesia and China. Aside from provision of technical and operations consultancy services in the international market, IMC has undertaken technical and commercial support work for company listings on all major international exchanges including London, AIM, New York, Toronto, Hong Kong and Australia. IMC view China, Indonesia, India, Russia and Vietnam as focus areas for coal international business development by mining companies. The advantage IMC provides to clients is a global professional resource base with experience in these locations accessible through any of our offices.
