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Subbies call for overhaul of system to protect themselves from corporate failures

Australia’s subcontractors are demanding the government legislate on how building firms structure bank accounts amid claims that corporate failures in the construction sector are causing a “crisis” and leaving suppliers without payments.

The Australian Subcontractors Association (ASA) demands that the Federal government take swift action to protect suppliers who are being “forced into insolvency” by the collapse of larger construction firms.

This comes after the recent collapse of engineering giant RCR Tomlinson, which had delayed payments to suppliers for up to 12 months.

“When it comes to the collapse of companies that rely on subcontractors to undertake the work, the domino effect can be devastating. Unfortunately, the subbies are often left to fend for themselves,” said Loise Stewart, ASA spokesperson.

“When companies fail to pay subcontractors for work done, the subbies still have to pay employee entitlements and taxes.

“Thousands of subcontracting businesses will be adversely impacted by the recent collapse of engineering firm RCR Tomlinson – in just the latest example of the flow-on effects to SMEs from corporate failures.”

A 2015 Senate inquiry into insolvency found that the industry is burdened every year by an estimated $3 billion in unpaid debts, including subcontractor payments. In 2018 alone, there have been 1,642 construction businesses that have become insolvent. A high percentage of these is attributed to misconduct.

“Sadly, non-payment issues have long plagued the industry – as evidenced by the subcontractor to RCR Tomlinson that has lost $9 million due to the company not paying for work done,” Stewart said.

“We have been advised by subbies that RCR has been delaying payments as far back as 12 months in order to prop up its own cash flow. And it’s unlikely any of these subcontractors will see their money.”

The ASA is now calling on the Federal minister for small business Michael McCormack to take action to protect subcontractors “all the way down the supply chain in the event of an insolvency”.

“The Federal government Review of Security of Payment Laws by John Murray has already made recommendations for cascading statutory trusts to be rolled out across the industry, however, there has been no further action,” Stewart said.

“When Craig Laundy was minister for small business, he said if state governments did not act before the end of the year, the Commonwealth would take action. We are still waiting for that to happen.”

Stewart added that national legislation is needed, and either cascading statutory trusts or cascading project bank accounts must be mandated.

“The Queensland government is certainly taking the lead on this and has made project bank accounts a legal requirement,” Stewart continues.

“However, greater responsibility needs to be taken at all levels. Governments need to act to legally impost these solutions and ensure pay subcontractors, rather than spending their money.”

RCR Tomlinson announced on November 22 that it had entered voluntary administration with the intention of commencing an immediate sale process.

McGrathNicol is the appointed administrator. The first meeting of creditors will be held simultaneously in four locations (Sydney, Brisbane, Melbourne and Perth) on December 3, 2018.

At the time of its collapse, the ASX-listed group employed more than 3,400 people in Australia, as well as in New Zealand and other areas within Southeast Asia.

Hail Victoria: The new five-year state plan for mining

Australian Mining looks over the latest mineral resources strategy from the Victorian Government, which aims for a spend of $220 million over the next five years.

On August 28 2018, the Victorian Government released its mineral resources strategy for 2018–2023, identifying key challenges and opportunities in the state’s mining sector.

The government report, entitled State of Discovery: Mineral Resources Strategy 2018–2023, lays out five key action areas that explore different segments of Victoria’s minerals sector. The Victorian Government is aiming to spend $220 million in exploration investment by June 2023 to help meet these goals.

While not the largest Australian mining state, Victoria is home to several large mining companies, including BHP, Newcrest and OceanaGold, with Melbourne-based firms accounting for 65 per cent of mining stock from the ASX100 in 2018 ($188 billion in all).

Meanwhile, major mines such as Fosterville (Victoria’s largest gold mine), owned by Canadian-Australian miner Kirkland Lake, have posted record results recently, with production at said mine up 21 per cent to June 2018.

In addition, mineral spend is increasing significantly in Victoria, up 79 per cent year on year (YoY) in March 2018 compared with 27 per cent nationally according to figures from the Australian Bureau of Statistics.

The minerals industry in Victoria also employs around 121,000 people and made a total direct and indirect contribution of $13.6 billion in 2015–16 for the state coffers (around four per cent of gross state product).

State of Discovery: Mineral Resources Strategy 2018–2023 is championing ambitious growth for Victoria’s minerals sector. Megan Davison executive director of the Minerals Council of Australia (MCA), posted a warm response to the report, stating that, “Victoria is blessed with a diverse commodity base including operating gold, antimony and brown coal mines, world-class mineral sands deposits and highly prospective precious and base metals provinces.”

The Victorian Government cites Victoria’s “intensively developed” landscape as a potential challenge for exploration expansion in the report, and as such has emphasised responsible minerals exploration as a key point of its strategic overview.

To advance geoscience and encourage mineral exploration and development to Victoria, the Government plans to release a Victorian resource prospectus that integrates resource and freight transport planning. It also plans to conduct competitive tenders to attract “high-performing” explorers.

The meat of the report lies in its five key action areas, however; key points to be addressed over the next five years.

The five action areas include (in order) Confident Communities and Responsible Explorers; Advancing Geoscience and Encouraging Mineral Exploration and Development; Victoria as a Global Mining Hub; Improve Regulatory Practice and Industry Compliance; and Deliver Modern, Fit-For-Purpose Laws.

The report’s introductory strategic overview states that “gaining and maintaining community confidence in the social, environmental, and economic performance of mineral exploration and development [is] critical for the sector” and the first of the five key action points builds on this.

Confident Communities and Responsible Explorers relates to improving community acceptance of the mineral resources industry through better understanding of the attitudes of Victoria’s community towards the sector and improved support of landholders in their negotiations with the industry.

The State Government hopes to build this trust by improving transparency and social responsibility standards for explorers, while also securing enduring benefits for host communities.

In addition, the Victorian Government hopes to provide more information to local communities about mining’s value and build a socially and environmentally responsible mining environment.

The second key action area, Advancing Geoscience and Encouraging Mineral Exploration and Development, refers primarily to the Victorian Government’s plan to create a Victorian resources prospectus to increase interest in mineral investment to Victoria. The Victorian Government will also attempt to make use of freight transport for mineral operation expansion and support skills development for mining (and mining services) through apprenticeships and TAFE courses.

The third action area, Victoria as a Global Mining Hub, is to focus on Victoria’s expansion as a mining exports provider. It cites factors such as the continuing growth of Victoria’s mining exports as a percentage of total exports, increase in mining companies, and hosting of events such as the annual International Mining and Resources Conference (IMARC) in Melbourne as evidence of this.

The fourth and penultimate action point, Improve Regulatory Practice and Industry Compliance, will see the creation of a robust regulatory system that builds on the Victorian Government’s current Earth Resources Regulation (ERR), part of the Department of Economic Development, Jobs, Transport and Resources.

ERR has seen backlog reductions in the last year for work plan and licence applications since the commencement of reforms last year, and the 2018-19 Victorian Budget will include $12.7 million of funding to support the implementation of further regulatory streamlining procedures, including an upgraded online system for mining applications.

The overall aim of this section will be to “simplify processes, sharpen risk focus, provide clear and timely information” as well as to “improve coordination between regulators”, “build regulator capability to support industry compliance,” and “measure, evaluate and report on regulatory and industry performance”.

The final key action point is Deliver Modern, Fit-For-Purpose Laws, which will allow for increased options for “responsible and safe” mining and mineral exploration. In August, the Victorian Government introduced the Mineral Resources (Sustainable Development) Amendment Bill 2018, which declared that a new Mine Land Rehabilitation Authority (MLRA) be implemented to succeed the current Latrobe Valley Mine Rehabilitation Commissioner (LRMVC).

Mines are to develop post-closure rehabilitation plans, with said plans a legal obligation of the landowner, with MLRA able to take on this role and responsibility in exchange for payment from the mine owner.

The action point states that the Victorian Government will develop on this bill by increasing transparency for investors and the community, amending the Mineral Resources (Sustainable Development) Act (MRSDA) to allow for the publication of non-commercial-in-confidence mining licences and work plans.

Information disclosure requirements will be revised, as will requirements for the timeliness of the release of mineral exploration data. Commercial-in-confidence data will be” appropriately protected where there is a genuine need for non-disclosure,” the report states.

Overall, the Victorian Government has delivered an ambitious report that suggests a confidence in mining’s returning optimism. As Davison says, “State of Discovery provides an opportunity to grow the state’s minerals industry through greater investment attractiveness, more engaged communities and modern regulatory regimes.”

This article originally appeared in the October issue of Australian Mining.

Australia’s mining and engineering sector on show at QME 2018

Queensland Mining and Engineering Exhibition (QME) 2018 saw more than 4,000 attendees visiting the event to explore the latest strategies and technologies driving productivity, profitability and protection of the industry.

More than 230 exhibitors attended this year’s event, an impressive 41 per cent increase on QME 2016. Industry heavyweights included Downer Group, Flender, Flexco, FLSmidth, Puma Energy, SMW Group, thyssenkrupp and Valley Longwall International.

Representation from key mining companies Adani, Anglo American, BHP, Glencore and Yancoal reaffirmed QME as a must-attend event for the Queensland mining industry. Collaboration was an underlying theme in the QME Seminar series sponsored by March IT.

With Australia’s mining equipment, technology and services (METS) sector contributing $86 billion to the Australian economy and supporting half-a-million jobs, QME 2018 also welcomed Australian Government representatives, Senator Michaelia Cash (Minister for Jobs and Innovation), Senator Matt Canavan (Minister for Resources and Northern Australia) and Mr George Christensen MP (member for Dawson).

Brandon Ward, director of QME 2018, said the success of this year’s exhibition reaffirmed the strength of the industry and its continued importance to the Queensland economy, with initial reports indicating a multi-million-dollar boost to the region during QME.

“With the sector playing such a significant role in the nation’s prosperity, it’s important that leading companies, decision makers, and personnel in mining and engineering have a major calendar event to come together to network and source the latest products and services,” said Ward.

“We would like to thank our supporters and all of the attendees, exhibitors, and speakers who chose QME 2018 to be that event, and Mackay to be that location.”

Ian Macfarlane, chief executive of supporting partner Queensland Resources Council (QRC), said the popularity of QME 2018 represented tremendous opportunity for businesses in the region.

“QME has been a fixture in Mackay for the last 25 years and remains the most important trade show for the region’s mining industry. It is truly a festival of innovation – brimming with ideas, energy and pavilions of all the latest products,” said Macfarlane.

“The exhibition provided a great opportunity for industry to come face-to-face with the best innovators the country, and find new opportunities that will safeguard the industry for generations to come in Australia.”

QRC figures show that last financial year, minerals and energy companies injected almost $14 billion into Mackay and Fitzroy regional economies. A survey of QRC’s chief executive officers (CEOs) showed that more than half were looking to increase their spending with local businesses this year.

QME also played host to the 2018 Queensland Mining Awards, celebrating the spirit of innovation, excellence and collaboration that is fostered within the highly competitive industry. QME sponsored this year’s Best Product Launch Award, won by Control Systems Technology for its IntelliRoll an autonomous ‘plug-and-play’ conveyor belt weigher.

QME will return to Mackay in July 2020 but the next major event for engineers, mining personnel, production managers and other professionals in mining and engineering will be the Asia-Pacific International Mining Exhibition (AIMEX) set to be held August 2019 in Sydney.

Restart of Century zinc mine ‘imminent’

New Century Resources is on the verge of restarting the Century zinc mine in Queensland after making strong progress in July.

The mine, 250km northwest of Mt Isa, was one of the largest zinc mines in the world during its original operational run from 1999 to 2016, when it was closed by previous owner MMG.

At the height of operations the mine was producing an average of 475,000t of zinc and 50,000t of lead a year. New Century has plans for the mine to become one of the world’s top 10 zinc mines when up and running.

New Century stated that mining, processing and port operations teams were now in place, with site activities moved from day shifts to a 24-hour schedule.

In July, the company completed mechanical installation, nearly finished dry commissioning and completed dredging at the mouth of the Norman River for shipping routes.

New Century will use the vessel MV Wunma, which was also confirmed to be ready for launch last month after testing of engines, generators, bridge equipment, ballast systems and several other necessary areas.

Notably, the company also fully commissioned its pipeline operation for the site, a 304km slurry concentrate pipeline connecting the mine in Lawn Hill to the project’s port facility at Karumba.

Rio Tinto takes key step towards first ‘intelligent’ mine

Rio Tinto has approved $US146 million ($197 million) in preliminary funding for the Koodaideri iron ore project in the Pilbara region, Western Australia.

The miner plans to develop Koodaideri into its first “intelligent” operation by including the latest in high-tech advances in the industry and by using an increased level of automation and robotics.

Koodaideri is described as a large scale, low cost, high quality project that will produce replacement tonnes and form a new production hub for the company in the Pilbara for decades to come.

The initial investment will focus on detailed engineering work on key elements of the project, the development of a rail construction camp and the first stage of the Koodaideri accommodation camp.

Rio Tinto expects to make a final investment decision on the project by the end of the year and also requires government approvals.

If approved, Rio Tinto has scheduled construction to begin in 2019 and first production in 2021. Koodaideri would create over 2000 jobs during construction and 600 permanent roles.

Rio Tinto Iron Ore chief executive Chris Salisbury said the investment was an important step for the Koodaideri project, which would be a significant leap forward for the global mining industry and the company.

“We’ve been building mines in the Pilbara for over 50 years, and, subject to final approvals, Koodaideri will incorporate all of that knowledge to enable us to build the smartest, safest and most efficient mine we’ve ever constructed,” Salisbury said.

“The deployment of leading-edge technology will deliver a step-change in both safety and productivity for our business.”

Koodaideri is about 110km from Newman in the Pilbara.

WEIR TO SPREAD ESCO’S SERVICE WINGS THROUGH MERGER

The acquisition of a century-old company specialising in cutting edge ground engaging tools will enable it to diversify globally, according to its new owner.

The merger of ESCO Corporation into the Weir Group is set to offer producers “market-leading solutions” from extraction to concentration, with the latter’s service centres spanning major parts of the world.

The Weir Group recently completed the acquisition for an enterprise value of $1.2 billion, after the merger was first announced in April.

“We are delighted to formally welcome ESCO to Weir,” Weir Group chief executive Jon Stanton said.

“It is a great brand that is respected throughout the world for its quality, performance and reliability. ESCO’s strength in extraction complements our leadership in the mill circuit, meaning that together we will have a comprehensive offering for mining companies around the world,” Stanton said.

Current ESCO president and chief operating officer Jon Owens, who joined Weir’s Group Executive committee, will continue to lead the business, as it becomes a division of the Weir Group.

“No other mining equipment provider will be able to offer customers market-leading solutions from extraction to concentration supported by a service centre network that covers every major mining region in the world,” Owens said.

ESCO has an extensive installed base of lip systems that house short-cycle consumables, such as teeth, shrouds, adaptors, blades and locking systems, with aftermarket sales representing about 90 per cent of ESCO’s revenues.

Weir’s traditional strength lies in slurry handling equipment with brands including Warman and GEHO pumps, Cavex hydrocyclones and Linatex rubber products.

Founded in Portland, Oregon, in 1913, ESCO currently employs around 2600 people with operations in 19 countries (including Australia), and generated $USD632 million in revenue last year.

A leader in mining and upstream oil and gas, Weir Group, with a 15,000-strong staff, has facilities in more than 70 countries (Australia included) and a global network of more than 100 service centres covering all key regions.

STEEL MANUFACTURING BOOMING IN VICTORIA

BlueScope, Australia’s largest steel manufacturer, has created more than 100 jobs at its Western Port plant over the last 12 months on the back of Victoria’s record infrastructure pipeline and its booming construction industry.

Visiting the company’s massive steel plant at Hastings, the state minister for industry and employment Ben Carroll said the Victorian government’s local steel requirements for major infrastructure projects gave the previously dormant steel manufacturing industry a new lease of life.

“Victorian manufacturing is booming – it’s creating jobs and supporting local businesses – including BlueScope,” the Minister said.

“BlueScope’s success reflects the resurgence in Victorian manufacturing which has seen 17 consecutive months of growth.”

BlueScope Steel Western Port Manager Jim Graham said demand for BlueScope’s coated and painted steel products is soaring, with the company set to export close to 10,000 tonnes of steel directly to the United States from the Port of Hastings.

“BlueScope is very pleased with the support the Victorian government has provided to the steel supply chain in Victoria, including through its use of Australian-made steel in major road and rail infrastructure projects,” Grahamsaid.

“Strong demand for BlueScope’s steel products in both domestic and export markets has seen a resurgence in production and employment at our Western Port plant.”

Rio Tinto awards Pilbara conveyor contract to Fenner Dunlop

Fenner Dunlop has secured a permanent contract with Rio Tinto to provide conveyor maintenance services at the Cape Lambert and Dampier Ports in Western Australia.

The long-term agreement is expected to create more than 40 full-time jobs. It will see Fenner Dunlop service all of the conveyors at the Pilbara ports.

Rio Tinto’s port facilities include four independent shipping terminals at Cape Lambert and Dampier, which are managed by a single system. The terminals have a combined 360Mt/y capacity.

Fenner Dunlop plans to open a new company branch in Karratha to form stronger business ties with the region.

Steve Abbott, Fenner Dunlop chief operating officer, said the two companies viewed the contract as a longstanding partnership.

“The award of this contract is directly attributed to our focus on total conveyor performance, our leadership and training programs and the excellent team we have in Western Australia,” Abbott said.

Fenner Dunlop, now part of the Michelin Group of Companies, has manufacturing plants in Melbourne, Sydney and Perth, and 16 branches nationally.

Australian Government representatives to meet with industry at QME 2018

The Queensland Mining and Engineering Exhibition (QME) 2018 has today announced the attendance of Michaelia Cash, Minister for Jobs and Innovation, Matt Canavan, Minister for Resources and Northern Australia and George Christensen MP, member for Dawson, reaffirming the importance of the sector to the Australian economy.

The Australian Government representatives will join engineers and mining personnel, production managers, and some of the industry’s largest corporations in Mackay from July 24–26 for Queensland’s largest mining and engineering exhibition, which will explore the theme, ‘Productivity, Profitability and Protection’.

According to the Mining in Australia 2018–2032 Report, mining production is likely to grow 5.5 per cent in the current financial year, with maintenance spending also on the rise and the investment decline winding down. To foster the industry growth trajectory, QME 2018 will bring together key industry players to improve collaboration, accelerate innovation and address future barriers.

“Since the doors opened 25 years ago to the very first QME, the event has built a longstanding reputation for bringing the best in Australian mining together, to collaborate and consider the industry’s domestic and international outlook,” said Brandon Ward, director of QME 2018.

“The event will also provide the Mackay region with national and international exposure and bolster its reputation as a mining hub, whilst providing visitors an opportunity to enjoy its diverse and vibrant community.”

This year’s exhibition will host more than 230 companies (an impressive 41 per cent increase from QME 2016) including global industry heavyweights Downer Group, Flender, Flexco, FLSmidth, Puma Energy, SMW Group, thyssenkrupp and Valley Longwall International.

Running alongside the exhibition will be a seminar series featuring more than 30 speakers across three days, providing visitors with exclusive access to the latest industry technologies and insights via keynote presentations, panel discussions and case study presentations. The seminar series will focus on six key areas including maintenance, automation and Internet of Things (IoT), procurement and supply chain, renewable energy, transport, and operational health and safety (OH&S).

QME 2018 will feature a Business Matching Program which offers visitors a personalised itinerary of products and companies matched to their areas of interest, to maximise their time on-site.

Weir completes acquisition of ESCO Corp

The Weir Group has completed the acquisition of ESCO Corp, the world’s leading provider of ground engaging tools for surface mining and infrastructure markets, for an enterprise value of $1,285 million. It follows regulatory clearance for the transaction, which was first announced on 19 April 2018.

Commenting, Weir Group Chief Executive Jon Stanton said:“We are delighted to formally welcome ESCO to Weir. It is a great brand that is respected throughout the world for its quality, performance and reliability. ESCO’s strength in extraction complements our leadership in the mill circuit, meaning that together we will have a comprehensive offering for mining companies around the world.”

Current ESCO President and Chief Operating Officer Jon Owens will continue to lead the business as it becomes a division of the Weir Group. He will also join Weir’s Group Executive committee with immediate effect.

Owens said: “This is an exciting day for ESCO and all our people. As part of Weir we can create something that is genuinely unique that will help more customers improve their productivity and safety. No other mining equipment provider will be able to offer customers market-leading solutions from extraction to concentration supported by a service centre network that covers every major mining region in the world.”

ESCO has surface mining’s most extensive installed base of lip systems that house short-cycle consumables, such as teeth, shrouds, adaptors, blades and locking systems, with aftermarket sales representing about 90% of ESCO revenues. ESCO’s extraction products sit upstream from Weir’s traditional strength in slurry handling equipment with market leading brands including both Warman® and GEHO® pumps, Cavex® hydrocyclones and Linatex® rubber products.

ESCO was founded in Portland, Oregon, in 1913 and currently employs around 2,600 people with operations in 19 countries. In 2017 it generated revenues of $632 million.

Ricardo Garib, Division President of Weir Minerals, said the combination would be beneficial to customers around the world: “It is great to welcome ESCO to Weir. They are a business we have admired for some time. By working together we’ll be able to give customers easier access to more market-leading products and services. With our global network of over 100 service centres, that means customers will have more of the superior solutions they require, where and when they need them.”

Joe Weber, Vice President of Global Sales for Weir’s ESCO division agreed: “As mining markets grow customers are looking for partners they can trust to help them increase productivity and safety while also lowering their total cost of ownership. That requires a relentless focus on innovation, quality and close customer proximity, which are the hallmarks of the ESCO® brand.

“As part of Weir we’ll benefit from combining some of the world’s leading materials scientists, applications engineers and developing digital technology to deliver increased innovation in the future, ensuring ESCO remains surface mining’s preferred provider of ground engaging solutions.”