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Your customers are killing your business, here’s how to sack them

In the early days of starting up my company Smart Books Online (SBO), I had no idea what I was doing.

Ok, I knew how to do the technical work, but I had no idea of what my ‘ideal customer’ looked like.

Accordingly, when it came to engaging new clients — I wasn’t fussy.

I needn’t care who they were, as long as they had money to pay me. I was just focused on sales to make payroll.

The challenge with business, particularly in the early phases of starting a new venture, is that it’s very difficult to say ‘no’. You take every meeting, every phone call, every bit of work that comes your way.

Even if you know in your heart and on paper that you might just break even or even lose money on a customer or project, you’ll say yes because you never know, it may lead to something bigger.

My newly formed habit of being a ‘yes man’ proved to be completely flawed as my business grew rapidly, from a revenue perspective anyway. Although sales were growing, we were losing money. Profit margins were getting squeezed due to discounting to win work.

Furthermore, due to misaligned client expectations, service declined. Customers were getting frustrated and were churning. As a result, I was losing more customers than I won. My financial and mental health was suffering as a result.

I was slaving away — 14 hours a day, 7 days a week, feeling overwhelmed and too busy to realize what I was doing wrong.

I mean, it could have been okay if I was profitable, but the truth was that I wasn’t. From a revenue perspective, I was crushing it. My business was consistently doing 20% month-on-month revenue growth (which is impressive growth for any business, irrespective of industry or size).

The problem, however, was while top-line revenue was growing, I was actually losing money. I was servicing unprofitable customers. I hadn’t designed a process on how to service our customers consistently, and profitably.

I was stuck in a profit losing machine of my own design, relentlessly spinning cogs.

I was trapped.

Higher thinking

With the business spiralling out of control, something had to change.

My business partner and I spent a Sunday afternoon taking time away from the business and objectively analyzing it. We wore our ‘business owner’ hats and assessed our financial performance.

What we unearthed validated our gut feel assumption: Our business was a disaster.

The irony was that while we were supposed to be helping our customers with their firm’s financial performance, I couldn’t even do it myself.

“How ironic,” I thought to myself. I felt like an imposter.

Quickly snapping myself out of an emotional state, my rational brain got to work: Starting with a customer profitability analysis.

In our analysis, we discovered that the profit generated by the top 20% of our customers were absorbing the losses of the bottom 80%.

In other words, we were suffering because we were not selective about our ideal customers.

Being a yes person was killing our business.

Chances are, it’s also killing yours.

A practical guide to analysing the profitability of your customers

Here’s a step by step guide of how we undertook our customer analysis. I’ve tried my best to document all the steps, but if you get confused or lost — feel free to reach out.

Step one: Export a sales report

Export a sales report from your accounting system to a spreadsheet. Filter this data by customer name and dollar value of sales for the last 12-month period.

Step two: Ask questions

For each customer ask yourself the following questions:

Are they easy to work with?
Do they pay their bills on time?
Are they a brand ambassador/influencer to your product or service?
Do I like them as people?

For questions one, two and three, assign a score out zero to three (zero being terrible, three being amazing).

For the fourth and final question, make that it binary. Either a zero or one.

Tally your results, which will give you a qualitative score out of ten for each customer.

Example:

The process of allocating a score against each question helps you to assess your customers objectively. This quantification serves to eliminate any biases you have to your customers.

Step three: Calculate the direct cost

Calculate the average direct cost to service each customer and enter the value in a new column. You can allocate this off your timesheet data or project management system.

Step four: Calculate the gross profit

Calculate the gross profit earned on each customer by deducting the average costs to service each customer from the sales dollars.

Step five: Sort your customers by gross profit

Filter the spreadsheet by gross profit of each customer and rank them per step two. The result is a list of your most profitable, desirable customers. They’re the ones you want to clone. And, at the bottom of the list, are the ones you want to cull.

The table above is a sample customer profitability analysis for a fictitious company called Voltage Media.

Here are the key observations:

The customers under note one are the customers you should fire. They rank low on the qualitative customer score, and they are loss-making. Fire them quickly.
The customer SaaSy under note two is less binary. This company brings in a lot of revenue and is ranked highly on the customer score. However, it is being serviced unprofitably. It’s fundamentally a great customer to work as it’s ranked eight out of ten, but ultimately, you cannot continue to service them profitably. In situations like this, dig deeper to understand why this client is unprofitable. Perhaps because you’re over-servicing them or not producing their work efficiently? Use this as a prompt to unearth the underlying issue.
The customers under note three are fence sitters. They rank in the middle from a customer perspective, and they generate a small profit to the business. You’re ok to hang on to these customers, but keep track of how they rank in the future.
These customers rank highly on the customer score and bring in the most profit to the business. Notice how the profit generated from these four clients carry the losses of the bottom half? These are the customers you want to replicate.

How to sack your customers

In the 24 hours that followed our customer analysis, I made several simple, but emotionally difficult decisions that literally changed my business. I took steps to fire the unprofitable 80% of my customers.

My outreach email was something like this:

Me: Hey customer, I’m reaching you to inform you of a few internal changes at our company. We’ve spent the last 12 months servicing our customers of all shapes and sizes, from startups to larger businesses. To date, we’ve been flexible to cater for all these different businesses as we want to help as many businesses as possible. As you can appreciate, being tailored for everyone does come at a cost. After reviewing our service offering and the associated fees, we are changing our prices. Your account will fall into the new package at $XX per month. I can appreciate this comes at a higher price, and this investment will ensure we’re able to continue to maintain our level of service.

Please reach out if you have any thoughts on the above. If I don’t hear from you in the next ten days we’ll assume you’re comfortable with the new arrangement.

Customer: I must say it is not an appealing proposition at all. As we have always been dealing with this issue fail to see what is different now and more surprising how it can double the monthly cost of the service you provide to us.

Me: I agree nothing has changed since engaging us, however our recent review showed we cannot service you profitably at the current rates. I hope you appreciate this doesn’t make business sense for us. I can refer you to a cheaper alternative if you wish. Let me know and I can make the introduction.

As expected, a handful of customers left us with and were happy to accept our referral recommendation to another service provider.

What we didn’t expect however was that the majority of customers accepted the price increases, and continue to be customers of ours today.

Giving your customers clear options to either pay a higher rate or, be referred to a cheaper alternative makes the decision binary, leaving no room for time wasting negotiations. Make the decision easy for your customers. They are busy people as well.

The net result was that we actually increased revenue because the price increase offset the churned, unprofitable clients. Making the decision cull these bad customers built a platform to maintain efficient and sustainable longer-term growth.

Although we had fewer customers, we were more profitable at a gross profit level, had more time and were most importantly, less stressed.

As business owners it’s easy for us to get stuck in the trenches, feeling overwhelmed and stressed with the state of your business. If you want to grow but not sure what to do start by reviewing your current customers.

Indeed, it sounds counterintuitive to sack customers in order to grow revenue and profitability.

But, to move forward, you need to start by getting your house in order.

This is an excerpt from Jason Andrew’s book, Stark Naked Numbers: Uncover Your Financials, Unlock Your Cash, and Unleash Your Profits, which launches on the 21st of January 2019.

RCR Tomlinson administrators reveal debts of up to $630m from collapsed engineering firm

By Kathryn Diss

Updated Tue at 12:20am

A line of about 30 people holding takeaway coffees and folders.

PHOTO: RCR Tomlinson creditors are owed hundreds of millions of dollars. (ABC News: Glyn Jones)

The administrators of failed engineering firm RCR Tomlinson have revealed the company has debts totalling hundreds of millions of dollars, including up to $250 million owed to about 4,000 subcontractors and suppliers.

Key points:

The engineering firm ran into trouble after an aggressive move into solar
A total of $630 million is owed to creditors, subcontractors and suppliers
The collapse came after a $100m injection of funds just three months ago

Administrators McGrathNicol revealed to creditors across the country that RCR’s total unpaid debts amounted to up to $630 million, but it could not say how much was recoverable until it started to sell off parts of the business.

The company, which employed 2,800 people directly and engaged with thousands of subcontracting firms across dozens of projects around the country, went into administration last month after its bank refused to lend it more money to pay its debts.

At its peak in August last year, RCR Tomlinson was valued at almost $1 billion.

Since McGrathNicol was appointed, the company’s workforce has reduced by 270, with most of the redundancies coming from the infrastructure arm, which includes its solar contracts.

Employee entitlements excluding redundancy total $32 million. Under the Corporations Act, employees are paid first, followed by secured creditors, unsecured creditors and shareholders.

RCR creditors — who is owed what

Trade creditors (subcontractors and suppliers) — $100-250 million
Secured creditors — $235 million
Unsecured bond issuers — $113 million
2,800 employee entitlements totalling $32 million, excluding redundancy

Burned by solar

McGrathNicol partner Jason Preston told creditors initial investigations revealed the company’s collapse was largely caused by problems with its solar farm developments, which left the business exposed to a number of risks, particularly if there were project delays.

This was attributed to the way in which the contracts were structured.

RCR signed engineering procurement and construction contracts, or EPCs, for its solar projects, in which it provided a fixed price for its customers.

If the contract took longer to complete, and therefore cost more to deliver, RCR had to absorb the increase.

PHOTO: RCR Tomlinson’s work on two solar farms in Queensland were hit with a $57m writedown. (Supplied: RCR Tomlinson)

This meant the company consumed “significant amounts of cash very quickly,” McGrathNicol told creditors.

The administrators indicated they were likely to apply to push the next creditor’s meeting back by three months due to the complex nature of the business, adding the RCR group was made up for 41 companies spanning a number of sectors including, energy, mining, resources, water and renewables.

The company had been a successful engineering firm for 120 years — predominantly in the mining and resources industry — before making its aggressive move into the solar industry.

RCR ran at the solar power movement hard and has been involved in building farms across the country, but it was a $57 million write-down on the value of two of its Queensland projects that burned it.

A stunning collapse

It was the failure of an engineering firm that left many reeling — so what went wrong for RCR Tomlinson?

At the first meeting creditors, held across four states, McGrathNicol told suppliers, contractors and employees it was working to sell the business but could not quantify how much it would raise in the sale.

McGrathNicol last week managed to secure funding to support ongoing trading of the company and said it hoped to find a buyer or buyers by the end of the year, having received interest from more than 180 parties.

“Our priority is to prepare the business for sale to bring certainty to employees, customers and suppliers,” McGrathNicol partner Jason Preston said.

“The business has been challenged by unprofitable solar contracts within its renewable operations, however the balance of the business operates across industries which are seeing increasing demand for services.”

Among the solar projects left in limbo include the expansion of Synergy’s Greenough solar farm in Western Australia’s Midwest.

A wide shot of rows and rows of solar farm panels on the ground at a solar farm under a blue sky.

PHOTO: RCR Tomlinson was working on the expansion of the Greenough River Solar Farm in WA’s Midwest. (ABC News: Sarah Tallier)

The energy utility has terminated its contract with RCR and has started the process of finding a new contractor.

Site activities will remain suspended during the replacement process.

Subcontractors gravely concerned

The company owes between $100 million and $250 million to 4,000 trade creditors across the country, which includes subcontractors and suppliers.

A line of people snakes through the foyer of a building.

PHOTO: Dozens of creditors queued up to find out how much money they could expect to get back following the collapse. (ABC News: Glyn Jones)

Mike Hollier runs a metal fabrication business which was working for RCR’s power division.

“I’m owed $42,000, part of that is made up of $27,000 of gear that they have and the rest sitting in the yard, which is about $13,000,” he said.

“It was a big shock, they’re a big company, you don’t expect that sort of thing. No, I didn’t think they’d go under.

“I don’t really know what will happen to all the stuff I have supplied to them when they sell it off. It seems I’d lose that from what I can gather.”

Mike Hollier in mid-speech, wearing a yellow shirt and reading glasses on his forehead.

PHOTO: Mike Hollier runs a metal fabrication business and is owed about $42,000. (ABC News: Glyn Jones)

Marco Da Silva said he was hopeful the business would be sold, but was not confident of getting the $25,000 he was owed.

“Ideally, we’d like to get our money, so hopefully they can sell the businesses off in their individual capacity and we can continue to trade out of that,” Mr Da Silva said.

“It’s negative, but one has to remain unemotional and try and apply themselves and focus on the business and do the right things by the staff.”

Marco Da Silva wearing a blue and green shirt, speaks to a journalist.

PHOTO: Marco Da Silva is not confident of getting the $25,000 he is owed. (ABC News: Glyn Jones)

Australian Subcontractors Association board member Louise Stewart said she had grave concerns leaving the meeting.

“I’m very concerned. There was no talk of a project bank account being set up. RCR haven’t been paid by a number of their clients, the project owners, the principals that actually own the projects,” Mrs Stewart said.

“What we don’t want to happen is for those funds to be paid directly to RCR, who are now in administration, and those monies to be used to pay secured creditors.

“Subcontractors are the biggest class of creditor affected here.

“We want to see that money going to subcontractors who have done the work, they should be paid and it’s very important that happens.”

Collapse after a $100m injection of funds

The collapse of the business, which is one of the oldest engineering names in Australia, stunned many in the investing world.

Just three months ago, RCR raised $100 million from shareholders to buffer itself against the losses it had incurred on the solar projects, but it wasn’t enough to save the business.

The move led many in investor circles to question what the board had not been telling shareholders and raised questions about whether the nation’s corporate regulator, the Australian Securities and Investments Commission (ASIC), would get involved.

Areial shot of the Curtis Island LNG plant

PHOTO: The collapse of the business stunned many in the investing world. (www.rcrtom.com.au)

The company is also facing a class action which was launched on behalf of shareholders in the New South Wales Supreme Court.

Lawyers Quinn Emanuel Urquhart and Sullivan filed the action, saying investors paid too much for their shares because the market was not informed of the problems the company was having with their solar projects.

Fundamentally, many analysts said the company ran too hard at the solar game without knowing enough about it, and found itself working in an environment of rising equipment costs, increasing wages and a lack of workers skilled in the renewable energy space.

Penrith substation maintenance work being done by RCR Tomlinson emplyees

PHOTO: RCR Tomlinson has more than 3,400 employees working on projects around Australia. (Supplied: RCR Tomlinson)

It also underestimated the time it could take to gain grid approval from the nation’s electricity regulator, the Australian Energy Market Operator (AEMO), which has toughened its testing regime to ensure reliability of the network.

RCR’s collapse prompted AEMO to issue a warning to all new entrants to “discuss early with network businesses … prior to making commercial commitments” so as to “avoid delays during project development, registration and commissioning”.

McGrathNicol said it would like to ask for a three-month extension for the second meeting with creditors to give more time to investigate what went wrong with the business.

EMBED: RCR Tomlinson share price

Topics: business-economics-and-finance, industry,

STRONG DEMAND DRIVES RECORD PRODUCTION YEAR

The boom in public infrastructure projects, particularly in Melbourne, has contributed to a record production year for the concrete, cement and aggregates industries.

More than 30 million cubic metres of pre-mixed concrete were produced across Australia in the 2017 calendar year, according to a survey commissioned by Cement Concrete and Aggregates Australia.

The boom in public infrastructure projects, particularly on the east coast, and continuing strong demand for high rise residential buildings, have driven a record production year for the concrete, cement and aggregates industries.

The sector has experienced steady growth in the past few years. In the report commissioned from the industry research and forecasting company Macromonitor, the 2017 results eclipsed the 27 million cubic metres produced in 2015 and the 28.5 million cubic metres in 2016.

“In essence, all of that material is provided from Australian quarries,” said Ken Slattery, chief executive of the CCAA. “There’s no significant imports of quarrying materials here in Australia.”

More than 30,000 people are employed directly by the industry, with another 80,000 estimated to be employed in work related to the industry, according to the CCAA.

“About 12,000 to 13,000 people are directly employed in quarrying and you can extend that out at a similar sort of ratio of 4:1 to get the indirect figure,” Slattery said.

The industry contributes over $15 billion to the national economy every year.

“The boom in infrastructure projects, such as WestConnex and NorthConnex in Sydney and the West Gate Tunnel in Melbourne, is good news for the heavy construction materials industry and for the more than 110,000 Australians who are employed directly or indirectly in the sector,” said Slattery.

Steady growth, supply

Future growth is projected on the back of planned projects, again driven by government-funded infrastructure projects on the eastern seaboard.

A recent report by consulting firm Deloitte concluded that infrastructure projects worth at least $324 billion were in the pipeline, an increase of almost $50 billion over the past two years.

Slattery said the building of the new Western Sydney Airport at Badgery’s Creek alone was expected to further lift demand for concrete and related products by at least another one per cent over the next five years.

The Melbourne Metro Rail Project, which is currently under construction, would also result in demand for concrete increasing by another two per cent, he added.

Slattery expects that Australian quarries will be able to continuing meeting demand. “That’s the big issue around all of this. Sydney and Melbourne have some particular challenges around how long it can take quarries to get approval.

“We’re not anticipating any shortages, provided governments’ approval processes are responsive to keeping up with demand,” he said.

The Victorian Government released a supply and demand study in 2016 that considered the state’s challenges to 2050. The Victorian Earth Resources Regulator has also subsequently launched a streamlined regulatory process for the management of basic operational changes, sparing producers the time and paperwork of having to prepare work plan variations. As of October, the regulator had received 16 requests under the new, fast-tracked process.

New South Wales has also engaged in recent studies considering the availability of resources for the burgeoning Sydney market. Infrastructure NSW commissioned a study from BIS Oxford Economics which recommended construction materials strategies for developing new sources of supply and the simplification of approval processes for quarries.

The NSW Department of Planning and Environment has also collaborated with consultants RW Corkery and Ecoroc on a study examining the supply constraints across NSW and projections about the quantities and quality of aggregate that will be required up to 2036.

BHP’s South Flank to receive world’s largest rail-mounted stackers and reclaimer from thyssenkrupp

thyssenkrupp Industrial Solutions has been awarded one of the largest fabrication and construction projects the company has ever handled in Western Australia, with an order from BHP’s South Flank iron ore operation.

Under the €150 million ($171 million) contract, thyssenkrupp will design, supply, construct and commission large-scale stockyard machines for South Flank, in the central Pilbara region.

BHP is targeting first ore extraction at the operation in 2021 and expects to ramp up to 80 Mt/y of output. This will replace production from the existing Yandi mine, which is reaching the end of its economic life. The company carried out the first blast at the project in September.

thyssenkrupp will supply two stackers that deposit iron ore into stockyards for loading, and a reclaimer for loading the ore on to trains for transport to Port Hedland. The machines will have a capacity of 20,000 t/h, making them the largest rail-mounted stackers and reclaimer in the world, according to the company.

Torsten Gerlach, CEO Mining Technologies at thyssenkrupp Industrial Solutions, said: “South Flank will be one of the largest iron-ore operations worldwide. We look forward to contributing to this project by combining longstanding global expertise in the mining business with local experience.

“Our strong partnership with BHP extends globally, but the Pilbara region is a core area where we have provided material handling solutions for decades. With our field service teams, we are supporting our customer on a daily basis.”

The design of the machines incorporates the latest Australian design standard requirements and technology improvements centred on safe construction, operation and maintenance activities, according to the company.

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.