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The recent downward plight of Australia’s mining industry has hit a number of other areas hard, and while the future is bright, there are likely few to have felt the impact quite as much as the METS sector.

 

An industry which has historically depended on local miners to drive its prosperity, Australian METS players have become a force in their own right, generating an estimated $15 billion worth of exports in 2013 and employing more than 380,000 people.

 

METS was identified as an area of focus in the Federal Government’s innovation pledge late last year and will have more than $1 billion pumped into it by the government over a four-year period.

Government-funded growth centre METS Ignited was established late last year to oversee and foster growth in the industry. Despite the positive outlook for the future, the present remains a challenge.

METS Ignited Chief Executive Daniel Sullivan told National Mining Chronicle while there was plenty of innovation on offer in the METS space, the nature of the Australian sector made it difficult to attract investment in the current market.

“We’ve seen the mining industry move from volume, where tonnage was imperative, to cost – the METS offering for mining companies is the opportunity cost along the value chain to reduce operational costs,” he said.

“Where the Australian METS industry operates is in the value space, so the challenge for METS companies at the moment is to demonstrate their value. The majority of Australian METS firms are technology-based.

“The buyer of the METS’ solutions needs to measure value over three to five years.

“If procurement is looking at the cheapest cost for that financial year, that doesn’t play to the strengths of the Australian METS industry.”

Mr Sullivan said true to the nature of the METS sector, there were plenty in the industry looking to innovate by changing their business model, including a shift towards leasing and costs charged over time.

Moving towards a focus on servicing and maintenance rather than new equipment offerings has also proven popular, but Mr Sullivan said diversification was key to prosperity in the sector at this time.

“METS companies should be as diversified as possible,” he said.

“Diversification can come geographically, it can also come from a customer base. For example, Austmine METS National Survey 2015 found around 60 per cent of the METS companies surveyed also sold into oil and gas. But the other way to diversify is also in the product offering.”

Mr Sullivan said overseas was a great option for those with a specialised product offering, but sometimes it was difficult for companies to execute such a move.

“Particularly small to medium enterprise METS have a very narrow solution set and they solve niche problems very, very well, but there may not be a large enough market for that in Australia so they have to globalise and sometimes earlier than they can manage,” he said.

An SME diversifying

Whittle Consulting is an Australian SME METS organisation which established an international footprint around five years ago.

Managing Director Gerald Whittle said the company had weathered the recent commodity price storm better than many in the consulting game.

The Whittle brand name is well-known in the industry through the software designed by Gerald’s father and Whittle Consulting Technical Director Jeff, which was sold to GEMCOM – now Dassault Systemes GEOVIA – in 2001.

Since that sale Whittle has focused on enterprise optimisation, covering all areas of the project using sophisticated internal software developed to help maximise value for all stakeholders.

Mr Whittle said while it made sense for mining companies to engage services to optimise their projects during tough times, logic didn’t always prevail.

“Simple logic says we should do better in a bad market because everyone needs to rejig their plans but, human nature being what it is, people in bad times tend to do nothing and hold their breath,” he said.

“As a result we’ve had to be very careful in how we project the value added. It’s not just about doing a pit optimisation or getting a better mining schedule, it’s really about developing a better mining plan for the business to really justify its existence.”

According to Mr Whittle his namesake business had noticed a change in the nature of the clientele it had on its books since the industry turned.

The number of development projects engaged by Whittle has fallen dramatically over the period, but operations have been strong and the interest has remained sufficient to sustain the business.

“We’ve had it up and down,” Mr Whittle said.

“It’s a confused and stressed market. Net overall it’s probably been marginally worse but not as bad as some other consulting companies I’ve seen which have had major downturn.”

In line with Sullivan’s recommendation for METS players to diversify, Whittle Consulting is releasing a tranche of its internal optimisation software to the market this year in?a move which throws back to the company’s roots and is expected to spread its services further.

However, Mr Whittle said the decision to diversify through the release was a natural progression unrelated to current market circumstances.

“As a consulting company it has always been a huge debate – if you’ve got some specialised tools, do you keep them for yourself and only apply them through consulting?,” he said.

“And certainly, for some of the functionality with advanced and new stuff, you’ve got no choice; you’ve got to keep it in house.

“But when something has been stabilised and can be packaged and the processes can be described, do you release it?

“It’s a huge debate inside every consulting company and one we’ve had ongoing for decades.

“What we have done at this point is we’re releasing what we believe is the right thing to release at this time. The market is ready for it, the technology is ready for it and we’re big enough to help people learn the skills and train and support them.”

Since Whittle’s services are generally engaged by a select few clients at any given time, the software release is expected to broaden the scope of the company’s influence.

“There is no way we could consult hundreds of companies – we’re not set up to and never will be, so we prefer to work with innovative leading companies, open-minded ones and lead the way,” Mr Whittle said.

“With a software release lots of companies can participate in enterprise optimisation, do it themselves and manage it. We can support them as required, particularly in set-up, but they’ve got to run their business on an ongoing basis.”

METS to lead the way

Not all METS players in Australia are SMEs. Atlas Copco is a Swedish company which has offered equipment to the Australian market for 65 years and continues to hold its own in a difficult market.

According to Atlas Copco Australia Managing Director Joe Farrugia, the METS sector has a lead role to play in getting miners through the current difficult period.

“The mining industry is in a consolidation phase. We’ve seen the number of surface and underground mines decrease over the past few years and the industry is still under pressure from the lowered commodity prices,” he said.

“I think the METS sector has an important role to play in lowering the cost of mining production in Australia.

“We know our equipment and its capabilities in a vast array of mining operations worldwide.”

Atlas has introduced innovative products to the market during the downturn, including the world’s only mobile raisebore rig, the first of which was recently sold to Pybar.

Automation has also been on the agenda, with major miners turning to the technology to improve efficiencies.

“We have been working with BHP Billiton and Rio Tinto for some time now with the remote operation of our blasthole and surface crawler rigs,” Mr Farrugia said.

“More recently Roy Hill is moving in this direction. Along with buying our 100th Pit Viper in Australia, it is setting up an ambitious autonomous drilling program, which should deliver substantial productivity gains and provide a safer working environment.”

While engaging larger miners can be more of a challenge for SME METS companies, Mr Whittle said there was much potential among the nation’s smaller players to provide further innovation as well.

“We don’t necessarily need more innovation in mining, we just need to apply the innovation that’s around,” he said.

“There have been some developments and they’re just not general practice.

“There’s a huge gap in mining and so rather than generate new innovation, I think the focus should be on applying the innovation we’ve got, because it’s not widespread.”

Mr Whittle said while mining was a traditionally conservative industry, those who invested in innovation would win in the long run.

“Everyone agrees mining has been very slow in terms of innovating or applying innovation – that’s why I’m excited about mining,” he said.

“I think if you speak to the METS you’ll find people very frustrated that great ideas are not being applied as rapidly as they could.

“It’s not that the industry doesn’t need it – it certainly does. In good times people are complacent and want to keep it simple and in the bad times they don't want to take risks.

“There’s always a reason not to try something new, even though the case is pretty compelling. It’s a pretty conservative industry but I believe now is the time to change.”



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