Consultants see room to grow in 2012
Richard Roberts, 15 December 2011
QUALITY control remains a major concern for many of the 17 international mining and engineering consulting industry leaders HighGrade quizzed about 2012 as they cast around in a muddy talent pool for new recruits while weighing up how best to maintain the integrity of their brand and expand in a fiercely competitive global market.
How many are seriously examining the attractions of merging with a long-time rival is, of course, unclear. But all the consulting sector leaders are in new territory – even the ones who’ve been running their company for years, decades in some cases, and who would have been saying a few years ago they’d just about seen it all.
Now they’re presiding over the biggest staff complements in the history of their firms and still the pressure/opportunity is there to grow. Equally great is the pressure to retain staff.
While there is some merit to consulting recruitment lines about “lifestyle” choices for career consultants, there is immense competition from other mining services firms for skilled and experienced people (and from big non-mining financial, IT and other organisations looking to increase their exposure to mining), and the big miners continue to offer higher salaries and more flexibility.
So a consistent pressure on consulting firms to continue expanding organically or through M&A is that being applied by other, aggressively growing mining services groups, and/or their clients.
“Retention [of staff] is always important as our people are our differentiators,” said SRK Consulting CEO Andy Barrett. SRK, the world’s biggest mining consulting firm, went from 800 consultants at the start of 2011, to some 1100 currently, while total staff numbers grew from 1026 to about 1400.
“Further consolidation of [consulting] businesses … and the challenge of keeping staff now being targeted by major mining companies,” were two of the key sector trends heading into 2012, according to AMC Consultants chairman Peter McCarthy.
Coffey International group executive mining, Robert Sherwen-Slater, was another who saw “difficulty attracting and retaining staff [and a] potential increase in M&A activity between consulting groups”, as features of a period of “increased demand for services” next year.
The “challenge to meet the increasing volume of work while maintaining [the] high quality of both service and deliverables”, was top of mind for Snowden Mining Industry Consultants CEO Craig Morley.
And Mark Noppe, managing director of Xstract Mining Consultants, was similarly concerned about the availability of people and resources – the “capacity to deliver projects in good time while ensuring the quality of that delivery”. Another challenge in 2012 would be “managing the pressure on consulting salaries and the resultant costs to clients”.
Meanwhile, Noppe sounded the keynote for the sector in terms of the outlook for business next year when he said his optimism was “tempered with realism”. After expanding consultant numbers by more than 50% during 2011 and increasing revenue by 80% year-on-year (to June 30), the Brisbane-based firm was targeting growth of 30% in 2012, “with mining engineering, resource geology and processing engineering” potentially the main avenues.
On the other side of Australia, in Perth, Optiro managing director Mark Warren said: “We see 2012 being a more challenging year for all of us. Capital and capital raising is clearly an issue and will become more so next year. We note the relative ease in which our major clients can raise capital and debt versus the difficulty faced by some of the juniors is having an impact on industry. Accordingly, we believe the use of capital, operational efficiency and cash flow will become more of a focus in the new year. We expect assignments designed to improve operational efficiency will therefore increase.”
After a strong consulting year in 2011, Runge CEO Dave Meldrum told HighGrade: “We’re wary.
“We’ve got a solid pipeline in most of our offices at the moment and we’re still running reasonably high utilisations. We are seeing some volatility; we are seeing some behaviour from some of our clients that would suggest there is a bit of nervousness out there.”
“The Asian market has been a lot more volatile but having said that our work in Beijing, which was really focused on compliance documentation for listings in Hong Kong has changed to doing more due diligence work for acquisitions,” he said.
“Where projects were priced quite high previously and … there weren’t a lot of transactions in play because of the price of the assets and people were taking them to market and raising capital on public markets, now we’re seeing some of these [groups] finding it a little bit harder to get cash and [they are] taking decisions to go into M&A type transactions rather than go to the capital markets.”
SRK’s Barrett said while there was “much uncertainty at present” this generally hadn’t yet affected the company’s backlog of work.
“[It] could in the future – there is probably a lag effect,” he said. “At this point in time, we remain cautiously optimistic. In an optimistic scenario, recruitment will remain the key challenge.”
Snowden’s Morley remained “very optimistic” about 2012, with much of that built on growth forecasts for emerging markets, and for Snowden, growth in new core business areas.
“We’ve moved our United Kingdom office to Oxford, and refocused that office to support the financial markets in London, and the emergent CIS region,” he said. “We’ve also opened an office in Calgary in support of our oil sands and coal focus as part of our team in the Americas.
“We’re looking at opening new offices in the emerging regions to support a growing demand from our clients in those regions. China, Russia and Latin America will be our first priority.
“We are experiencing a growth phase and are attracting some high quality candidates.”
The company expects to add 20 consultants during the first quarter in 2012.
“Experienced technical resources remain in short supply, particularly in the areas of mining and geotechnical engineering,” Morley said. “We have found that our culture and work environment have been a significant influence in attracting some very good candidates during the last couple of months.”
Kane Dowsett, communications manager at major environmental and mine technical consulting group GHD, said skill shortages looked likely to affect the delivery of major projects over the next five to 10 years.
“We are resource-light [and] there are tight project funding conditions,” he said.
“To succeed there will need to be more collaboration in industry.”
Kristy Sell, director environmental science at MBS Environmental, said the company’s recent experience with the GFC was that environmental work continued, “timeframes just became more realistic and achievable”.
“Operational aspects of projects are still required even if new project related work reduces,” she said.
Sell said concerns about the experience levels of consulting staff and the ability of some firms to provide practical and effective services remained.
“We are seeing an increasing level of new clients due to customer dissatisfaction, or failure to deliver services,” she said.
But the high Australian dollar had also pushed consultant rates higher and there had been “some importation of North American based expertise and loss of jobs for Australian consultancies for larger clients with experience and contacts outside of local networks”.
Gerald Whittle, managing director of Whittle Consulting, extended the operational efficiency theme to capital when he said for many small and large resource owners the focus in 2012 would be an “economic rather than technical” one.
“It will be a competitive capital market on 2012 for projects and expansions,” he said.
Snapshot: consulting sector leaders
Company Consultants Total staff FY11 revenue growth
(2011 start/finish) (2011 start/finish) (yoy)
Mining One 70/100 80/110 20%
Snowden 135/170 160/191 21%
Coffey Mining 222/245 240/270 18%
CSA Global Not Supplied 100/150 72%
Whittle Consulting 8/9 10/12 145%
Optiro Not Supplied Not Supplied 40%
Runge 220/250 370/420 19%
SRK 800/1100 1026/1400 Not Supplied
AMC Consultants 126/148 166/196 29%
Golder Associates 5581/- 7973/- Not Supplied
MBS Environmental 21/23 24/26 7%
GHD 3745/4345 5572/+6000 0.5%
Mining Plus 31/45 34/50 50% past 3yrs
Xstract Mining 24/38 29/44 80%
SKM Mining/Metals -/700-800 1568/1870 Not Supplied
Enthalpy -/130 -/140 20%
Also in the December 15 - 21, 2011 edition
- AFRICA
- Eritrea risk narrows Zara field
- ASIA DESK
- Not all good as gold in China
- AUSTMINE
- MST buys Nixon Communications
- BREAKING NEWS
- Abenab progress for Avonlea
- Alara advances
- Alcoa declares divi
- Alcyone search boost
- Better news for St Barb
- Black Fire complies
- Bu Dun Hua copper
- Chief sees higher rating for Endeavour
- Cockatoo extension
- Impala sacks drillers
- Industrea win
- Kingston shines
- Maiden Rosie resource
- More Bass trouble
- More concerns on uranium supply
- Nany option exercised
- Newcrest output up
- Palito reassessment
- Pegasus finds copper
- PGM output up
- Radar on track
- Redhill expands holding
- Rio in control
- River attraction for Silver Lake
- Southern Cross ready to move forward
- Stonehenge sets sights high
- Straits gain
- Strategic permit
- Tanoyan update for Reliance
- Trafford's exploration boost
- Two Rivers death
- Ventnor copper hits
- WA uranium policy
- West Rand mines to merge
- Windfall at lake
- Winmar attracts investor
- Yellowhead on track
- CENTRAL ASIA
- Can miners really side-step a war?
- COAL
- Mardon's new year wish
- CONSULTING
- Lory leads SKM mining into new growth phase
- CONTRACTING
- Contracting briefs: Redpath, Thiess, Decmil
- FINANCE
- A golden path to Dubbo development
- Copper deficit a fixture for the future
- Kagara opts for safety first
- Money’s almost too tight to mention
- Terramin view expected to become clearer
- FORUM
- How the JORC and Valmin codes work
- More must buy into JORC discussion
- FROM THE CAPITAL
- Capital management will be key 2012 theme
- GOLD
- Loyal to the cause
- Upside seen despite Teranga downslide
- HEAVY METAL
- Atlas Copco expands mining range
- ISSUES
- State-run miners: best of a bad bunch
- MINING
- Independence gloom unwarranted
- MINING INTELLIGENCE
- 'tis the season (still) to be wary
- MINING IT
- Auto-money changes everything
- Innovation is the new black
- IT notebook: ARANZ Geo, Immersive Technologies
- IT notebook: Devex receives certification
- IT optimists
- Mining IT: 2011 rebooted
- Mining IT: product releases to fill 2012 calendar
- XPAC to lead dynamic software revival
- PEOPLE
- People on the move: Gindalbie Metals, Abcourt Mines, Carbon Energy
- SOUTH AMERICA
- Chili backers like its prospects
- VIEW FROM THE WEST END
- Bitten on the bum by a Black Swan