Lory leads SKM mining into new growth phase
Richard Roberts, 15 December 2011
SKM Mining and Metals boss Phil Lory.
PHIL Lory was there at the birth of SKM’s mining and metals business so it wasn’t a big surprise he was recently chosen to lead the group’s boom division, nearly 10 years later, into a new stage of maturation.
The successor to Santo Rizzuto (who is now CEO of SKM), New Zealand-born Lory was a partner in Auckland engineering consulting firm Kingston Morrison when it was taken over by SKM in 1999. A mechanical engineer who began his career in the pulp and paper sector, Lory had worked on a number of heavy engineering projects in NZ and the region when SKM made him general manager of what was then an integrated power and mining business unit.
A couple of years later, with the mining boom really powering up, a decision was made to split mining and metals, and power and industrial, and Lory stayed with the latter as GM. Mining and metals went from being a division with more than 600 staff to nearly 1900 now (not including joint venture vehicle SKM employees), and generating about $A500 million of SKM’s $A1.2 billion annual revenues.
“We’re anticipating $A530 million in the current year [fiscal year 2011-12],” Lory told HighGrade.
“With some of our projects, the more significant ones, we’ve got a workload that’s stretching out into about 2016.”
Expansion in South America, Africa and Asia is on the cards, but a continuing major contributor to SKM’s mining and metals growth is its joint venture with Fluor Daniel in Western Australia’s Pilbara region, which recently notched up a staggering $A20 billion of work completed for BHP Billiton over the past decade. It was the “most significant thing that we’ve done” in the mining and metals area, said Lory, who recently sat in on his first JV steering committee meeting.
“When we first started with the JV 10 years ago it was a situation where BHPB said to Fluor and ourselves, we like some of these things that Fluor brings and we like some of these things that SKM brings, so go into that room over there and work out how you’re going to do it jointly.
“I guess our view initially was that it was … something that would work for 1-2 projects, but as the JV relationships have developed it’s just got stronger and stronger,” Lory said.
“There is such a massive amount that we have done and … you look into the future with BHP’s commitments going forward and there is a strong pipeline there provided we continue to deliver. I remember a few years ago at one of our planning retreats we had one of the senior executives from BHP come along to talk to us and the very strong message was that the different parts of BHP speak to each other and you’re only as good as your worst project, so you’ve got to continue to test yourself and make sure you’re doing all the things that you should be.”
Lory said central components of the JV arrangement with Fluor were stable and not in need of overhaul.
At this stage, given the multi-billion-dollar plans BHPB has laid down for further expansion in the region, portents were good for another decade of solid revenue from the JV.
“It really depends on how BHP’s plans continue to evolve,” Lory said. “There’s a bit of market uncertainty out there with question marks about Europe and how that might impact on investment plans. But with BHP looking to expand as they are you can potentially see another $5-10 billion easily being delivered through that … provided we continue to add value.”
SKM has also done a lot of work for Rio Tinto in the Pilbara and as with its relationships with other major clients it is progressively transferring the ties to other parts of the world.
Lory listed Chile and China as other key current growth areas for SKM consulting services. The former has been the biggest market for SKM mining and metals, after Australia, for several years, but China is now expanding on more fronts for the company.
“We established in China 3-4 years ago and the driver for us setting up in China was initially because Rio and BHP were having [plant, etc] modules fabricated in China. So we set up an inspection and expediting service there to monitor those fabrications as they were going through the works,” Lory said. “And that’s been the basis of that office probably for the last 3-4 years.
“One of [SLM’s] other business units, our buildings and infrastructure business, has recently completed two acquisitions there which has broadened our capability quite a lot and we’ve moved from 30-40 people to now about 120 people in China and we’ve also started an active recruitment campaign to recruit engineers in the mining space to build a central capability there for design engineering.
“So we’re recruiting engineers and designers and taking the lead guys and actually putting them down on our projects in Brisbane and Perth to learn the SKM way if you like. That’s something that we’ve been moving on more actively in the last 12 months.”
The mining consulting work in China and Central Asia is expected to play a bigger part in SKM’s growth in the region in future.
Elsewhere, it opened mining and metals focused offices in Lima, Peru, and Bogota, Colombia, during 2012, and plans extend its presence in South Africa and Russia during 2012.
An ongoing debate within SKM about moving more deeply into the mining and geological consulting arena, perhaps via mergers/acquisitions, hasn’t changed company policy yet.
“We keep having the debate about mine planning,” Lory said. “There are a number of specialist organisations. I think our philosophy is a teaming relationship there, so use the specialists in that mine planning area and we’ll stick to our knitting.
“We’ve got a number of groups that we’re in conversation with at the moment about bringing on some additional skills to broaden out our capabilities in a few areas, but I can’t talk too much about the details at this stage.”
SKM plans to recruit an amazing 200 or so new starters in its mining and metals business in the first half of next year. This must surely impact firms working in the mine planning consultancy space, not to mention other mining services organisations.
“I think that the mining area is the one that’s showing the most growth but it’s having an impact not just on our mining business unit but across the board,” Lory said.
“We rely quite heavily on other parts of the business for environmental and social impact assessments, for example, or our infrastructure business for maritime skills. So it’s having an impact on their recruitment needs as well. We’re seeing a demand across the board for environmental scientists, maritime engineers, materials handling people.
“We are seeing growth in some of those other areas too, just not at the same rate as mining.”
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
- Consultants see room to grow in 2012
- 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