25/06/2008 - 22:00

Howard-Smith faces first test under gas blowtorch

25/06/2008 - 22:00


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Reg Howard-Smith may not be the busiest bloke in Western Australia right now, but he'd probably come close.

Howard-Smith faces first test under gas blowtorch
First In Line: The State\'s gas crisis has presented Reg Howard-Smith with a major challenge just six months in to his role as chief executive officer of the Chamber of Minerals and Energy. Photo: Grant Currall.

Reg Howard-Smith may not be the busiest bloke in Western Australia right now, but he'd probably come close.

Just more than six months into his term as chief executive of the Chamber of Minerals and Energy, the job spec has suddenly changed.

Until this month he was the new boss, re-engineering the long-established industry body to raise its performance, in line with the growing status of the WA resources sector.

As if that wasn't challenging enough, the Varanus Island gas pipeline rupture and subsequent shut down of 30 per cent of the state's gas supply has made life quite a lot more hectic. Mr Howard-Smith is now the man in the middle of a crisis.

While, ironically, Varanus operator Apache Energy was not a member of his chamber, a great swath of affected companies are, from minnows to the majors.

It's a big leap from the policy role he had at the CME until November when he replaced Tim Shanahan - not only reshaping the chamber and overseeing its 30 staff, but playing a pivotal role in one of the state's biggest ever internalised economic crises.

Perhaps not surprisingly for a man whose rest periods include cycling to Everest base camp, when Mr Howard-Smith spoke to WA Business News two weeks ago he appeared relaxed and comfortable despite having just left a high-level meeting of the crisis team brought together to manage the unfolding gas issue.

He was, perhaps expectedly at that early stage, positive about the state's response to the crisis, including the government's.

"I believe they fully understand the seriousness of this issue," Mr Howard-Smith said.

It's serious alright.

And not just for the state. The crisis is viewed by some in the industry as a key test of Mr Howard-Smith's fledgling leadership, as he has sole responsibility for the chamber following the recent departures of two of the CME's other most experienced hands, Mr Shanahan and former external relations director David Parker.

In an industry that directly employs 62,000 people, has been bankrolling state and federal governments for years, and has a number of pre-existing growth constraints such as skilled labour shortages and high costs, the gas crisis is a huge problem.

Not only do many see the CME as the key body to put the industry's case to the government, it is also considered to have an important role if potential internecine struggles over gas allocations emerge, as decisions have to be made about where priorities lie in the supply chain.

Mr Howard-Smith said the situation was complex, with reliance on gas in the minerals sector being widespread, either as a metallurgical input or as a fuel that is logistically difficult to replace.

"Around 30 per cent of the industry absolutely needs gas, they can't substitute it," he said.

Mr Howard-Smith admits he's learned even more in the past few weeks about the interlacing impact of resources on the economy. The lack of gas has revealed itself as critical in the supply of cyanide for gold processing, explosives for mining and even as a basic role in manufacturing concrete, which is vital for working underground.

While this crisis may have further opened many people's eyes to the interconnectivity of the WA economy, it will also provide ammunition to Mr Howard-Smith's pre-crisis view that the chamber requires beefing up due to its increasing stature.

"In a de facto sense we have become the national body," Mr Howard-Smith said.

"Traditionally we are a state body, but over the past two years we have spent increasing amounts of time in Canberra.

"We probably know the corridors of power in Canberra better than we do the corridors, not that there are too many of them, here at the WA parliament.

"That trend commenced under the previous federal government, with state issues migrating there.

"The Howard government was quite centralist.

"There were all these issues where we followed our bread and butter across the border.

"This government is not only going to continue that but speed it up."

Mr Howard-Smith is credited with having the foresight to build networks with the federal opposition under Kevin Rudd. Now Labor is in power, another test - presumably after the current crisis - will be to exploit those connections to influence outcomes.

Occupational health and safety, and training, are issues that were embraced by the federal Liberals. The new Labor government is taking on the much bigger issue of emissions trading, a regime that is expected to have a big impact on the energy intensive resources sector.

"In the past we would have left that to the Minerals Council and APPEA (Australian Petroleum Production & Exploration Association)," Mr Howard-Smith said.

"We are now spending a great deal more resources on these things."

While a few secessionists among the junior mining sector might disagree, the CME chief reckons that the chamber is also following the lead of its members.

"The companies themselves are taking a national view of this, if not an international view," he said.

"The old parochial views that used to be expressed in this chamber don't exist in the resources sector anymore."

As a result, Mr Howard-Smith said the chamber had to reflect this change, with its policy work becoming broader and deeper to reflect the national and international context.

One of the big issues on the CME agenda is, not surprisingly, the environment.

While conservation issues have been a major part of the resources sector for decades, the shifting sands constantly catch the industry off-guard.

The latest focus of environmentalists is biodiversity, a high-profile issue for both minerals and petroleum players.

Perhaps the most public example has been the impact of conservation moves on the banded iron formations of the Mid West, the centre of the region's fledgling iron ore industry's prospects.

A similar issue arose with tiny spiders in the Pilbara.

"That is becoming a major issue," Mr Howard-Smith said.

"There's a lot of unknowns, it is not like a geological survey when it comes to materials.

"We don't have a detailed picture of the flora and fauna in WA."

In terms of detailed pictures, WA Business News has already reported on the CME's major project to assess the people, energy and water needs of the resources sector over the next decade or so.

"The chamber is doing a lot of work that members want us to do, around strategic planning, like collaborative work and long-term industry policy," Mr Howard-Smith said, acknowledging that the main game remains, even if the short-term issues prove very distracting.

It's the kind of big projects that you might expect an economist to thrive on. Mr Howard-Smith started out in such a role with BHP Ltd. His last role in private industry was heading up human resources with Woodside Petroleum Ltd.

These are roles that would prepare him for the now ongoing issues confronting resources companies - immigration, research, skills and training - even if many of these problems had not fully surfaced before he joined the chamber.

Such a background, though, is generally considered to be on the softer side by those in project management.

Now there's a crisis, many in the industry will be hoping to see true leadership qualities emerge from their new industry chief.


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