METS locals a global force

Business News’ annual mining services review highlights the large and diverse number of companies exporting their skills and expertise.

Among the niftiest marketing tools I’ve ever been given is a foldout cube that displays the many services offered by Perth company Ausdrill.

As the eight-part cube is manipulated, it reveals 17 different brands, which employ 4,500 people across nine countries.

The company’s business units range from exploration drilling and mineral analysis through to mine development, contract mining, mine supply and the manufacturing of drill rigs, drilling consumables and dump truck bodies.

As such, it’s a microcosm of the entire METS sector, a term that stands for ‘mining equipment, technology and services companies’.

In a survey published last year, METS advocacy group Austmine identified 860 METS companies nationally that generated $90 billion in annual revenue.

The survey encompassed a wide range of companies. Engineers Monadelphous, Sedgman, Ausenco, GR Engineering Services and Lycopodium; contractors such as Downer, Macmahon Holdings, BGC and Barminco; equipment suppliers WesTrac, RCR Tomlinson and Hofmann Engineering; consultancies including GHD, Sinclair Knight Merz, Coffey and Snowden; and specialist software suppliers Micromine and Maptek.

This listing just scratches the surface but serves to illustrate the calibre and diversity of companies in the METS sector.

Beyond the big numbers, what makes the METS sector even more impressive is the world-class expertise.

Underground mining contractors Barminco and Byrnecut, for example, were both established in Kalgoorlie and now run mining operations across Australia and internationally.

Perth engineering firms such as Lycopodium and Southern Cross Electrical Engineering have played a big part in numerous gold developments in Africa.

Australian companies have also made inroads into South America, with Sedgman recently signing a $US134 million engineering design and construction contract for a gold project in Guyana.

The world-class standing of METS companies is also evidenced by their investment in modern technology.

Having toured Ausdrill’s Canning Vale factories, for instance, I can attest to the high-tech equipment, including state of the art robotics, deployed there.

Perhaps even more impressive is the precision engineering undertaken at Hofmann’s Bassendean workshop.

Business News wrote last year about the production of a giant, forged steel mill gear – believed to be the world’s biggest, with an external diameter of 13.2 metres and weight of 73.5 tonnes.

It was exported to China, to be used in the grinding mill of a copper mine, illustrating Hofmann’s ability to compete on a global stage.

This week’s edition of Business News features two other Perth companies that are competing in a global market.

Immersive Technologies (see Immersed in mine simulation) is the acknowledged market leader in the design and production of training simulators for the global mining industry.

Its latest innovation was to devise a training package for the ‘drivers’ of driverless trucks.

Immersive has 250 global customers, including nine of the world’s 10 largest mining companies.

Micromine (see Old is new at Micromine helm) also has global reach, with its mining software used by clients in 90 countries.

Hofmann, Immersive and Micromine are all mature businesses – they have traded through plenty of commodity cycles.

They are also privately owned, and that seems to be an important factor in their success.

The families that own these businesses have been willing to reinvest a large share of profits back into their business, rather than pay big dividends to external shareholders.

That approach seems to be the exception in Australia. Most business owners are only too willing to sell to a large competitor, or float their business on the stock market, or sell to private equity investors.

We can’t begrudge any individual for taking this path but in many cases it does result in a shift in focus, as external shareholders need to be looked after.

The current challenging market will test how much ownership determines business strategy.

While all businesses need to efficient, they also need to strike a balance between cutting costs for short-term profits and investing for long-term growth.

It will be fascinating to see who emerges in best shape after this downturn.