14/03/2012 - 10:57

More competition for mining villages

14/03/2012 - 10:57

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WA has dozens of remote mining and construction camps, and every one needs caterers, cleaners, launderers and more. It’s a services sector that pits a handful of global giants against an array of local competitors.

More competition for mining villages

WA has dozens of remote mining and construction camps, and every one needs caterers, cleaners, launderers and more. It’s a services sector that pits a handful of global giants against an array of local competitors.

WHEN ISS Facility Services went looking for a new general manager for its energy and resources division, it didn’t seek candidates from the mining industry.

Instead it went to the hospitality sector and found Dale St George, whose resume includes stints managing Queensland’s Hamilton Island resort and Mirvac hotels.

Mr St George doesn’t believe the new job is a dramatic change, except perhaps for the remote locations. Rather, he sees a lot of continuity, because mining companies have significantly upgraded the quality and service levels in their villages.

The rooms have become larger, they have en-suites and split-system air-conditioning, expert chefs run the kitchens, and there are swimming pools, gyms, cinemas, taverns and more.

And, Mr St George believes, the village operators are trying hard to bring a personal touch.

“It’s the little things that make the difference,” Mr St George said, citing the herb garden at one village and the takeaway pizzas at another.

ISS is among more than a dozen facilities management companies in Western Australia competing for mine site contracts.

The sector includes three giant European companies – Compass Group, Sodexo, and ISS.

They are up against about 10 Australian competitors, including Brisbane-based Morris Corporation, local firms Action Industrial Catering and DCL Services, and national player Spotless.

The sector is attracting new players, with the latest entrant being Perth firm Credo Group.

It is also evolving, with a trend towards ‘build, own, operate’ contracts.

A recent example was the joint venture between Perth construction contractor Decmil and Queensland’s Maroon Group to build, own and operate a 2,200-room accommodation village at Gladstone.

The three European companies have expansive operations that range across many industries, from mine camps to hospitals, universities, airports and sporting stadiums. ISS is the largest, with 500,000 staff around the world and 20,000 across Australia.

In the WA mining sector, however, the ranking is very different. 

Compass, through its ESS Support Services business, is by far the biggest player, courtesy of several acquisitions including Poons, P&O Catering Services, and SHRM.

ESS runs 105 camps in WA and employs about 3,600 people as cooks, cleaners, baggage handlers, bus drivers, plumbers, and electricians.

In addition, Compass has a specialist design and building arm, Delta Facilities Management, and a specialist security subsidiary.

It also boasts 10 indigenous joint ventures, employing 380 indigenous people and turning over $200 million.

The second-ranked player is Sodexo; its remote services business runs 40 camps in WA and 65 nationally.

ISS moved into the mining sector through two acquisitions – national business Tempo Services in 2006, and Perth-based Topic Caterers in 2008.

These were part of a global strategy under which ISS – based in Denmark but owned by two private equity funds – made 560 acquisitions around the world since 2005. It now operates 10 mining villages for clients including Rio Tinto, BHP Billiton and CITIC Pacific.

ISS Australia chief executive Dane Hudson sees the mining sector as one of the big growth opportunities for his business.

He believes the experience gained in other sectors will help ISS expand in mining.

“We have scale in every service the mining companies want in their camps,” Mr Hudson said.

He said his background in the fast food industry, including with KFC owner Yum Restaurants, provided handy experience.

“It’s about large teams of people scattered across the country, with a focus on processes, discipline and getting the right people culture,” Mr Hudson said.

Like all of its major competitors, ISS has learned the importance of occupational safety and health in the mining sector.

Another area of focus is indigenous employment, as well as operating in an environmentally sustainable manner.

But Mr St George acknowledges that the real litmus test is the ability of staff to deliver.

“What we want is consistent quality and friendly service,” he said.

“It’s the people on the site who create the brand, not us.”

The Australian competitors include Morris Corp, which has a 100-per cent focus on the mining sector in Queensland and WA, and sees that as a competitive advantage.

Morris started life servicing army bases in countries such as Somalia, before moving into the Queensland coal mining industry.

The company won its first substantial WA contract in 2003 when it started running the village at the Golden Grove mine in the Mid West.

That was followed by contract wins at Fortescue Metals Group’s Cloudbreak site (which recently expanded to 1,600 beds) and Christmas Creek site.

To support its growth, Morris struck a deal last month with private equity group Catalyst Investment Managers, which acquired a 49 per cent shareholding for an undisclosed sum.

Another player is ASX-listed Spotless Group, which is more akin to the big European companies. As well as running numerous city-based facilities, it has contracts to run accommodation villages for BHP Billiton’s Nickel West business and at Rio Tinto’s Argyle diamond mine.

The largest Perth-based player in the market is Action Industrial Catering, which operates 16 camps and has just won several new contracts.

Its mining clients include Western Areas, Independence Group, and Kentor Resources.

Action also services six FMG railway construction camps and has just won its first Rio Tinto contract, also for a rail construction camp.

Director Owen Selman said Action had the capacity to service camps of up to 1,200 workers.

One of the newest players in the market is Perth’s Credo Group, which has a background in recruitment and project management.

Managing director Tim Brady said Credo had delivered efficiency gains for clients in other sectors over the past 10 years, and three years ago recognised an opportunity to apply that skill set to the mining sector.

It has won contracts at a handful of mining and exploration camps and is looking to expand its profile in the mining sector, including through build-own-operate contracts.

Another Perth-based player is R2R Services, which operates motel-style facilities in Port Hedland and Karratha. R2R also has a niche service, acting as camp auditor for clients such as Ivanhoe Mines, which engaged the firm to audit a 5,000-worker camp in Mongolia.

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