The role of contract mining in the resources...
Transcript of The role of contract mining in the resources...
The role of contract mining in the resources industry
Wal
King CEO / Melbourne Mining Club / 6 August 2009
Leighton Holdings Limited2 Melbourne Mining Club 6 August 2009
The Minerals Demand Cycle
Leighton Holdings Limited3 Melbourne Mining Club 6 August 2009
F
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1780 1794 1808 1822 1836 1850 1864 1878 1892 1906 1920 1934 1948 1962 1976 1990 2004 2018
GDP $bn
Australia’s Economic Growth
GDP AT CONSTANT F2008 PRICES 1788‐2009
Source: IBISWorld
Hunting Age Agrarian Age Industrial Age Infotronics
Age
An Industrial Age is when
Manufacturing, Construction
and Utilities (electricity, gas
& water) dominate the economy,
that is over a third of GDP
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Changing Importance of Australian Industry
0%10%20%30%40%50%60%70%80%90%
100%
1800
1820
1840
1860
1880
1900
1920
1940
1960
1980
2000
2020
2040
2050
AgricultureMiningManufacturing UtilitiesConstructionWholesale tradeRetail tradeTransport &storageCommunicationFinance &insuranceProp &businessDwelling O'ShipGovt adminEducationAccom, cafes &restHealth &communityCult &recreationPersonal &other
Share of GDP by Industry Division
Source: N.G Butlin, ABS & IBISWorld
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The World’s Economic Regions In 2009 ‐
Share of World GDP (ppp
basis)
Source Note:
North America24.0%
C&S America5.0%
W. Europe24.5%
C&EEurope5.5%
Asia Pacific27.3%
Africa4.0%
ME3.5%
IndianS‐C6.2%
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20%
13%
6%
5%4%3%3%3%
3%3%
15%
7%
15%USAChinaJapanIndiaGermanyRussiaBritainFranceBrazilItaly11th‐20th Nations21‐30th NationsRest of World
World’s 30 Largest Economies 2009 (F) World’s 228 nations US$ 73.8 trillion
PURCHASING POWER PARITY (PPP) TERMS
Source: CIA/IBISWorld
10/11/08
11TH –
20TH NATIONS:Spain
2.0%Mexico
2.0%Canada
1.9%Korea S 1.9%Indonesia
1.3%Turkey
1.3%Australia
1.2% 17thIran
1.1%Taiwan
1.1%Netherlands
1.0%
21ST –
30TH NATIONS:Poland
1.0%S. Arabia
0.9%Argentina
0.8%Thailand
0.8%S. Africa
0.7%Egypt
0.7%Pakistan
0.6% Belgium
0.6%Malaysia
0.6%Sweden
0.5%
Rest of World (198 nations)
15.3%
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F
‐30
‐25
‐20
‐15
‐10
‐5
0
5
10
15
20
25
1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
%
Chinese Economic Growth
ECONOMIC GROWTH: CHINA, REAL GROWTH 1950‐2010 (F)
Source: SSBC/IBISWORLD
8.2% average
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Over 60% of China’s steel use is
for construction and
infrastructure – the key targets
of their stimulus package
7%5%
6%
20%
62%
Infrastructure/ Construction
Machinery
Metal Goods
Autos and Ship‐Building
Other
Chinese Steel consumption
CHINA’S STEEL USE BY SECTOR CY2008
Source Note: CEIC, UBS, BHPB
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F
‐8
‐6
‐4
‐2
0
2
4
6
8
10
1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
%
Indian Economic Growth
ECONOMIC GROWTH: INDIA, REAL GDP GROWTH 1950‐2010 (F)
Source: SSBC/IBISWORLD
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F
Trend line.Actual
Impact of GFC on world GDP
‐2
0
2
4
6
8
10
80 82 84 86 88 90 92 94 96 98 0 2 4 6 08e 10f
%
Worldeconomy*
Emerging anddevelopingeconomies
Advancedeconomies
WORLD REAL GDP GROWTH
*PPP weightsSource: IMF World Economic Outlook Update, Jan. 2009. Year end December
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Forecast
0
50
100
150
200
250
300
350
2 3 4 5 6 7 8 09e 10f 11f 12f
$US/Various
Gold($US/oz /10)
Thermal Coal($US/t)
Coking Coal(US$/t)
Iron Ore
Commodity Price Forecast
SELECTED COMMODITY PRICES
SOURCE: ABARE, BIS SHRAPNEL, MACQUARIE RESEARCH APRIL 2009
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Hobart
Brisbane
Perth
Darwin
SydneyCanberraAdelaide0.9%
0.9%
53.7%48.8%
17.8% (not producing)19.3% (not producing)
18.7%18.4%
0.1%0.2%
1.8%0.9%
0.2%0.2%
9.5%1.3%
1.9%
(not producing)0.3%
Otway
BasinBass
Basin
Gippsland
Basin
Bowen Surat
Basin
Adavale
Basin
Cooper / Eromanga
BasinAmadeus Basin
Carnarvon Basin
Browse Basin
Bonaparte
Basin
Dampier‐Bunbury
stage 5 gas pipeline
Pyrenees oil
Van Gogh oil
Pluto gas
NWS CWLH oilNWS North Rankin B LNG
Reindeer gas
field,
Devil Creek gas processing plant
Blacktip
gasMontara/Skua
oil
Queensland gas pipelineLacerta
Gas Field coal seam methaneDarling Downs ‐
Tallinga
coal seam methane
Darling Downs including Spring Gully
coal seam methane
Eastern gas pipeline
Turrum
gasKipper gas
Longtom
gas
9.5%4.8%
South Gippsland
gas pipeline
Proposed gas
pipeline
Capital Expenditure$101‐500m$501‐1000m>$1000m
Oil basinGas
basin
Melbourne
Oil & Gas reserves
MAJOR OIL AND GAS RESOURCES AND ADVANCED PROJECTS
Source: ABARE Apr 2009
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
World
Asia
Europe
Africa
NorthAmerica
LatinAmerica
Forecast World Population Growth 1950‐2050
POPULATION GROWTH (MILLION PAX)
Source: United Nations World Population Prospects
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The role of contract mining
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Contract mining in Australia
Components by Commodity‐ Contract Mining, 2008f, $ million
2539
1367
7
128
964 206
171
716
Coal
Iron Ore
Bauxite
Copper
Gold
Mineral sands
Silver/Lead/Zinc
Other (mainlyNickel)
Source: ABS and BIS Shrapnel
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Year ended June Coal Iron ore Total
2002 1247 425 3234
2003 1696 543 4076
2004 1532 714 4070
2005 1767 845 4272
2006 2366 1022 5329
2007f 2506 1137 5665
2008f 2539 1367 6098
Ave growth pa % 12.6% 21.4% 11.2%
Share % 41.6% 22.4% 100%
Source: ABS 8415.0 and BIS Shrapnel
Value of contract mining
Value of contract mining by commodity AUD $million, 2004-2008f, current prices
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Contractors can provide a full range of services
Typical roles of contractor in the mining sectorOwner Operator Traditional
Contract MinerFull Services Contracting
Contractor
Activity•
Limited to
infrastructure set‐up
•
Pre‐strip
•
Mining
•
Rehabilitation
•
Infrastructure set‐up•
Mine planning•
Pre‐strip•
Mining•
Processing & load out•
Rehabilitation
Delivery
System•
Design & construct
•
Lump sum
•
Schedule of rates
•
Lump sum
•
Alliancing•
Schedule of rates per tonne delivered•
Schedule of rates for some
components
Investment by
Contractor•
Nil •
Plant & equipment
•
Working capital
•
Plant & equipment•
Working capital•
Investment stake in mine
Skills
Required by
Contractor
•
Construction Earthmoving/Mining
skills
•
Construction•
Mine planning•
Earthmoving/Mining skills•
O&M
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Wilpinjong
Coal Mine, NSW, Thiess
Leighton Holdings Limited18 Melbourne Mining Club 6 August 2009
Leighton Holdings Limited19 Melbourne Mining Club 6 August 2009
Key reasons for using contractors
Reason Coal Gold Copper SLZ Other metals
Doesn’t tie up capital 3.5 3.5 3.2 2.8 2.9
Cost management & accountability
3.7 3.3 2.4 2.8 3.1
Management of equipment3.3 3.1 3.6 3.2 3.5
Need for flexibility 4.4 4.2 3.2 4.0 4.0
Uncertainty over size and life of mine
2.7 3.3 2.8 3.8 2.5
Technical capability 3.1 3.3 3.4 3.4 3.2
Labour shortages 3.4 4.1 2.6 3.8 3.6
IR concerns 2.4 1.8 1.8 2.0 2.1
Internal benchmarking
2.5 2.1 1.8 1.8 2.1
Note: Ratings scale: 1=unimportant and 5= very important
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Leighton Group contract mining
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Leighton Group is world’s largest contract miner
World contract miners(A$bn revenue pa, various recent years as available)
0 1 2 3 4
WashingtonUSA
Kiewit USA
MoolmanAfrica
BumaIndonesia
MacmahonAustralia
PamaIndonesia
Downer EDIAustralia
LeightonGroup
Caterpillar Purchases 2004 - 2006
BHP
Billi
ton
Leig
hton
Gro
up*
US$920m
* Including HWE
This graph includes RT, Anglo, Newmont, Peabody, CVRD, Downer EDI, Xstrata, Phelps Dodge, Freeport, Drummond and Arch Coal
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Leighton Group Mining projects in Australia, NZ & Asia
Collinsville
South Walker CreekYandiOrebody 23/25
Area C
Yarrie Nimingarra
Cockatoo Island
Koolyanobbing
South Middleback
Iron OreCoalGoldNickel
St IvesBeta Hunt (U)
Agnew
Challenger (U)
Callie (U)
Favona (U)
Mt Keith
Toka Tindung
Leighton Contractors/HWE MiningThiess
Leighton InternationalLeighton Asia
Rapu Rapu Polymetallic
Kaltim Prima
SatuiSenakin
MSJLoa Raya
ABK Loa JananGHP
Sebuku
Rotowaro
Duralie
Broadmeadow (U)
Poitrel/Peak Downs/ Saraji/Middlemount
Dawson North
Yallourn/Loy Yang/ Hazelwood
Liddell/ Mt Owen ComplexWestside
Wilpinjong
Riverside
Oaky Creek/Lake Lindsay
Prominent Hill
Wahana
(U) Underground
Phu Bia Mine, Laos(not shown)
Curragh North
Hail CreekBurton
Goonyella Moorvale
Sonoma
Project Magnet
Tarong
Lake Vermont
Masbate
Collinsville
South Walker CreekYandiOrebody 23/25
Area C
Yarrie Nimingarra
Cockatoo Island
Koolyanobbing
South Middleback
Iron OreCoalGoldNickel
St IvesBeta Hunt (U)
Agnew
Challenger (U)
Callie (U)
Favona (U)
Mt Keith
Toka Tindung
Leighton Contractors/HWE MiningThiess
Leighton InternationalLeighton Asia
Rapu Rapu Polymetallic
Kaltim Prima
SatuiSenakin
MSJLoa Raya
ABK Loa JananGHP
Sebuku
Rotowaro
Duralie
Broadmeadow (U)
Poitrel/Peak Downs/ Saraji/Middlemount
Dawson North
Yallourn/Loy Yang/ Hazelwood
Liddell/ Mt Owen ComplexWestside
Wilpinjong
Riverside
Oaky Creek/Lake Lindsay
Prominent Hill
Wahana
(U) Underground
Phu Bia Mine, Laos(not shown)
Curragh North
Hail CreekBurton
Goonyella Moorvale
Sonoma
Project Magnet
Tarong
Lake Vermont
Masbate
•UHG Mine, Mongolia (not shown)
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UHG Coal Mine, Mongolia, Leighton Asia
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Mt Owen Coal Mine, NSW, Thiess
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0
1
2
3
4
5
6
7
8
9
10
98‐99 99‐00 00‐01 01‐02 02‐03 03‐04 04‐05 05‐06 06‐07 Averagerate
Fatality rates in Australian mining
FREQUENCY OF FATALITIES PER 100 MILLION HOURS
The role of contract mining in the resources industry
Wal
King CEO / Melbourne Mining Club / 6 August 2009