Adapt or shut shop: Mastermyne head20 June, 2013 Malavika...

Adapt or shut shop: Mastermyne head

20 June, 2013 Malavika Santhebennur 0 comments

Managing director of coal mining services company Mastermyne Tony Caruso has issued a blunt warning for its company: react and adapt, or shut shop.

A recently released Mackay Area Industry Network survey which said 83 per cent of the region’s mining business had shown a decline in performance.

On top of this decline, 70 per cent of member companies have hinted a performance decline since September 2012. A cautious estimate of the economic loss to the sector as a result of the decline could be around $254.5 million.

Many mining services companies have issued profit downgrades in the recent past including UGL, Boart Longyear, Transfield and WorleyParsons.

NRW Holdings was the latest to join the group.

Caruso is not surprised and said it is paints a true picture of the industry’s economic situation at present, the Daily Mercury reported.

“We’ve seen the same thing at Mastermyne, and certainly we’ve seen that slowdown in our activities,” Caruso said.

“Generally, why it’s happening is obviously with the mining companies coming under pressure with costs, they’re looking to restructure and as a result the service companies are feeling the effect of that.”

“But we’ve also been through and revisited what we’re paying people, both out in the field and our executive and head office people as well.

“We’ve had to go back and make tough decisions around overheads and what we’re paying people. That’s the brutal reality; the good times are over and we either adapt or we won’t be around.”

Recent research by consulting group Wood Mackenzieand commissioned by the Australian Coal Association said declining commodity prices and increasing operating costs is destroying Australia's coal sector.

One industry association said over 9000 jobs have gone in the last 15 months.

The research highlighted the dismal state of Queensland and NSW coal mines.

Caruso attributed the current downturn to a dip in the commodity price for coal, less demand from China and more taxes and royalties.

In these circumstances companies have to adapt to the slowdown to survive into the future.

“The whole industry is going through a restructuring. I don’t think there’s a magic bullet. I think there’s a few things that are in play that need to change.

“It feels very doom and gloom at the moment but the industry is not going to go away. We just have to adapt.

“Mining companies have made too big of an investment to just walk away from this thing.”

The Bureau of Resource and Energy Economics recently said $150 billion worth of mining and energy projects have been shelved in the last 12 months.

Following its merger, Glencore Xstrata decided to abandon its coal export terminal development at Balaclava Island in May.

A further 31.13 per cent of businesses predict more declines in performance over the next six months of around 12.83 per cent.

This could result in a further economic loss of about $24 million.

Mastermyne won BHP's Appin Area 9 project earlier this year. The company was contracted to provide development drivage and outbye services.

The company axed 30 mining jobs from Centennial Coal's Newstan mine last year as the mine reviewed its operations and cut costs.

The company said about 100 mineworkers and 30 staff would lose their jobs.

http://www.miningaustralia.com.au/news/adapt-or-shut-shop-mastermyne-head