Australia’s mining boom may be over, but Australian manufacturers and innovators are still making their mark on the industry globally. By William Poole.
Mining, so long a key driver of Australia’s economic prosperity, has hit a slow patch. The boom of the 2000s is long passed. Following a wave of investment in construction and equipment, the industry has entered a production and sustainment phase, employing fewer workers and spending less. In 2014-15, revenue and exports both dropped substantially, as increased production resulted in global oversupply and depressed commodity prices.
However, grounds for optimism remain. According to the Department of Industry, Innovation and Science’s Resources and Energy Quarterly for the March Quarter, Australia’s resources and energy sector enjoys broadly positive prospects in the medium-to-long term. Earnings from exports are forecast to decline by 7% to $160bn in 2015-16, but will average annual growth of 3% to 2020-2021, reaching $208bn in real terms. Although challenging market conditions are likely to persist in the short term, consumption of most commodities is projected to increase as Asian economies urbanise.
The post-boom years have to some degree forced Australian mining to up its game. Mining companies and manufacturers supplying them have had to focus on efficiency, productivity and innovation. Through measures such as increased automation, costs at some Australian thermal coal sites were halved from 2010-15, while labour productivity for the sector rose 33% in the last two financial years. Nonetheless, the report stresses a need to find further ways to innovate and improve efficiency.
“Australian producers have in the past demonstrated their ability to respond to changing market dynamics,” says Mark Cully, Chief Economist at the Department. “They will need to continue doing so to ensure they remain competitive in what is expected to be an often volatile market.”
Korvest – Strength through diversification
One company that has shown its ability to adapt is Korvest, based in Adelaide. The company actually began life as a goldmine, KiaOra Investments, which was ASX-listed in 1970. However, gold-mining soon hit a downturn, so instead the company invested in a galvanising plant. Over the subsequent decades it bought and sold various businesses within the sheet metal and galvanising segments.
Today Korvest employs around 275 people including around 160 manufacturing personnel, with its headquarters and manufacturing plant in Adelaide, and sales and distribution offices nationwide. In keeping with its gold-mining origins, the company remains significantly involved in the mining equipment, technology and services (METS) sector, but also operates across various other industries. Korvest’s Managing Director Alexander Kachellek believes this diversity is key to its strength.
“If you’re only in METS, when the mining is great, sales are great; when the mining is down, sales are down,” he explains. “To me it’s important that a business has a diverse product range or a diverse customer range. Businesses have to look at their internal capabilities and grow them, to safeguard against shocks.”
The company has four key divisions: Korvest Galvanisers, its core galvanising business; EzyStrut, Australia’s market leader in cable and pipe support solutions; PowerStep, which makes safety access systems for large mobile equipment; and Titan Technologies, which provides bolting solutions.
All four divisions have some exposure to the mining and resources industries, but are also active in other fields. The galvanising business services clients across the structural steel industry in South Australia, Titan Tools has provided solutions in areas such as wind power and rail transport, while EzyStrut’s products are sold into all types of non-residential construction, including hospitals, power stations and commercial utilities. Even PowerStep, the division closest to a true METS business, is pursuing fresh prospects. Initially it operated entirely in mining, producing retractable step systems for installation on the big trucks and draglines utilised in the sector. However, it is now targeting markets such as rail and shipping.
Due to the nature of the Australian economy and markets, and its small population, Korvest’s businesses tend towards low-volume, small batches, with the company providing specialist services to meet specific customer demands. Kachellek regards this as where Australian manufacturing overall should be heading, rather than trying to compete with low-cost nations in high-volume production.
“Our focus here should be on bespoke, custom things that our expertise and our intellect or knowledge enable us to do,” he says. “That is also more difficult for Asian volume-producers; they don’t want to be bothered with specials and one-offs. They find them difficult and costly to do. They’re not set up to do that.”
Alongside his role at Korvest, Kachellek is also Chairman of Austmine, the industry body for the METS sector in Australia. As such, he can speak with some credibility about the sector’s outlook. Despite the recent downturn, he believes Australian manufacturers are well placed for the future.
“Mining 100 years ago used shovels and the wheelbarrow. We still use shovels and a wheelbarrow, just bigger!” says Kachellek. “I think this is where the Australian METS sector plays a part, because we do have innovative companies. We have the brains to think laterally. The climate that we’re in now, it’s pushed the industry to think harder and come up with new ways of doing things. We’re seeing that.”
Bubbles of inspiration
When Kachellek talks about Australia having ‘the brains to think laterally’, he could probably find few better examples than Laureate Professor Graeme Jameson, the Director of the Centre for Multiphase Processes at the University of Newcastle. Last September, Jameson was awarded the inaugural Prime Minister’s $250,000 Prize for Innovation for his pioneering work on the Jameson Cell.
“It was a great thrill,” says Jameson. “It’s wonderful to see your work recognised after many, many years. The fact is you don’t work to get prizes, you do it because you like it and you’re looking for some sort of fulfilment in the work itself. But when you do get public recognition, it’s a great thrill.”
Invented in the 1980s, the Jameson Cell employs a floatation process to draw valuable minerals from raw ore. The ore is ground into small particles and suspended in water. Air bubbles are passed through the suspension, carrying reagents that make the valuable particles stick to them, forming a mineral-rich froth that can then be skimmed off the surface. Other flotation techniques exist, but Jameson recognised that the efficiency of the process lay in the size of the bubbles.
“The next trick is how you make lots of small bubbles” he explains. “A billion a second, on a very big scale, with equipment that’s low-maintenance, won’t block up and performs well? That’s the task I set myself. I came up with a simple way of doing it. That’s what the Jameson Cell does.”
Jameson likens the process to when you wash your car: get a bucket with detergent in it, squirt water in from a garden hose, and you end up with a bucket of froth. However, his solution is somewhat more sophisticated, using a high-speed jet to produce bubbles with a diameter of 300-500 microns. Compared with more conventional processes, the Jameson Cell offers increased throughput while using less energy and taking up less space, and it can also much finer, higher-grade particles.
First installed in 1989, the Jameson Cell has been installed in 26 countries, with over 300 machines now operating at mines worldwide. Other applications have also been found, in the manufacture of everything from aluminium cans to ice cream, as well as the environmental clean-up of polluted waterways.
“The biggest benefit to Australia has been in the coal industry, where it’s been used to recover very fine coal which would otherwise have gone to waste,” says Jameson. “The exports to date have brought in about $36bn to the economy, which is a lot of money. It’s been a big success and I’m very proud of that.”
The Jameson Cell is a rare case of an Australian innovation effectively commercialised here, rather than the intellectual property going overseas. Jameson says he was very fortunate in finding the right partners to help develop his ideas.
“Mount Isa Mines in Queensland had an unusual ore body which couldn’t be separated by normal means, so they became interested in what I was doing,” he recounts. “I was able to try my ideas in their plant, they worked, and Mount Isa Mines put a young metallurgist on it for a year to try out the machine in a concentrator and develop scale-up rules, that were very simple. It really took off from there.
Jameson says those opportunities don’t really exist anymore as mining companies have cut back on investment in research and innovation, and he believes Government could help: “Nobody will take on an invention unless it’s been developed to a stage where it’s been demonstrated at a realistic scale. There’s an old saying: the one-ten-100 rule. It takes $1 to make a discovery, $10 to develop it to the point of commercial take-off, and $100 to actually commercialise it. It’s the $10 part we lack. And that’s where Governments can step in.”
The Jameson Cell essentially comprises two elements: a large metal tank in which the process takes place; and the machinery that carries it out. The latter, more high-value components are produced in Australia, while the tank is produced in the location where the machine will operate. Jameson believes this is a good model for Australian manufacturing.
“It’s much cheaper to build a tank where the mine is, so if it’s in South America, the tank would be mostly fabricated locally. Those things can be done more cheaply elsewhere. Where the future lies is in added value.”
Despite his achievements, Jameson is not sitting back and polishing his awards. His latest project is the NovaCell. Named in honour of his home town Newcastle, the NovaCell is a fluidised bed froth flotation cell that can efficiently capture larger particles, meaning ore doesn’t have to be ground so finely. This would bring major savings in terms of energy as well as the cost of the wear parts.
“But the real benefit comes by being able to reject most of the waste material early in the process, he adds. “It’s taken me a while to understand the process properly and to develop the design criteria, but I’m at the point where I’ll be looking for an industry partner to develop the idea. I’m pretty sure it will happen in the next year.”
Another prize from the Prime Minister could be pending.
Elphinstone – Putting its name on the line
While the recent mining downturn might make some manufacturers wary of the sector, one iconic Tasmanian company is actively increasing its involvement, and putting its name behind it. Based on the north-west coast of Tasmania, the Elphinstone Group recently announced its return to the underground mining industry, manufacturing specialised support equipment using major Caterpillar components under the Elphinstone brand.
The move has resulted in Haulmax, an Elphinstone Group subsidiary that builds extended-distance off highway haul-trucks and technologically advanced road-rail excavators, adopt the Elphinstone Pty Ltd name. Elphinstone is also in the process of acquiring local underground equipment manufacturer Specialised Vehicle Solutions (SVS).
Although in part expedited by US machinery giant Caterpillar’s decision to relocate its Burnie-based manufacturing operations to Thailand at the end of 2015, the Elphinstone Group had somewhat been expecting this transition. Zak Brakey, Elphinstone’s Sales & Marketing Manager, is bullish about the prospects.
“The Elphinstone group has been manufacturing mining products in Tasmania for over 30 years, and successfully exporting these products all over the world,” he says. “What we’re finding is, in a low-commodity-price environment, our customers are very much focused on reducing costs. Miners are willing to spend money on products and new technologies that improve efficiency, increase productivity and reduce their operating costs”.
Dale Elphinstone started his business in 1977, modifying Caterpillar equipment to work underground, and the relationship between the two companies would prove pivotal in Elphinstone’s evolution. The company went on to design and manufacture its own range of underground LHD’s and trucks, using Caterpillar major components that were sold and supported via Caterpillar’s global dealer network. Elphinstone grew steadily, and in 1987 it purchased William Adams, the Cat dealership for Victoria and Tasmania. In 2001, Caterpillar bought the remaining 50% of Elphinstone’s underground mining manufacturing business, and while the products were eventually rebranded Caterpillar, they continued to be manufactured in Burnie right up until the end of 2015.
Throughout this time, Burnie has become somewhat of a centre of excellence in the manufacture of specialised mining equipment. Haulmax was originally based in Brisbane, before its founders made the decision to move to Tasmania taking advantage of a skilled local workforce and state-of-the-art manufacturing facilities, Haulmax became a 100%-owned subsidiary of the Elphinstone Group in December 2014. SVS, meanwhile, was founded by two former Elphinstone employees in 2009, who have been successfully designing, manufacturing and supplying underground support vehicles to the global market.
Elphinstone Pty Ltd is genuinely committed to the North West Coast of Tasmania, the region that has been its home for almost four decades. To maintain operations in a relatively high-wage location, the company has had to embrace and foster a lean manufacturing culture, in terms of both technology (such as a vertical lift for storing components) and ongoing employee training – all manufacturing staff have undertaken their Certificate 4 in Lean manufacturing, while senior managers have completed Certificate 3.
“We have and will continue to invest in the layout of our fabrication shops, assembly areas and warehouses to ensure we eliminate as much waste as possible, improve safety, minimise downtime, and reduce costs,” says Brakey. “We know to remain globally competitive we have to be as efficient as possible which means we must continue to maximise and improve our productivity”
Between them, Elphinstone and Caterpillar have built more than 5,000 underground mining trucks and loaders in Burnie over the past 40 years. As Elphinstone Pty Ltd begins a new chapter manufacturing underground support equipment in Burnie, the Elphinstone Group remains fiercely proud of its reputation as a specialised, high quality Australian manufacturer.
“I guess we find it extremely frustrating when we hear people make the comment that manufacturing in Australia is a dying industry, because we definitely don’t believe that,” says Brakey. “Our view is that Australian manufacturing can and should exist. Yes, there are challenges and that’s business, however we honestly believe if we continue train and develop our people, invest in our facilities, and embrace new technologies we will remain globally competitive.”