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In the two biggest sales in its 81-year history, the Christchurch-based Gough Group is supplying 95 pieces of Caterpillar machinery, worth $120 million, to Solid Energy’s Stockton opencast coking coalmine north of Westport.
Karl Smith, group chief executive officer of Caterpillar dealer Gough Group, told Contractor that securing two orders of this magnitude, in such a short timeframe, was a huge vote of confidence in Goughs and its staff and also the Caterpillar product. “As a company and dealership we have always had such great faith in the quality of the Caterpillar product and it is fantastic that Solid Energy and the Stockton Alliance (the Solid Energy and Downer EDI Mining partnership which operates the mine) have that same faith, both in the equipment and the technical expertise of our Goughs team. “Orders of this magnitude have a trickle down effect right through the company and out into the community. We had more than 100 staff assembling, commissioning and installing the first phase of the project, and there will be even more when Stage II kicks in. “The contracts have also had a very positive impact on our apprentice programme. This year we took on 13 new apprentices, out of 340 applicants, for heavy diesel mechanical trade and engineering and are already looking to add to those numbers. We currently have 64 apprentices within the business at various stages of their courses and would be one of the largest employers of apprentices in this specialist field,” he says.
“We’re working from a temporary facility at the moment but we’re going through due diligence in preparation for a move into a permanent site. A number of local jobs have been created from the supply of the equipment, and we hope to provide further opportunities in future,” Smith says. The Caterpillar machinery purchase is one of a number of improvement initiatives at the mine after the state-owned energy company ended its main contract mining arrangements last October and the Stockton Alliance took over operating the mine, using the former contractors’ machinery on a hire basis. Steve Bell, Solid Energy’s South Island alliance and development manager, says the first tranche of mobile plant was to replace the core mining fleet of hired machinery. The second tranche would complete the mining fleet replacement, upgrade coal haulage capacity and provide a range of smaller plant for work such as roading, water management infrastructure construction and maintenance and minesite rehabilitation. The mobile plant purchase complements the recent commissioning of a $124 million wash-plant on the mine site and approximately $15 million in a range of infrastructure upgrades. Solid Energy believes Stockton Mine, which directly employs about 600 staff through Stockton Alliance and around 100 other contractors, has sufficient economically recoverable resources to continue operating at around current levels for at least another 20 years. Annual production over the mine’s life will be in the order of 2.2 million tonnes.
Bell told Contractor that the switch from a contracting to an owner-operator structure at Stockton was in line with the company’s best-for-project management strategy. “We had some real challenges with contracts at Stockton in being unable to be flexible enough to react to the market. Also, changing contractors leaves you with an insecure workforce: we were starting to lose quite a few people. We therefore went through a process on professional advice, culminating in an alliance relationship with Downer EDI Mining. It took us about two years to get an understanding of alliancing, and we’re still learning.” Downer EDI Mining brings to the alliance its extensive experience in large mine management, while the alliance allows Solid Energy to have a hands-on role in areas such as purchasing and planning, while allowing its staff to develop the knowledge to be able to run the mine independently at the end of the five-year period. “It has been a step change right from the word ‘go,’ and at the end of the five years we hope to be fully capable of operating the mine on our own,” Bell says. The alliance arrangement goes beyond Downer EDI Mining simply providing management; they are commercially rewarded on all performance outcomes, from safety to cost.
Downer EDI Mining had a major role in the equipment purchase from Goughs, including the identification and specification of the required plant. “And in some things, whenever a cost such as insurance comes up, we get quite competitive as to who can get the best deal, Downer or ourselves,” Bell says. “We run all the costs through our company so we know exactly where everything is, and the Downer guys have done an impressive job in getting everyone employed, on board and trained, and also getting all the procurement through.”
The Goughs contract includes:
Contractor Vol.34 No.5 June 2010 |
Stockton mine’s two Cat equipment contracts, which are of similar size, comprise 58 trucks, 19 excavators, five tracked and three wheeled bulldozers, seven wheel-loaders and three motor-graders. The first contract was awarded towards the end of last year and the second last month (May). Delivery has already started on the first contract.
Westport will also be a winner with Goughs committed to set up a new branch in the town, employing up to 10 people, to back the company’s commitment to the alliance and the Stockton project.
The machinery purchase meets three levels of need at Stockton. The first was the core requirement for plant for over-burden removal, the second to harvest the coal and deal with the increasingly difficult mining situations, and the third for water management, modifying old workings and carrying out post-mining rehabilitation.
“There is now a single management structure on site,” Bell says. “The management team on site is split roughly 50/50 between Downer and Solid Energy, and the Stockton Alliance has a general manager who reports to a leadership team comprising three people from each company.”