Flying high on top of cautious optimism

CWT Energy, Resources and Marine senior director Marty Lonergan speaks to Vanessa Zhou about the focus on mining travel as the market continues to recover.

Mining travel is a big line item in the balance sheets of many large mining companies. Hundreds of million of dollars can be spent every year to keep existing mines running, or to start a new exploration project thousands of kilometres away.

Smaller mining companies, though only spending a fraction of their larger counterparts, also feel the impact on their operating profit if they don’t maximise every dollar spent, according to travel management company CWT Energy, Resources and Marine.

From a budget point of view, it is then natural for clever management of travel budgets to be a big focus, if not one of the key trends observed among mining companies this year as activity picks up.

“We’re hearing from our clients that there’s cautious optimism as far as what’s happening in the future,” CWT senior director, global program management Marty Lonergan says.

Though prices for most commodities have recently ascended and are expected to remain strong, there’s nervousness about the possibility of a United States–China trade war, the risks of Brexit and the Chinese import ban on Australian coal.

This contrasts with the appetite for air travel during the construction phase of the mining boom when companies would get workers to a site to build their mines and infrastructure at almost any cost.

Today, companies are looking to strike the right balance between maximising every dollar spent and looking after their workers’ wellbeing.

Some have taken a more drastic approach in managing their travel budget and choosing the lowest airfare regardless of the airlines, given that 80 per cent of companies’ travel cost is associated with getting people on-site.

“The key thing about managing the travel budget is to make sure companies are also managing workers’ fatigue. They want to ensure that when the worker does get to the location, they’re able to do their job effectively,” Lonergan says.

“A lot of our clients now travel to locations where they may be making assessments around whether they should invest in different parts in Australia, or to operate a mine elsewhere around the world, like Africa and South America.

“Companies don’t want their workers flying via two different transit points to save $100 while spending 10 hours travelling – when they could go direct for six hours. That fatigue element is very important as well.”

Depending on the destinations, companies also have different arrangements set up for their team members, for example, safety around ground transfers and secure accommodation. Politically, the environment is something that all organisations also monitor.

“They want to make sure they know the latest development going on in that area and have the right safety and security around their travellers,” Lonergan says.

“That’s where having [past] data enables them and us to make the right decision and implement some strategies to keep people safe. When there’s a major geopolitical event, we can step in and help the companies get their travellers out as quickly as possible.”

According to Lonergan, being able to capture historic data is a key point in ensuring companies don’t fall back to mining boom “bad habits” of unwise travel budget management, supply negotiations and workforce management.

This process doesn’t necessarily have to be a manual, inefficient Excel spreadsheet-driven activity, Lonergan says.

There are different ways in which companies can streamline their processes and make use of their data. And once the industry continues to see an uplift in the sector, they’re able to benefit from the decisions they’ve made at present.

“There’s been an uplift in travel activity in Australia and beyond in 2019 – cautious optimism is certainly the trend we’re seeing particularly in the last 12 months,” Lonergan says.

“We are certainly waiting for the next round of investments considering we are experiencing an interesting time [with] the number of mergers and acquisitions in Australia.”

This article also appears in the April 2019 edition of Australian Mining.

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