Prospect Awards review: Collaborative contractor BGC wins second straight award

BGC Contracting general manager mining Pat Kelly and Atlas Copco Mining Rock & Excavation CFO Claudia Ledesma

BGC Contracting’s reputation for delivering substantial and sustainable operating efficiencies for mining companies continues to grow.

The Perth-based, privately-owned company, a back-to-back winner of the Atlas Copco Contract Miner of the Year, has been awarded six mining contracts worth a combined $1.5 billion since July 2016.

BGC is an attractive partner for mining companies because of its award-winning collaborative contracting model, which has proven to deliver improvements in operational efficiencies, while also setting industry-benchmark safety standards.

The company’s reputation for this model was a key reason behind it winning significant contracts with Arrium and Idemitsu Australia this year.

BGC was awarded a $720 million, five-year contract by Arrium for mining services at the Iron Knob and South Middleback Ranges iron ore projects near Whyalla in South Australia.

The contact, which extended a four-year relationship between the two companies, involves drilling, blasting, hauling, loading, dumping and train load-out services.

BGC was awarded a $700 million, five-year contract by Idemitsu for mining and equipment maintenance services at the Boggabri coal mine in New South Wales.

The Idemitsu contract win was BGC’s biggest in NSW, demonstrating the company’s growth around Australia.

BGC chief executive Greg Heylen explained to Australian Mining how the collaborative model worked earlier this year.

“This collaborative model allows the client and the contractor to have meaningful discussions on what the client is actually looking for. It is a commercial model that incentivises the contractor to reach those targets – whatever they are,” Heylen said.

“It’s more about the model that we implement that rewards the contractor for achieving the targets the client has, whether that is improved productivity, lower costs or to produce a certain range of product.”

BGC’s collaborative model has delivered tangible production and cost improvements for mining companies.

The contractor has been instrumental in implementing strategies in a challenging market to improve Arrium’s operating efficiencies and production rates, delivering a 38 per cent saving in cash costs at the iron ore operations.

Arrium executive general manager Matt Reed said the collaborative approach to the iron-ore price challenge in the past few years had resulted in significant improvements for both parties.

He cited the major role BGC played in working in partnership with Arrium’s operations team to bring down mining costs.

BGC at Arrium’s operations in South Australia

 

BGC’s collaborative model has also benefitted Cliffs Natural Resources at the Koolyanobbing iron ore operation.

The model helped further improve on the 41 per cent reduction that was achieved in Koolyanobbing’s costs in the 2016 financial year, with another substantial cost reduction bringing its costs down by 60 per cent by September this year.

Heylen said it was important for BGC to evolve with its clients’ requirements and as market conditions changed.

“Over time client requirements change – if commodity prices continue to improve for example, clients may then want more product to port, opposed to the pure focus at the moment, which is generally around lowering costs,” Heylen said.

“If the client has a change of focus two, three or five years from now the model allows those targets to be changed – that incentivises the contractor to reach those targets.”

BGC is now servicing mining clients across a range of commodities, including iron ore, coal, gold and phosphate, with contracts in Western Australia, SA, NSW, Queensland and the Northern Territory.

The company’s expansion around the country has been reward for a diversification strategy aimed at lessening its reliance on Australia’s iron ore sector and extending its geographical presence.

In 2016, BGC opened new offices in Sydney and Brisbane to support its east coast expansion efforts. It also acquired engineering and manufacturing firm, DIAB Engineering, to extend its capability and service offering to clients to include mining maintenance services, and asset maintenance.

These investments have paid off, with BGC now having contracts in every Australian state or territory except the Australian Capital Territory and Tasmania.

BGC is also a significant employer. In the past year, the company has increased its tender win rate from one-in-eight to one-in-three, which will see the company employ an additional 1000 people before the end of 2017.

This article also appears in the November edition of Australian Mining.