A LACK of certainty is hurting Australia’s minerals sector says the boss of one of the world’s largest construction and engineering firms.
Bechtel Australia managing director and president of the company’s global minerals business, Andy Greig (pictured), says unpredictability is letting Australia down.
Bechtel Australia has $35 billion in work ongoing in the country’s burgeoning LNG industry alone, in addition to major coal projects with BHP in Queensland and another at Kooragang Island at Newcastle.
“The people who make the decisions to invest billions in capital, they are our customers. Our work comes and goes based on the decisions they make in terms of investing in projects,” says the Brisbane-based MD.
“In order to make the investment decision they have to have confidence in the predictability of the market in which they will invest.
“Political instability is never good. Predictability in politics, predictability in fiscal tax and predictability in performance and delivery of projects, they are three of the fundamentals associated with investment decisions and I think we can do better.”
“We need to create stable investments and predictable investments and confidence in the delivery of projects.”
Greig is responsible for about 50,000 employees worldwide in his role as global president of Bechtel’s mining and metals business, while also managing the company’s Australian operations, which employs 13,000 people.
Bechtel is building three LNG projects in Gladstone and another at Wheatstone in Western Australia, in contracts collectively worth $35 billion.
“These are big projects we are providing in Gladstone, with a total value of about $25 billion. We provide fixed-prices for the developers and carry the risks of delivering the project,” says Greig.
Greig says Australia’s high costs make predictability doubly important, but despite his concerns, he says Australia’s minerals industry is well placed for the future.
“The minerals market is highly cyclical, and we go through periods of significant capacity growth and then the owners tend to … focus on extracting value from their operating assets and they’ll contract their capital spend and that’s pretty normal,” says Greig.
“The good news in the long term is that minerals are a proxy for economic growth, so as China urbanises, as the BRIC countries grow, so they need commodities.
“In big mines and big production facilities gradually over time the ore grades decline, the strip ratio goes up and the production of these minerals over time declines, so you need to replace existing capacity and you need to respond to growth.
“In the long term the industry will be robust and Australia is relatively well placed because we have the stuff, we have the minerals.”
Bechtel has been in Australia since 1954 and has built a large amount of the country’s industrial infrastructure.
Greig says 70 per cent of its work comes from repeat customers and usually through negotiation, rather than a bidding process.
“We have a high amount of repeat workload and are quite proud of the fact we have developed those good relationships,” he says.
Greig has worked for the company for 32 years, managing director in Australia since 1995 and global president of the mining and metals business since 2001.
Born in Scotland, Greig immigrated to Melbourne as a child. He completed a business degree at Monash University and began his career in industrial relations, working for employer associations.
He moved into the mining industry and was hired by Bechtel in 1981 as an industrial relations manager. He held a number of positions at Bechtel worldwide over 32 years, relocating 21 times.
“I have had a number of really interesting assignments. I was the IR manager for Australia and New Zealand, ran a project in Nigeria and was executive assistant to our chairman and president.”
He has been Managing Director of Bechtel Australia since 1995, when the office relocated from Melbourne to Brisbane and in 2001 the company moved its president of mining metals position from Denver to Brisbane when he was appointed to that role.
“I am an immigrant Australian working in a global business. I am very proud to be an Australian inside Bechtel and very proud to be a significant Bechtel presence in Australia,” says Greig.
There are five reasons the office moved to Brisbane: its mining town credentials; the good flow of technical talent coming out of universities in Queensland; customers including BHP, Rio Tinto and Xstrata are based there; and the city was stable, safe and had a good rule of law.
“Also, I understood the local language,” laughs Greig. “We did a detailed analysis around the decision and we don’t regret it.
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