April 2010

NICOLE Hollows never aspired to be a corporate executive, yet after three years as Macarthur Coal CEO she has steered the company through drought, flood and an international financial disaster too. Hollows still came out on top.

The 39-year-old tells Brisbane Business News about her plans to diversify, with upcoming takeovers pending on two fronts.

MACARTHUR Coal Limited (MCC) shareholders meet this month to vote on a proposed $1.2 billion acquisition transaction including Gloucester Coal, Noble and CITIC, but even if the deal is not approved, Hollows expects to double coal production in the next five years.

It is the sort of forecast that leaves little wonder as to why Peabody Energy has come on the scene, offering $13 per share to acquire Macarthur. The board deemed the proposal not in the interests of shareholders.

Along with the board of Gloucester Coal, they have recommended shareholders support the previous $1.2 billion deal, but Hollows says ‘you can never be sure’.

She says the deal involving Gloucester, Noble and CITIC would finally give MCC a chance to de-risk against the types of natural disasters that have held it back in recent years.

“In the last three years we’ve had drought, flood, infrastructure constraints and production has been impacted by that, and we’ve had the GFC.

“When you look at the company it’s gone through a lot of external environment issues, really nothing to do with yourself, which is a frustration when you’re the CEO because while you’re responsible you don’t control all those impacts and those outcomes.

“In terms of sustainability as a CEO, I never want to have to go through a GFC and have to put off 30 per cent of our people again, because our whole market fell away in a short time period.”

Some people have not supported the acquisition deal because it would take away Macarthur’s status as a pure metallurgical coal play, but Hollows says a CEO should never make decisions just for popularity.

“It’s great when the market is strong being purely metallurgical coal, low volume PCI, but when the GFC hit, steel production fell off a cliff,” she says.

“It was unprecedented, sudden and what that meant was that our customers shut off their blast furnaces and maintained their coke ovens, which are harder to turn off – our coal couldn’t go into the coke blend.

“We were impacted quicker and harder than most other coal mining companies because of our product, but when the market turned back around there was a big economic advantage for mills to use our product and we probably ramped up quicker than others.”

MCC shares have gone up more than three-fold over the past year.

While the coking coal price is strong now, Hollows says the company needs a strategy that sells different types of coal, as well as geographical expansion away from heavy reliance on the Dalrymple Bay Coal Terminal.

“Gloucester would actually allow us to do that because one, it’s in New South Wales and two, it’s actually coking coal and thermal coal,” she says.

“Our other acquisition of Middlemount has allowed us to be a diversified product, but it’s still reliant on Dalrymple Bay Coal Terminal and it’s still going to be reliant on that same geographic area.”

Gloucester Coal was recently named in Mineweb’s world’s hottest 100 mining stocks.

Before her time

Hollows has been with Macarthur Coal for 11 years, a duration of which she says served her well for the top job. Before joining the Brisbane-based company her dream was to become a partner at a chartered accountancy firm.

But while in negotiations with Ham & Partners she asked a client to act as a referee. That referee was from Macarthur Coal, but instead of a reference she was offered a job in the roles of CFO and company secretary.

“I did not aspire when I started my career to be a CEO. My aspiration was to be a partner in a chartered firm and I wanted to be a partner by the time I was 30, but I knew I was going to do that so I
thought I better try something else,” explains Hollows.

At the time Macarthur was a private company owned by Ken Talbot, who has since been embroiled in controversy surrounding alleged payments of $360,000 to former Labor MP Gordon Nuttall.

Allegations aside, Hollows cites Talbot as one of her most influential business mentors who sent her to the Harvard Business School in 2001 because ‘he wanted me to think more like an executive and less like an accountant.’

“The opportunities have come by and I’ve stepped up to those opportunities to face the challenges head on, which has not always been easy – it’s been a big learning curve,” she says.

“Becoming CEO at the time I did was before it’s time, a surprise to me as well as to everybody else.”

Hollows continues to follow a leadership policy with a focus not just on operational capacity and commercial interests, but also the safety and culture of employees.

“When you’re with a mining company, safety is a must so that has to be your first priority at all time – if you have safe people and you have a safe mine,” she says.

“If you have a good safety culture then people want to work at your mines, you’re looking after your people, and then ultimately it should be lower cost because you don’t have incidents.

“We’ve had some incidents we’re not proud of but people have been hurt and it’s just not good enough, so we’ve got to ensure that actually gets improved and we continue to drive for that.”

There are a myriad of issues that come from shifting within a 50-staff company to managing 400 employees, but Hollows follows the motto - ‘leadership drives culture and culture drives performance’.

Macarthur aims to reach around 10 million tonnes of annual coal production by 2015, but with the Gloucester acquisition and a boosted stake in Middlemount as a result, output could reach up to 15 million tonnes.

The next phase of production will be to get the Middlemount coal project up and running and then embarking on a fourth organic project, which could be either Codrilla or Vermont East Wilunga and will fill Macarthur’s Abbot Point capacity.

“The whole idea is that in five years we should be six mines – our four plus the two Gloucester ones – and have grown at Gloucester through their plans of increased production, as well as increasing production by bringing on four mines across in Queensland.

“That will allow us to actually take different risks or what we want to look at as well. Our focus is organic growth but we would continue to look at acquisitions if they make sense.”

Hollows says she needs to slow down a bit, so to do that she tries to travel somewhere every year, as she enjoys learning about different cultures, while also putting her life and business into perspective.

Early this year she was caught in the mudslides in Peru.

“I was in the middle of the natural disaster, but when you saw what was happening to other people, that they lost their homes, you didn’t really have a lot to complain about when you were still safe and knew you were going to get out,” she says.

Nicole Hollows’ views on:

A lack of female CEOs
The only time I think about it is when I get asked. It’s probably made to be a bigger deal than what it is, but I think people make work-life choices and some don’t have the opportunities, so for them it’s more difficult. Some women in general probably lack the knowledge and confidence to take the initiative and step up, but they shouldn’t be afraid to. That doesn’t mean I haven’t been nervous when I’ve done it.
Some women may not have the capacity to become executives because of those work-life issues, but I just wanted the best of both worlds so I have to manage and struggle with that.

Balance and support
You rely on other people to help you out, seek support when you need to and you have to be extremely organised. The advantage is that I earn enough money that I can pay for some of that support. I have a supportive family that allows me to do that and I see this as irrespective of gender, because a lot of men will succeed a lot better too if they have that support at home.

What a CEO should never do
Never make a decision or not make a decision for popularity. You’ve got to be prepared to make the tough hard decisions even if they’re not popular, and that is easier said than done at times. Also, don’t ever think you’re too high or at a level where you can’t talk to your people or seek feedback, or think that because you’re CEO you don’t have to work as hard as other people. You have to always be open to learning because you’ll never know it all.

How To play the game
It’s not about whether you fail or not but whether you continue to learn and be stimulated. That’s what drives me. It would be nice if there weren’t so many challenges to deal with all the time but it’s important to take the initiative.

Because my dad was in the army I went to four schools in six years, so change doesn’t worry me very much. It was tough as a teenager but you don’t have a choice. People don’t just come up and talk to you in a new school, so if you want to get involved in something you have to step forward to do it. Whether you have the confidence or not, you just have to, otherwise you’ll be left standing there by yourself. You have to embrace change and I say the same thing with work.

It’s a lifestyle choice. I like the size of it, the weather, I think it’s great that Brisbane’s gotten bigger and it’s more cosmopolitan and you’ve got a better variety of restaurants. Brisbane probably doesn’t get the exposure it should, because it’s changed so much in the last 10 years. Even though we complain about the traffic it’s still not as bad as Sydney or Melbourne.

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