Staying on top - how UK consultancy and mining engineering companies are faring
UK consultancy and mining engineering companies are in good shape, but some revitalisation will be needed in the future. Michael Forrest talks to Dr Clive Hallett, Principal at CRT Minerals, in Tonbridge, UK.
The global business of mining includes many more countries than it did 25 years ago at the end of the cold war. Although the UK was one of the leading mining nations in the Industrial Revolution, larger and more prolific mining areas were developed around the world, often with British capital and miners – leading to the expression ‘at the bottom of every hole in the ground in the world you’ll find a Cornishman’. The UK is still a major market, mainly for mining finance, but also for the headquarters of major companies including Anglo American and Rio Tinto, as well as a number of mining service companies offering geology, mining engineering, mineral processing and geotechnical support.
The global market for these services is competitive, not just on technical excellence, but also on price, and this represents a challenge for those companies in developed markets where salary and other costs are far greater than in developing countries.
It is reasonable to assume that operating from a developed country, such as the UK, would be disadvantageous for mining services companies and that their days would be numbered. ‘This is not the case’, says Dr Clive Hallett, Principal at CRT Minerals, following research undertaken for his presentation at the FINEX10 conference held in London, UK, from 27-28 October 2010. The purpose was to ascertain the capability of UK mining service companies and their ability to compete in the global market.
He explains, ‘A total of 17 mining consultancies were approached using a universal script to determine their technical capability in the exploration, mining, processing and environmental aspects of the business. As well as looking at the extent, level and breadth of services available, the research aimed to confirm that UK consultants are competitive in the global market in terms of chargeable rates’.
‘The survey was focused on those consultants and employees who had at least 15 years’ experience in the industry, based on the premise that individuals with this level of experience have core expertise in their particular field,’ declares Hallett.
Excluded from this review are small companies, comprising freelance professionals who mainly work independently. While some composite data is held by IOM3 and other professional bodies about their members, it is incomplete and has not been included. Many company websites include statements of capabilities, which are further enhanced by a confidential disclosure of summary CVs of their senior staff. Three aspects were examined in the course of this research –
- Extent, level and breadth of the core services provided.
- The demographics of senior staff (benchmarking UK against international organisations).
- The range of rates charged for UK staff compared with other countries supplying international mining services.
The first part of the research reviewed 250 short CVs of senior technical staff from consulting and engineering companies with a UK presence and the results are presented in the table above.
Four different types of organisations were identified –
- International consultancies with experienced staff, both in the UK and overseas.
- Similar international organisations providing more engineering-based consultancy (as indicated by their ability to provide engineering, procurement and construction management services).
- UK consultancies possibly with small satellite offices overseas.
- UK consultancies relying heavily on the use of associate consultants to augment their services.
‘With a level playing field determined by experienced consultants globally, it is possible to compare like with like in terms of rates charged across the world,’ says Hallett. Ranges of charge-out rates were provided by 12 UK organisations, using a senior specialist with 15 years of experience as a point of reference. The charge-out rates ranged from £60- £150 per hour, with more than half of the organisations charging between £90-105 per hour.
The research also obtained rates from South African, Canadian and Australian companies for comparison with the UK. For the same comparator, rates (October 2010) are on average 10% higher in South Africa, almost 30% higher in Canada and the USA, and nearly 50% higher in Australia. These differences are considered to be mainly the result of the weakness of the pound against foreign currencies, as rates are almost in line when compared using exchange rates of four years ago.
While making UK services highly competitive on the global market, this does, however, have a negative impact on recruitment of graduates with five to 10 years’ experience in the UK mining services sector. Far higher salaries are available abroad making it difficult to attract both returning home grown graduates, as well as experienced graduates from Canada, USA and Australia. From further discussions with senior directors and HR managers in consultancy organisations, this has been compounded by the temporary cap imposed on visas for overseas specialists, which is hindering the recruitment of staff with key expertise.
The research has also compiled data on the demographics of those employed in engineering and mining consultancy companies in the UK. These data are shown in the stacked column graph below, where the palest green represents practitioners with 15-19 years in the business, while the darkest green represent those with over 40 years. Taking 21 as the graduation age, the former will be at least 36, and the oldest over 60.
For exploration geologists, mining geologists and mining engineer, the demographics are healthy with a succession of younger professionals in place to take the industry forward, although exploration geology is not every older person’s ideal occupation. Geochemists, geotechnical specialists, and hydrogeologists also have a strong base of younger professionals, however mineral processing engineers and metallurgists display a distinct age bias with the majority over 50 years of age. Environmental specialists show the opposite trend with the younger age groups dominating the profession, as would be expected in this relatively new discipline.
In the second graph, below, the overall demographic distribution of UK-based senior staff is compared with that of two large international organisations, showing a similar trend.
‘The results of this review indicate that the UK consultancy and mining engineering companies are in good shape and not disadvantaged in terms of cost or expertise to meet the challenges of the future. UK rates are highly competitive at the present time, although this is a double edged-sword with recruitment of experienced graduates a key issue exacerbated by the temporary cap imposed on recruitment from overseas,’ says Hallett.
Dr Clive Hallett, Principal of CRT Minerals and Project Manager with the Minerals Industry Research Organisation. The full presentation can be downloaded at www.londonfinex.com
The UK staff line on the graph above was omitted when this feature was originally published. It is presented correctly here and shows the relative demographic of UK staff in comparison with two international organisations.