On 15th February 2017 in Sydney, NSW, Austmine was delighted to be joined by David Moult – CEO & MD at Centennial Coal for our first networking session of 2017. The event was sponsored by Joy Global and Akzo Nobel, and the audience first heard from Jason Savage, President Australia at Joy Global and Kriben Thambiran, Project Manager – Northern, at Akzo Nobel.
David has been with Centennial Coal for the last 20 years and has over 37 years of coal mining experience. David is stepping down from his role with Centennial at the end of March (EGM of Operations, Mick Cairney, will step up into the role), but will remain on the board of Centennial and is still heavily invested in its future. Therefore, it made sense that the title of David’s presentation was “In a Changing Market Where Will Centennial’s Growth come from?”. David highlighted he would discuss three key areas in his presentation:
- Where’s the market now and what does it mean for a company investing into the sector?
- Centennial's projects: their status and pending tendering timelines
- Low emission power stations
David quickly went through a summary of Centennial Coal’s business, which includes five underground operating mines, all managed on an owner-operator model, with 60% domestic sales vs. 40% export sales. He also shared some insights into Centennial’s strategy plan from the end of 2016, which included acknowledgment of key external events impacting on the Australian Energy Market, such as the commencement in 2016 of major QLD LNG export projects, the 2020 Renewable Energy Target of 33TWh and 2030 COP21 Paris targets.
David then went on to touch on global issues that are naturally affecting the coal market here in Australia, including the growth from 2015 – 2016 of demand from China, Vietnam, Malaysia and the Philippines (although this was hindered somewhat by a drop in demand from Europe, driven largely by the UK limited coal imports).
China’s greatest focus is on employment, and the coal prices last year made many Chinese coal mines unfeasible. David noted that on a global scale, the volume of coal being produced in China will maintain its dominant position, but in regards to its percentage contribution to domestic energy, there is strong growth in renewables and nuclear.
India is of course another country that’s been on many lips over the last few years, with some banking on it to replace China in terms of demand and others dismissing it. David commented that the Indian government is pushing state-owned power plants, that can be supplied by Indian mines. There was expectation of huge growth in demand from India, which hasn’t happened, but David warned the audience: “You ignore India at your peril!”.
David then moved on to focus on Centennial, and he started with its key takeaways for 2017:
- Maintain cost and productivity focus
- Optimise opportunity to take advantage of higher export prices
- Continuous drive for operational efficiency
- Maximise cash generation
Centennial evaluates different growth options in a couple of ways: firstly, in relation to organic vs. inorganic growth and secondly in relation to risk, taking into account their current portfolio. David mentioned that 2016 was a good time to look at distressed assets (inorganic growth), but currently Centennial is focused on organic growth and their existing assets: Airly, Angus Place, Neubeck and Newstan. Centennial is an underground coal miner, but would like to consider some open cut mines in the future, to balance the high risk of being an underground miner. David summed up this risk nicely: “No matter how many boreholes you put down, you can’t know everything that’s below the seam.”.
Centennial has an emphasis on capital productivity, and they see a major part of the solution to this as being technology and automation. Springvale mine’s longwall is fully automated and using guidance technology built out of the USA which David was very impressed by: “Once you press the button, it keeps that machine here. I started working in longwall back in the 1970s and I’ve never seen a longwall as consistently straight as that!”
Bolting automation has been another area of focus, in particular the idea of spin to stall, which saves seconds per bolt: when you’re putting thousands of bolts in per year, that’s a lot of time. Centennial Coal has invested in their own operations centre at Fassifern (David noted they also take advantage of Joy Global’s incredibly advanced operations centre, as Centennial is a client of Joy), where their techs can do some real-time data analysis and feed it back to the operations teams. 50 – 60% of their machines (going across cutting, haulage and feeder breakers) are on real time monitoring and pumping out reports which are presented in a tactical dashboard. This is occurring across all of Centennial’s mines and it’s working well, allowing the supervisors on shift to make informed decisions.
David pointed out that Centennial is passionate about their partnerships: “We do have some very strong supplier relationships and I think over the last few years they have strengthened.” Over 2000 suppliers work with Centennial, and it is partnering with OEMs and universities on researching and developing new technology, ranging from proximity detection, auto-bolters (David urged the audience to speed up developing these, as they are critical for our sector) and remote power supply created by conveyor rollers, a suggestion which prompted a lot of nodding heads in the audience.
David then went into detail on each of Centennial’s four projects that form their focus for the years up to 2023. He discussed timelines on tendering, production, and the specific mining method that will allow Centennial to remain sustainable and competitive into the future. Austmine members can download David’s full presentation via the Member self-service portal to see all of the details on this, or contact us for further notes from the event.