KNOW THE DRILL
SPECIAL 20-PAGE FEATURE ON DRILLING SERVICES AND SUPPLIERS:
For more than 60 years, the Australian Drilling Industry Association (ADIA), Australia’s peak drilling industry organisation with about 800 drilling contractors, suppliers, consultants and regulators in its registry, has been giving a voice to its members who are at the forefront of the growth and expansion of the sector. The Australian Mining Review spoke to ADIA chief Peter Hall about the current skills shortage, the issues industry faces to capitalise on the current mining boom and the cyclical nature of mining’s effect on drilling.
Q. What is your professional background and how did you end up as the chief executive of ADIA?
I’ve been at ADIA for nearly four years now.
Previous to that I garnered 34 years’ experience in the drilling industry, predominantly with Boart Longyear.
I started in an apprenticeship as a fitter and turner and made my way up through the products and drilling divisions over the years.
Fast track to 2016 and ADIA were looking for a new CEO.
I felt it was a great opportunity to utilise my experience to help grow a key sector of the Australian mining industry.
Q. Drill 2019 – can you fill us in on the details?
ADIA’s drilling conference is a biannual event which this year ran from September 17-19.
We chose Darwin this year as the Territory has some great opportunities for our industry.
This time around we chose a theme called Drilling Down on Skills in response to the current skills shortage facing our industry.
As the drilling utilisation and demand on services has increased it has stretched the requirements of the skill base of our workers.
Drill 2019 was a chance to get industry players in the same room together to tackle the key issues facing the industry from as many angles as possible and find some sort of common agenda to sustain and grow our sector into the future.
It also helped the suppliers, manufacturers, miners and service providers to network and create business opportunities.
Q. It has widely been reported that there is a skills shortage in the drilling sector. Can you tell me why that is, and what steps are necessary to fill the skills gap?
In terms of exploration drilling, the cyclical nature of the mining industry directly affects the work itself.
It’s at the pointy end of the mining process which can be both good and bad.
When the sector is doing well, good amounts of money tend to be spent by the miners to prove up further reserves.
However, when the market starts to quiet down, exploration drilling is one of the first parts of the mining process to be cut.
At the end of the last boom, around 2012, the whole drilling industry across Australia started to suffer.
We had just under 1000 drill rigs at that time – which equates to about 10,000 jobs if you estimate 10 workers per rig.
By 2016, before things started to turn around again, we were down to about 300 drill rigs in operation and about 7000 people were out of work, and that’s a big loss.
One of the major issues we face is the difficulty of getting people into the industry when the work comes back up.
It can take up to three years to train people up to become drillers, and when an uptrend in exploration occurs, many of those that lost their jobs at the end of the last mining cycle have moved on to other work and become reluctant to come back.
Previously, under the 457 visas, drilling companies used to be able to fill the skills gaps that occurred by hiring drillers from overseas; however the federal government took drillers off that eligibility list a few years back.
Here at ADIA we’ve have been campaigning, and will continue to campaign for that to change.
Q. Tell us about the drilling book Collared and Cased by Barry Avery, that was released at Drill 2019.
About 18 months ago we started the process to get the stories behind a lot of the industry stalwarts that have been around for a number of years – such as John Emerson and Ron Sayers – who have been at the forefront of Australia’s drilling sector and really shaped how the exploration industry grew over the years.
One of the big things that came out of the book was the fact there was a lot less red tape and regulation around the industry back then which sheds a light on how drilling businesses have changed and now operate.
Q. What is the latest in drill tech that is improving the industry and what has led to the improvement of drill rig utilisation rates over the past few years?
The amount of data you get can out of a drill hole has been one of the biggest changes for us.
The ability to do some of the analysis on site instead of sending drill cores to a lab to be looked at has really upped efficiencies.
Results can be, in real-time, sent for analysis and companies can make decisions very rapidly on what might need to change or happen next in the drilling program.
Drill rig utilisation rates are at about 75pc — we would normally say 90pc is full utilisation as some rigs are always in a service cycle or moving into operation – so it’s quite healthy.
One thing we are finding is that the bigger drilling companies tend to be busier than the smaller ones.
This is because the larger drillers are now funding a lot of the exploration themselves and make up the bulk of the active drilling in Australia.
Unfortunately, the junior sector is having a fair bit of difficulty in accessing exploration funding due to investment companies becoming more risk adverse.
Q. How have the demands from clients changed over the years?
What we hear from some of our members is that they find it quite difficult to
have a good relationship with their client, when once upon a time they used to deal closely with the exploration departments.
Now the contracts are handed across to procurement departments who don’t necessarily know a lot about drilling, but are professionals are getting the best deal possible for their business.
Q. What are the issues surrounding contract rates and payment terms?
It’s a normal supply and demand situation.
The drillers had it pretty good in the 2009-2012 period when there was a massive demand for drilling and this went in our favour and rates were good.
Then, when work dried up for four to five years during the downturn, we ended up with a big glut of inactive drill rigs.
The market thus became very competitive and drillers’ rates went down as a result.
It’s hard to push prices back up – it’s a gradual process.
Payment terms have also increased from 14 days up to 90 days which become a burden to the smaller drillers who rely on a quick turnaround of payments so they can utilise that capital for the next job.
These factors put – especially the juniors – in a difficult situation.
We hope to see a change where drilling companies can navigate a fairer business climate into the future.
Information on how to stay up-to-date with the latest news and trends in drilling and what services ADIA provides to the sector can be found at www.adia.com.au.