InfraStructures - June/July 2006 - Drilling Business is Booming

Drilling Business is Booming

Brian O'Sullivan, Sandvik Mining and Construction Oy

There is a management theory that encourages salesmen to adopt the same mannerisms as their potential clients when selling to them. The thinking is that people like to buy from people like themselves. While this theory is doubtful on an individual level, it appears to be true when it comes to companies - Big companies do like to work with Big companies. This is because the cultures are often similar, the management systems are the same and the volumes involved are much larger than smaller players can cope with. (You never find McDonalds ordering its buns from the local baker do you?)

The UK quarrying industry has undergone a fundamental change over the last 15 years. Continued consolidation has lead to a large proportion of the country's quarries being held by a handful of multi-billion dollar cement or aggregates producers. With a focus on their core competencies, these owners are increasingly outsourcing non-core roles to specialists. Drilling and blasting is just such a role - but one that has forced contractors to not only get big fast, but get professional too.

"In the past the standard of equipment and service could be hit and miss - and very localized," states Ben Williams, general manager of Blasting Services, one of the largest drilling and blasting contractors in UK quarrying. "Now clients demand the latest machines from the leading suppliers, well maintained and operated by smart, highly trained and safety conscious operators with regional coverage. There has been a sea change in our sector."

The reaction times involved are now very short; an unexpected order may mean clients needing contractors on site quickly, providing shot rock on the ground. Such 'just in time' working is unforgiving of mechanical breakdown, and the average age of rigs has fallen accordingly. "In 2001 the average age in our fleet was six years," says Mr. Williams. "Now it's three. Total cost of ownership starts to rise after that, and despite full repair and maintenance agreements with our supplier, we would rather replace rigs than risk a reduction in machine availability."

Although also involved in explosives supply, consultancy, training and environmental analysis, the efficiency of the rigs is the key component affecting drill and blasting contractors' profitability. As customers are only charged for the amount of rock that is put 'on the ground', any machine downtime directly impacts top line sales. In 2005, Blasting Services put 22 million t on the ground in 70 sites around the UK, helping it towards a $10 million turnover and making it one of the largest players in UK quarrying. A large proportion of that has been put back into the business in acquiring new rigs. Leading supplier Sandvik has provided a Ranger 800 and four Titon 500 diesel powered, self-contained crawler mounted down-the-hole drilling rigs in the last two years. The Titon rigs are matched with Sandvik's Drilltech Mission range of Mirror Impact DTH hammers and drill bits. "We expect to get 1000 m a week out of these rigs to justify our investment," says Ben Williams.

The Titon 500 is built in Sandvik's Austrian facility and is designed for drilling 105-152 mm diameter holes to depths of up to 35 m when equipped with 76 or 89 mm diameter drill pipes (5 m long). Drill power is supplied by 24 bar air pressure provided in 22 m3/min lungfuls and the operator is insulated from the action in a FOPS/ROPS air-conditioned cab. The 'mirror impact' element of the Mission hammers refers to the way that the drill bit is shaped to mirror the hammer piston: optimizing the energy transfer from the piston to the rock and resulting in faster progress. "One operator told me that he preferred our Mission hammers and drill bits because their better efficiency meant he could take Saturday mornings off - as he had made his target for metres drilled by Friday," laughs Sandvik's UK sales manager Mark Haywood.

It's not just the speed of the Sandvik rigs that makes life easier for contractors; there are a number of issues that help to increase safety, productivity and therefore profitability. Not least among these is the integrated dry dust collector, which offers both environmental and operator safety advantages. The powerful Caterpillar C11 engine helps provide the energy to provide compressor air volume sufficient to operate 4 - 5 in. DTH hammers at high pressure. The Titon's 5 m long drill pipes have the combined benefit of both improved productivity and added stability to the rig when drilling.

"Because our rigs are continually being moved from one customer's site to another, the Titon's compact design makes transporting them a straightforward exercise," says Mr. Williams. "The heavy duty frame and excavator tracks mean that they can cope with poor access (which is common), and their relatively high speed tramming mode (4 km per hour top speed) helps get the rigs quickly to the work area." he concludes.

Safety in numbers
Specialist drill and blasting is increasingly being taken over by larger operators and it is leaving behind the smaller family owned companies. Ben Williams' Blasting Services evolved from such humble beginnings. He recognized the change that was coming in the industry and negotiated the company's own acquisition by Exchem, the UK's largest explosives supplier to the quarrying industry. This not only provided the financial backing to go on the acquisition trail, buying up several other family owned contracting firms, it also provided access to the latest thinking in training, environmental & safety care - not to mention modern explosives techniques.

Blasting Services now employs over 40 people and has adopted a corporate culture rather than a family owned one. Its turnover may 'only' be in the millions, but it now talks the same language as its billion dollar customers. "The biggest change we have undergone is in our training regime," believes Mr. Williams. "How an operator uses a drilling rig is the primary factor influencing how well it drills, how often it breaks down and how long it lasts. A well trained operator can get the best out of a rig just by using it properly. All our rig operators have the NVQ level 2 qualifications. How we service the rigs is also important: we have a preventative maintenance program that, in partnership with Sandvik, keeps the rigs at peak condition and helps prevent downtime through component failure.'' Sandvik's Mark Haywood has also noticed the change: "Potential problems with the machines are now being spotted early, allowing us to plan preventative work, avoiding component failures, lost working time - and waiting for the emergency supply of spare parts. This partnership approach is not revolutionary - but it just didn't happen in the past in this industry," he says.

Having quality products and maintaining them well is no longer the order winning criteria when considering which drill rig supplier to choose. Contractors like Blasting Services are also relying on rig suppliers to provide financial services that allow an optimal mix of capital investment (in machine purchases) and operating cash flow (via leasing agreements). "All the market leading firms make good machines," says Mr. Williams, "but the key factor is Support - I don't ever want to hear the word...'But'!"