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Transcript - Leighton Holdings CEO address - 2011 Mongolia Australia Business Forum

Leighton Holdings CEO, Mr. David Stewart’s address at the 2011 Mongolia Australia Business Forum

21 February 2011

Duration: 11 min. 21 sec.

Speaker: David Stewart, CEO, Leighton Holdings




Mr David Stewart: Thank you for the opportunity to speak with you all today, and I have been to Mongolia and I was extremely impressed with the country and the mine site. It was an extraordinary visit and I’ll pass over some of that as I go forward.

Leighton is a major Australian company; we’re a big Australian public company. We’re involved in mining, civil engineering services, railway construction, building and all areas of civil engineering. In Mongolia Leighton has an extraordinary relationship with the government and we find that the government in their professionalism, regulatory authorities have shown a genuine interest in trying to bring the Mongolian resources to the world market.

Local demonstrations of our mining equipment continue all the time. Our main thrust is to pass on our technology and our skills and I think the Mongolian people have shown a tremendous desire to understand what we’re doing and how we’re doing it. Leighton is involved extensively in the community, and I’ll come to that later on. We also are actively engaged with the minerals industry safety association of Mongolia to promote intelligent mining and safe mining, which is a prime part of our Australian operations.

We work very closely with the local community. We support a local orphanage 20km out of Ulaanbaatar. We provide training for all the people in our local community; the bulk of our operators and mine workers are local people. We facilitated street lighting in the local community, we’re setting up micro-businesses in the local communities to provide community training in all aspects of mining and mine works. Traditionally as these mines grow the local communities become the main support for the mines, and I think it’s important to make sure these local communities understand what is needed and how they can provide that support.

We employ 680 local people in our Mongolian operations and area office in Ulaanbaatar. The thing that struck me about the mine more than anything else was that there’s a long term view in that area. I arrived at the mine site in what would be as good an airport as you’d find in any community in Australia, my mobile phone worked, there was wi-fi, there was Blackberry reception, it was just a very organised place, and I think that’s so important nowadays. The camp on the mine site was world class and I say that having visited many mines all over the world and in Australia, the mine camp at that mine site was extraordinary. And again, these resources aren’t short term; the resources the Prime Minister mentioned is something like 6.4 billion tonnes and therefore to go in there and set it up properly I think is very important.

The Leighton Group, just very broadly, we’re Australia’s largest project development contracting group; we operate through seven subsidiaries. We have three companies in Australia competing in the civil engineering and mining sector; we were established in 1949 in Melbourne and we’re an Australian Stock Exchange listed company. We have 47,000 direct employees and probably something like 50,000 subcontractor employees and associated employees. So we’ve got a family of 100,000 people stretched from Saudi Arabia through to the Gulf, the United Arab Emirates, India and Asia, and we undertake, as I mentioned, civil engineering, building, property, oil and gas, maintenance, etc.

Our Asian footprint is -- we’ve been in Asia now for 35 years and we operate in every country in Asia. We work in 14 countries across Asia, we have 45 ethnic groups that we deal with, more than 35 religions and 40 languages and the average age of our employees in Asia is 30 and 2% of our staff are expats, the balance are all local, and I think that’s very important – we can’t go and do business in all these countries if we go there with a mentality of Australians only, it doesn’t work. But the Australians provide the core, the training core, the core of expertise to get it started and then progressively the operation becomes a local operation.

Going forward to the mine site, our Mongolian operations, we first went to Mongolia in 2007 and had discussion with the operators who had been granted the concession for the UHG Mine. We employ 730 staff of which 680 are locals. The coal mining operation is with Energy Resources at UHG Mine in the Gobi Desert. The coal mining, also we’re working at Khushuut with MoEnCo and we’re doing planning and a box cut for Ulaan Ovoo for the Red Hill Project, and we’re also constructing a road in the South Gobi Desert, a 47km road, and we’re also upgrading the access, the coal export route to the Chinese border. We are looking at opportunities in infrastructure, but primarily mine infrastructure, although there are opportunities for us to become involved in civil infrastructure as well. So our long term view is that there is fantastic opportunities in Mongolia for everybody, primarily at this stage circling around mining operations.

Our full board of Leighton Holdings visited the mine site in 2007 and again, we had a board meeting on site and it was a very impressive visit and I think everyone left there with a very positive feeling about the Mongolian operations.

Our international experience clearly makes us able to move into new countries successfully. We’ve got a lot of people involved in mining and construction across our business; we’ve got a big focus on safety and we align safety, the environment and our people to all of our business objectives. We’ve got a large pool of people available from Australia and from our Asian operations. We work very hard to develop the local workforce, and I think that’s an essential part of whatever we do. And then we establish what we believe is a cost effective and efficient operation. At the end of the day Leighton is a service provider; if we’re not cost effective then we won’t be asked or we won’t continue to provide the services and we believe we effectively use capital. Leighton is the biggest contract mining company in the world and we’re the number one customer of Caterpillar Worldwide, so it gives us extraordinary access to their technology and their people and their equipment.

There’s some pictures from the mine site. This is our mining operations at the UHG Mine. We train all the operators in these mine sites on simulators, so we bring in Caterpillar truck simulators and excavator simulators from Germany and all the operators go through extensive training on those machines before they have to drive in the real equipment. As a result we can achieve safe operations and world class plant utilisation at the mine sites. And again, all local people; we don’t have Australian operators, they’re all local people and they’re all trained to operate this equipment which before we arrived there didn’t exist in Mongolia.

Safety is part of what we do. Our Strive for Life program from Leighton Asia is rolled out in Mongolia. It’s exactly the same if you went to Mongolia or to Hong Kong or to Singapore or to Malaysia, you’d see the same safety, the same standards, the same rules and the same attention to detail in all our operations, and we’ve had no Class 1 accidents in our operations in Mongolia since our beginning of business there in 2007.

We value the environment. Again, Leighton as a world company, we can’t go to places and do anything other than the way we would behave here, so we’ve established the same standards of safety and the environment. Again, just some pictures of what we do, but everything is done properly, everything is done to what we would say are world class standards or to local standards, whichever is the higher standard. I think it’s very important and it establishes us a professional international company.

That’s the mine site at UHG. Again, a massive mine. Two years ago that was the Gobi Desert; we’ve established all that. We’re now mining seven million tonnes per year and we expect to grow to 15 million tonnes per year by 2013. It’s a mine where we mine coking coal for steel manufacture.

And the environment is harsh. When I was there it was in June and it was a very pleasant day but in winter I think the temperatures on the mine site go down to -40°. Our operations continue; we work on site seven days a week, 24 hours a day and 365 days a year, which is the same as we would normally do in Australia, and again the differences are the temperature goes from -40° to +40° which makes it challenging but as we say, we thrive on a challenge, it’s important to our clients and it’s what we can offer.

Again, community engagement as I’ve mentioned is very important. Every community we work in we engage with that community very strongly. In Australia Leighton today rolled out an initiative where we’re going to adopt a community in Queensland with the floods. I think that’s most important, that every one of our projects is working across Queensland. I think we have something like 400 projects in the world and 400 engagements with the communities and those engagements can be big or small depending on what is necessary or what we think will add value to that community. We’ve got to become part of the communities. We would hope to remain at this mine site for many years, but in our construction work we come in; generally less than one year or two years we move out again, but again, we hope to leave some lasting legacies for the communities that we work in.

So looking ahead we want to continue to engage with the mining industry in Mongolia and I suppose eventually engage in civil engineering. We want to provide employment and training opportunities to the people of Mongolia. We want to operate sustainable mining businesses for the Mongolian people. We want to be a partner of choice. Again, we’re a service provider, we’re not the only company in the world that provides mining services. If we don’t do it well, if we don’t do it properly, if we don’t engage with the community we lose our licence to operate. We want to benefit the Mongolian people and work with the national champions of Mongolia in the public and private sector. We welcome the opportunity to have been able to work in Mongolia and we’ll continue to partner with the people in Mongolia going forward.

Thank you very much, that’s all I have to say. Thank you.




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