McKay: The ‘hole’ picture

The resources boom in Australia has stimulated the economy of Western Australia and astute business owners have been able to grow strong enterprises as a result. One operator, McKay, has built an operation successfully supplying drilling services to the big miners using state of the art equipment, highly skilled operators and an emphasis on quality.

Ever since the McKay business started, back in 1990, the company has consistently used Mercedes-Benz trucks to handle its work and get the equipment out to the remote drilling sites. Starting off with just one rig, the company has expanded over the years and now operates a fleet of nine drilling rigs. Most of the equipment consists of a percussion rig which is mounted on a 8×8 truck. This is joined by an 8×8 rod truck acting as a support vehicle with a third similar truck supplying air to the rig from a large compressor. Basically, for each rig there are three trucks.

Eight of the company's rigs are mounted on trucks while the ninth is mounted on tracks enabling it to get to some of the tougher sites. Other trucks included in the fleet are smaller 4×4 vehicles which can act as general support vehicles to the various rigs and are capable of getting equipment into some difficult to reach areas.

McKay works as a ‘reverse circulation’ contractor to the large mining and exploration companies. The mining companies will contract the company to drill holes in specific places and provide them with the sample they require. The sample provided gives the miners information about just what they have in the area they have specified.

The picture provided by the percussion drilling allows the mining operation to better target potential mining areas. This is then followed up by diamond head drilling in a tighter drilling pattern and this can provide the core samples needed to identify precisely where mining will be viable. McKay has one diamond drill rig in its fleet for this purpose.

The work can be varied for the rigs. When they are involved with exploration drilling, they tend to move about on a regular basis from area to area. The rigs are expected to drill at sites between 500m and 1km apart. On the other hand, when being used by the mining company to specifically identify a potential mine position they will be drilling 50m apart over a specified area.

“As an example, in the Pilbara we took one rig out to do a three-week program and it's been there for over a year now,” says company owner Matt McKay. “There are now seven rigs just on that one job. That's how drastically it can change.”
Before starting up his own company, Matt came from an agricultural background, but one of the farms on which he worked became involved in a drilling company. He began to work for the drilling operation and left farming behind. Over 10 years later, after working for a couple of drilling operations, Matt found himself in possession of a nearly new but recently repossessed drilling rig.

The business works for a number of different clients – including big players like Fortescue Metals Group – with customers across Western Australia and the Northern Territory. The rigs are involved in searching for signs of iron ore, gold, copper, lead and vanadium, but the majority of the work is involved with searching for iron ore in the Pilbara. All of the rigs are contracted to various companies on annual or biannual contracts. This kind of contractual security has given Matt the opportunity to grow the company over time.

“All of our percussion rigs are the same,” says Matt. “We have two rigs out there which are now 10 years old and they are as good as our new rigs. They have been upgraded with new engines, hydraulics and compressors etc. They are running all the same equipment as the new rigs. If you were to compare our older rigs and our new rigs you couldn't tell which was which because they are in such good condition.”

At intervals, the rigs are taken from the truck and given a complete tear down right down to the smallest nut and bolt. Everything is then sandblasted and reassembled with new components added. This is often fitted back to the original truck, depending on the condition and age of the truck.

“Our trucks only travel between 10,000 and 15,000km per year,” says Matt. “So we do not have a lot of kilometres on them. One of the 12 year old rigs had a new truck put under it just last year. The old truck had been under it for 12 years and only had 80,000km on it. They don't click up the kilometres, they just move from hole to hole and it is the rig which is doing the work.

“Mind you, we do take the 8×8 trucks into some pretty awkward and tight spots, like sand dune country. We work in some very hard and trying conditions. They are carrying over 40 tonnes. We've got a rig at the moment up in the Gulf in the Northern Territory working about 15km from the coast where there's a lot of very heavy sand going. We were running 1400 tyres on the trucks so they were all over width.”

The operators working on the rigs are rostered on fly in fly out basis, spending 20 days at the site and 10 days at home. The company employ 75 people all together, 15 of which are based at the company's headquarters at Wangara in northern Perth. The rest work out in the field with the rigs.

At each rig there is a driller with a team of two or three others to help on the operation. There are also mechanics who will travel from rig to rig and help out with the technical difficulties. Quite a few of the drillers employed by McKay are also qualified diesel mechanics which helps with maintenance issues.

“We will only bring a truck home when we really need to,” says Matt. “They only come back here if they need refurbishment or for major maintenance.”

Wages in the drilling industry can be quite high because the work is mining related. Good drillers can expect to earn up to $200,000 per year. McKay does not appear to have much trouble recruiting and has not come across any form of skills shortage in its part of the industry.

When the rig is moving from site to site on the highway, it forms a substantial caravan. The rig truck itself is overweight and runs on the highway with a permit. The rod truck, working as a support vehicle, will travel towing a 40 foot trailer on which is a mobile workshop, a 15,000L fuel tank, generators and spare parts. The third truck in the convoy is the air truck which will also be pulling a six berth off-road caravan, which is the operators' accommodation when out in the field. Following the trucks will be a 4×4 runaround vehicle, usually a Toyota, pulling a small trailer with ancillary equipment. Each caravan is set up with a satellite communication system giving the teams access to wireless internet, even in the most remote areas.

Each rig is around 12 metres long and weighs approximately 41 tonnes. The truck acts as a platform for this piece of equipment and, as such, has its track extended out, using spacers, to 2.9m to meet the permit requirements to allow it to meet the bridge formula in WA. McKay also extends the vehicle chassis to fit the rig body onto the truck. All of the engineering work required to build the bodies for the rod trucks and the air trucks is done in McKay's own workshop to its own demanding specifications.

Over the years the business has grown organically and Matt has been able to promote people from within the organisation. The operations manager is an ex-driller as is the OHS officer – management has a high level of drilling experience.

“We are putting the business through ISO 9001 accreditation at the moment,” says Matt. “It's just to take us to that next level. We have our full-time OHS officer who handles all of the training. We have to pull people out of the field, put them through training and then we can put them back out there. There is four wheel drive training, first aid, senior first aid certificates, getting a HR licence or an MC license and things like ‘working at heights’ training.”

The company is only just now recovering from the shock of the global financial crisis. The level of uncertainty spread through the mining industry very swiftly taking many unawares.

“Everything stopped,” says Matt. “We were fully booked with work, everything was committed for all eight rigs, which we had at the time. Then suddenly we dropped down to having just one rig working in the Northern Territory. There was just nothing in WA. We brought all of our equipment home and, basically, carried out maintenance.

“We didn't really slow down, we kept all of our drillers employed through the crisis and we did a lot of maintenance work on the equipment. Then, slowly, the work started to build back up. By the beginning of 2009 we had three rigs out in the field and it has slowly built back up to where we are today. It has left us in quite a strong position because all of our equipment is in excellent condition.

“The GFC has certainly made me a lot more cautious, I keep my debt to the minimum because I wouldn't like to go through another downturn. It was quite a worry at the time, we had run out of room in the yard to park all of our gear. It's pretty traumatic when you walk out in the yard and there is steel everywhere. But it did bounce back pretty quickly.”

The company is now operating at pre-GFC rates, indicating the mining industry is also working at pre-crisis levels. The rates which the drillers are able to charge has also recovered after a severe dip during the worst of the GFC. However, looking to the future, McKay's growth plans tend to be quite conservative as the memory of the recent downturn is still very fresh.

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