Jellinbah Book [DIGITAL]

Jellinbah StoryThe

Sandy Worden

The Jellinbah Story

Published in 2013 by Jellinbah Group GPO Box 374, Brisbane Q 4001, Australia www.jellinbah.com.au

© text The Edge Public Relations Pty Ltd

This book is copyright. Apart from any fair dealing for the purpose of private research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission.

National Library of Australia Cataloguing-in-Publication entry Author: Worden, Sandy, author Title: The Jellinbah Story / Sandy Worden ISBN: 9780646904528 (hardback) Subjects: Jellinbah Group (Firm) – History Coal mines and mining – Queensland – History Dewey Number: 338.762233409943

Produced by The Edge Public Relations Pty Ltd Design and layout by Sassy Branding Cover and back cover paintings by Vanessa Thomson Professional photography by Ray Cash

Jellinbah Group thanks: Tony Champion Faith Dempsey John Rawlins Marubeni Corporation for contributing photography from their private collections.

Table of ConTenTS

foreword .................................................................................................................. 5

The Jellinbah Group .............................................................................................. 7

Beginner’s guide to owning a coal mine ........................................................... 7

Establishing a market for ‘unwanted’ coal ...................................................... 17

Cracks begin to appear ...................................................................................... 23

The Anglo American influence .......................................................................... 27

And then there was one .................................................................................... 32

Diversifying Jellinbah’s market base ................................................................ 33

Jellinbah east ........................................................................................................ 35

Jellinbah today .................................................................................................. 35

Family and a community spirit ......................................................................... 44

Tales of yesteryear ............................................................................................. 48

lake Vermont ......................................................................................................... 73

“It’s a Curragh look-alike” ................................................................................. 73

Getting the green light ...................................................................................... 79

Expansion plans ................................................................................................ 83

Transplanting the Jellinbah culture ................................................................. 85

The road ahead—in for the long haul ............................................................... 89

What lies ahead for Jellinbah Group ................................................................. 91

bibliography............................................................................................................ 96

7The Jellinbah Group

foreWord

It was the spring of 2012. The Australian/US dollar exchange rate was 107 and benchmark coal prices had more than halved over the past two years. I was reviewing the ‘tough times’ plan the Jellinbah executive team had put in place four or five months before and was considering just how robust our business was. When I joined the company in 2004 we were a one-mine, one-product company with 70 per cent of our coal going into the Japanese market. Within eight years we had transformed the business. Today we have two large open-cut mines producing five products that are sold to customers in more than a dozen countries around the world. Diversity had delivered what it always should for business – real robustness – and we were weathering the current storm.

In this frame of mind, my thoughts wandered to what it must have been like for our founding fathers who faced a market that didn’t really want their largely unknown and untested product, but for which those four mates had pretty much bet the farm. They had been courageous. I then started thinking about how long had it been since the business began with a nameplate output of just a few hundred thousand tonnes per annum. On 8 August 2013, the Jellinbah Group would be 25-years-old. Was this something to celebrate? Should we be celebrating at all if the downturn continued?

It quickly became clear to me that we did have something to celebrate. Not only did we have a strong business that would survive the difficult time we were experiencing, but we were a family, and that’s what families do – get together to celebrate who they are and what they have achieved.

I then considered how best to celebrate given the economic climate. Ever since I joined Jellinbah, I had frequently heard people say, “There is a book in the Jellinbah story”. Yes, a book. What a great way to celebrate 25 years, sales of almost 100 million tonnes, the courage and dedication of the four mates who started it all, and every member of the Jellinbah family who has contributed to the business.

This is your celebration and your family’s story.

Thank you to everyone who contributed to this project by telling their story, helping us to check details and providing photographs. With your spirited and willing support I believe we’ve been able to capture the true spirit of Jellinbah and faithfully map our journey to this point. Thank you in particular to Sandy Worden, our author, who managed to produce a magic wand that welded the many sources, inevitable holes and fading memories into one coherent and genuinely fascinating yarn.

Greg Chalmers

9The Jellinbah Group

The Jellinbah GroupbeGinner’S Guide To oWninG a Coal mine

It’s a remarkable story.

It’s a story about three mining engineers and a geologist who yearned to own a coal mine. It was the late 1980s. The colleagues had never owned a mine before. They had no capital. The tenement they were interested in wasn’t for sale. The coal held little appeal in the global marketplace beyond industrial applications. At the time, Queensland’s renowned coal region, the Bowen Basin in Central Queensland, was dominated by big mining companies primarily focused on developing coking coal, coal destined for the world’s steel mills.

It was against this backdrop that Ken Talbot, Sam Chong, Gary Zamel and Jim Gorman took a punt. They were determined, willing to explore new ways of doing things, and just a little bit cheeky. Many would have called them brave, many others crazy; no one could predict that their gamble was to pay off handsomely.

11The Jellinbah Group10 The Jellinbah Story

It was an unlikely partnership given their diverse backgrounds and personalities. Ken had been raised by an aunt in New South Wales. He completed a degree in mining engineering at the University of New South Wales and worked in coal mines across New South Wales and Queensland.

Gary was the son of a doctor and had always been based in Sydney. He established his own mining technology business early in his career.

Sam, a Chinese Malay, came to Australia in 1967 to complete a Graduate Diploma of Mining Engineering at the University of New South Wales. He worked in a range of mining operations in Tasmania, the Christmas Islands, the Northern Territory and Queensland before joining the Queensland Electricity Commission (QEC) where he assessed the coal supply to its power stations.

Jim was born and bred in Rockhampton. After completing a Bachelor of Science degree majoring in geology and chemistry at James Cook University in Townsville, he worked in geology roles at Esso in Sydney, and South Blackwater and Curragh mines in Central Queensland.

Their common link was Ken Talbot. Ken and Gary studied mining engineering together at the University of New South Wales. Ken and Sam worked together at the Utah Development Company, and Ken and Jim had worked together at Curragh.

Circumstances and a common driving ambition to own a coal mine brought them together.

As early as 1986, Ken and Gary had discussed the differences between being mine managers and mine owners. Ken, a registered mine manager (the equivalent of today’s site senior executive), was working for Bond Coal, and Gary had just started his consulting business. They used to catch up regularly at the City Tatts Club when Ken visited Sydney.

“As a mine manager you take on the responsibility of running a mine, looking after the workforce, operating safely and managing the commercial requirements of the business. As a mine owner you fundamentally have the same issues to confront, but you actually own the mine and reap the rewards. So Ken and I talked at length about the whole idea of starting our own mine,” Gary said.

“We looked at different operations from new greenfields sites to established brownfields sites; some down in the Wollongong area and others up in Central Queensland.”

Warwick Parer, Faith Dempsey and Ken Talbot travel in style.

Ken Bateman, Jodie Randall, Warwick Parer and Gary Zamel at Ken Bateman’s farewell dinner, 1996.

Sam recalls sitting at his kitchen table in Brisbane with Ken somewhere around late 1987/early 1988 talking about the need to secure their financial futures.

“We had the idea that we should start our own business and even our own mine. We never considered developing a big mine. We were thinking about half a million tonnes’ production, making around half a million dollars a year. If we had an income of $150,000 to $200,000, that would be fantastic. We were never thinking big,” Sam said.

“We looked in the Ipswich coal area and in the Bowen Basin. I suggested that we look at the Jellinbah mine in the Bowen Basin, because I knew about it from my time with QEC and I thought it had potential.”

Jim and Ken had similar conversations. They considered a number of opportunities in Central Queensland but considered Jellinbah East the most likely.

“We knew the coal was there but it held very little value because it wasn’t suitable for power stations in Queensland. We believed the government would consider getting rid of it,” Jim said.

Jellinbah East is 280 kilometres north-west of the Port of Gladstone and 37 kilometres from the town of Blackwater. It is located south-west of Yarrabee mine and north-east of Curragh mine. Its exploration rights were held by the QEC.

Because Gary had his own company and was not hampered by being employed by another entity, the partners agreed that he should request a meeting with the QEC Commissioner Neil Galway to discuss the feasibility of the QEC relinquishing the Jellinbah leases. During this meeting in Brisbane Neil said he would be willing to relinquish the leases to the Department of Mines because the low-volatile coal did not suit the boilers at Gladstone Power Station. Gary spoke with Director General of Mines, Kevin Wolfe the following week to discuss the feasibility of picking up the area.

“I told Kevin that I’d met with Neil Galway, that he was willing to relinquish the area and that we wanted to pick it up. Kevin said that was fine and the department would welcome a new mine because no new mine had been developed in Queensland for a number of years, but he said the leases would have to go to tender,” Gary said.

[Pix (8) E]Ken Bateman and Ken Talbot during a visit to Japan.

Ken Talbot (left), Peter Thorsen (third from the left) and their hosts during a visit to Japan.


“Of course I tried to object to that because we didn’t want to be put into a competitive process. We had identified the opportunity, we’d come to an arrangement with the QEC that they would relinquish it and we didn’t want to lose out on the opportunity. The reality was it was government protocol to go to tender, but Kevin’s comment to me was that most times the people who identified the opportunities were the people who were successful at tender.

“So in July 1988, the area was gazetted, we put a submission up and, on the 8th of the 8th of ’88, we were issued the authority to prospect (ATP) over the area. Our understanding was that we were pretty much the only bidder.”

The then Minister for Mines and Energy Martin Tenni announced in the October 1988 issue of the Queensland Government Mining Journal (QGMJ) that Advance Queensland Resources and Mining (AQRM) was required to pay $1 million to QEC within 30 days as part reimbursement for previous exploration undertaken by the QEC in the area.

“A further $2 million would be payable to the QEC upon granting of the mining lease,” Mr Tenni said.

As it turns out, they picked up a bargain.

Having no capital of their own to invest, the partners needed to secure funding before they could submit their tender.

Through a business connection of Jim’s, they were referred to the Bank of America in Sydney where David Hobday and Tom Rudd helped them develop an information memorandum and to package their proposal in a format suitable for presenting to Bank of America clients. Having the bank’s logo on the cover of their documents gave the partners a level of credibility. Greater Pacific Investment (GPI), a financial investment group headed by Brian Yuill and with links to Spedley’s merchant bank, was interested in Jellinbah.

“Brian Yuill loved the idea. He and his colleagues John Ferguson and Jamie Craven thought it was a terrific way of getting into the coal industry. It suited what they were looking to do, so they formed a company called GPI Coal and said they would fund us and fund our establishment,” Gary said.

Warwick and Kathi Parer at Ken Bateman’s farewell.

Ken Talbot and Ken Bateman at the Clinton coal facility in Gladstone.

They were on their way. GPI Coal’s investment secured a 66.67 per cent stake in Queensland Coal Mine Management (QCMM), which owned AQRM, the entity that submitted the tender for Jellinbah East and would become the mine operator.

The remaining 33.33 per cent was held by Ken, Sam, Gary and Jim with each of them reputedly investing just $2. In the early days Sam and Gary were not involved in the day-to-day running of the business, Ken took on the role of chief executive officer, and Jim was the on-site manager and geologist.

To help with landholder negotiations, the directors of GPI Coal suggested that Ken talk to a lawyer they had dealt with called Harold Shand. Harold had consulted to Alan Bond as a legal advisor in his hotel business, Austotel, which had been set up to acquire all the Tooheys and Castlemaine hotels. GPI’s subsidiary, GPI Leisure, had business dealings with Austotel.

Harold tells of another coincidental connection around the time he had finalised the hotel acquisitions and was about to return to his office in Brisbane.

“I left Bond Corporation at five o’clock on Friday 29 June 1986. The next inhabitant of my office at 20 Bond Street was Ken Talbot who started on Monday morning, but I didn’t meet him,” Harold said. Then in January 1989, Harold became Jellinbah’s a legal advisor and later became a non-executive director on the QCMM Board.

By this stage the fledgling company had employed a skeleton staff in Brisbane, including Ken’s executive assistant Faith Robins who had worked in shipping at Utah.

Also on board were Ken Bateman (in a consulting capacity), a coal technologist and marketing specialist who, as a result of his work at Utah, was well respected by the Japanese; Bob Adams, the general manager finance; and Peter Thorsen, a mining engineer.

Because they worked closely together, and as a play on their surnames, Ken Bateman and Faith became known as Batman and Robin.

To distinguish between the two Kens, Ken Talbot became KT. To accommodate the growing team, Ken ‘Batman’ Bateman and Faith ‘Robin’ Dempsey catch up

at Tony Champion’s farewell dinner, 2006.


they leased half the floor of Level 8, 145 Eagle Street. KT enjoyed telling the Japanese that he chose that particular floor because it was the lucky number eight. The Japanese consider eight a lucky number because the Kanji character for eight suggests better things to come in the future. The office was conveniently located above Daniel’s Steakhouse, which was the venue for many of the company’s business lunches and dinners.

Around this time Senator Warwick Parer was appointed Chairman of the QCMM Board and associated entities. Warwick knew Ken Bateman from his time at Utah and they had spent a lot of time together in Japan, Korea and India negotiating with the steel mills. Warwick was a Liberal senator having been elected in 1985. He was Minister for Resources and Energy from March 1996 to October 1998 in the Howard government and retired from the Senate in February 2000.

In 1996 Warwick resigned from the QCMM Board due to a conflict of interest relating to his ministerial responsibilities and his QCMM interests. He returned as chairman in 2001 and remained with the company until after the Anglo American purchase of Gary Zamel’s share was finalised.

Warwick Parer, Ken Bateman and Peter Thorsen at Tony Champion’s farewell dinner.

Harold Shand also resigned at this time. Warwick went on to chair the Coalition of Australian Governments’ independent Energy Review Panel and Harold pursued his own business interests.

Warwick explained how he came to join the Jellinbah team.

“Ken Bateman and the guys came to me and recounted their story and I said, ‘why are you telling this horror story?’” Warwick said.

“Bear in mind, it wasn’t just the coal quality that was rat-shit – no-one wanted it – it was also the fact that they had no arrangement with Queensland Rail, they had no arrangement with the Port of Gladstone, and they had no arrangement with Yarrabee for hauling the coal on their road.

“They said to me, ‘we want you to be chairman’, and I said, ‘you’ve got to be joking’. Ken said, ‘well it’s a challenge’ and I said, ‘alright, if you want me’.”

Meanwhile, the sense of satisfaction the new mine owners had at securing funding was short-lived. In April 1989 news hit the media that Spedley and GPI had gone into receivership.

“All of a sudden Ken Talbot and I were on the phone to each other saying ‘what the hell has just happened here? This is our finance partner. This is our security blanket. How are we going to get through the early period before we get the cash flow going?’” Gary said.

“KT was up in Brisbane, I was in Sydney, GPI was in Sydney and we found out very quickly that a liquidator had been appointed called Ferrier Hodson, which was the largest liquidation firm in Australia. Harold served a notice of default under the joint venture agreement and within 48 hours I had a meeting with a guy called Warren Panzer, who was the liquidator. He was working for Brian de Silva at Ferrier.

“Warren asked me how much GPI had invested at that stage. I said GPI had invested $2.7 million. He said, ‘can you pay it back?’ I said, ‘can you give us some time?’ He said, ‘how long do you want?’ I said, ‘well how about if you give us 18 months to pay it back’, not knowing in any way how we were going to pay it back because we hadn’t mined a tonne of coal at this stage. He said ‘ok’ and on the spot we signed a document basically releasing their 66.67 per cent in return for us committing to

Caption Text

Cash flow woes

Faith Robins (now Faith Dempsey) recalls the cash flow struggles Jellinbah faced due to the financial collapse of GPI. “In early to mid-March 1989, I drew down a $50,000 payment from GPI. It was about my second one and then a week later they went bust. GPI went into receivership. They were our financial backer. I distinctly remember thinking how lucky I was that I had drawn down that 50 grand because that paid KT’s wage, my wage, Jungle’s (Jim Gorman’s) wage, Batman’s contractor rate and some printing and the office rent, just to keep us going. The next shipment was only a month or two later, so we kept working from shipment to shipment for cash flow … along with our contractors.”


paying back $2.7 million over 18 months.” To finance this transaction and to cover its QEC liability, Jellinbah took out a $5 million loan from the Commonwealth Bank in early 1990.

After the trauma of the GPI collapse, Jellinbah East’s first shipment was an exciting event. On 22 April 1989, almost 22,000 tonnes of coal was loaded onto the Soarer Diana at the RG Tanna Coal Terminal at the Port of Gladstone. It was bound for Nihon Cement – a Marubeni customer – in Japan. The four mine owners, Ken Bateman and Faith headed up to Gladstone to witness this momentous occasion.

“We got on board the ship and we were very excited. I remember wearing a white shirt and we were all looking down into the hold. It was the dustiest coal I have ever seen (and have ever seen since). The coal dust was billowing up and we were looking down. Then we all looked up at each other and we had black, black faces. It was so funny. Back at the airport we were madly scrubbing our faces trying to make ourselves decent to go back on the plane,” Faith recalled.

Technical issues arose at Nihon Cement due to the relatively high chlorine content of the coal and the company decided not to buy anymore Jellinbah coal. However, the marketing team was able to identify other cement makers who could use this type of coal and also looked to markets beyond general industry.

As an unknown entity in the global marketplace, it was critical that Jellinbah appoint trading companies to help market its coal into Japan. Selecting the right ones – those with strong relationships with companies that were a good fit for Jellinbah – was also important. The team selected two mid-tier trading houses – Nissho Iwai (which later became Sojitz Corporation) and Marubeni Corporation. Nissho Iwai had connections to Kobe Steel and Nippon Steel while Marubeni had links to Kawasaki, Sumitomo and NKK.

“We wanted to make sure we chose the right trading companies so we wouldn’t have any doors shut on us, that’s why we chose Nissho Iwai and Marubeni,” Faith said.

Being an unknown entity also meant it was difficult to get bank finance to purchase mining equipment. Bringing reputable joint venture partners on board was a means of overcoming that impediment. In order to overcome the difficulty in financing, Marubeni offered Jellinbah a letter of credit, which the company used to obtain finance to complete the trial bulk shipments. Successive

Jellinbah East powers Queensland

In May 1989, Jellinbah delivered two train loads of coal to the Gladstone Power Station for a trial burn, a somewhat strange twist of fate given that the QEC had relinquished the Jellinbah East lease because the coal wasn’t suitable for its power stations. With a combustion engineer from the Australian Coal Industries Research Laboratories (ACIRL) in tow, Ken Bateman went to Gladstone to supervise the trial, which resulted in Jellinbah East coal contributing to Queensland’s electricity supply for a few hours. However, no contract was forthcoming. “It was borderline coal and worked in a fashion, but the price they were willing to pay would make it uneconomical,” Ken said.

trial shipments were also backed up by the letter of credit, but were partly funded by the proceeds of the previous trial shipments.

Former Marubeni Coal Department General Manager Director Nobby Fukui said Marubeni had always been looking for an opportunity to obtain an equity position in the Australian coal industry.

“We wanted to develop new sources of coal that we could trade,” he said.

“After a few shipments, we started talking about taking an equity position in Jellinbah. At that time Marubeni and Nissho were negotiating with Ken Talbot quite separately. Marubeni and Nissho reached agreement with Ken and his group at the very identical time and for the same conditions.”

In July 1990, QCMM formed a joint venture – the Jellinbah East Joint Venture – with Nissho Iwai and Marubeni. The trading companies each acquired 15 per cent of the Jellinbah East mine, which left the original shareholders with 70 per cent between them.

Marubeni and Nissho Iwai agreed to pay a premium on the value of their joint venture equities into an escrow account, which was to be used only for capital expenditure to develop Jellinbah East. Growth in its customer base and increased sales, however, meant that Jellinbah did not need to fully rely on these funds. In the late 1990s, Marubeni and Nissho Iwai agreed to release the funds for purposes other than capital expenditure if required because Jellinbah East’s production capacity had increased significantly by that time.

In November 1990 Harold Shand established a separate entity called Capregin. The main shareholders were KT, Gary, Sam and Jim, with very minor shareholdings offered to Warwick Parer, Ken Bateman and Harold. Capregin built a motel at Bluff, east of the mine, to house the mine’s single people, the mine manager’s house and other houses in Bluff, and charged the joint venture a commercial rent to use these facilities.

Within eight months of being granted the ATP for Jellinbah East, the novice mine owners had, in possibly Australian record time, delivered their first coal against all odds after overcoming the loss of their finance partner, securing two joint venture partners, and opening a new mine.

Gary Zamel and Shiro Nakao ham it up at a karaoke evening. Shiro, a former Marubeni general manager, was instrumental

in Jellinbah’s first shipment to Nihon Cement.

The Jellinbah team and representatives from Marubeni Corporation.


Scott Kidston illustrates the scale of the Pollux Seam at Jellinbah Central, which averages eight metres in thickness.

eSTabliShinG a markeT for ‘unWanTed’ Coal

Jellinbah East had excellent mining conditions with generous coal seams of around 10.5 metres thick and a low volume of waste material or overburden required to be handled (strip ratio), making it highly productive.

It was located close to a railway line and was only 280 kilometres from the Port of Gladstone. In theory it had everything going for it. But when the Queensland Government released the area for open tender in 1988, it received only one bid. Although other companies had considered Jellinbah East, they felt the coal would be too difficult to sell.

The coal is soft with a relatively low volatile matter – around 15.5 per cent – low ash and high carbon content. Although it also had high energy value, its fuel ratio was too high for standard power station boilers and it had no natural home in the marketplace.

One of the critical factors in the success of the Jellinbah Group has been the quality of its people. Without Ken Bateman and Ross Stainlay, it is unlikely that Jellinbah East coal would have moved beyond basic industrial markets.

Warwick Parer said, “Talbot knew about underground mining, but he knew nothing about coal properties or the use of coal, and Ken Bateman was the world expert,” he said.

Ken Bateman had qualifications in mining engineering, mineral dressing and coal technology. He was head of coal process development for British Coal but, dissatisfied with the state of the local industry, he began looking for a position overseas. He arrived in Australia in September 1971 to take up a technical role with the Utah Development Company, and went on to earn the respect of his contemporaries at steel mills around the world.

Ken knew Ross Stainlay from the Utah days when Ross was a metallurgist at Norwich Park, and thought highly of him.

“Ross has got a great technical knowledge of coal,” Ken said.

In 1990 Jellinbah secured funding for a National Energy Research Development and Demonstration

Ross Stainlay, Nobby Fukui, and Ken and Margaret Bateman at Tony Champion’s farewell dinner.

Ever the Scout, Ross Stainlay is ready to go partying after a board dinner.


Council (NERDDC) project to investigate the use of low-volatile coals in new methods of steelmaking such as Corex. Corex is a process developed for the cost and energy-efficient production of hot metal from iron ore and coal. The process differs from the conventional blast furnace route in that cheaper non-coking coal can be directly used for ore reduction and melting work, eliminating the need for coking plants.

Ross was appointed to manage the project. In 1992 he was appointed Jellinbah General Manager Marketing and, according to Ken Bateman, “did a magnificent job”.

When Ken first arrived at Jellinbah, he said to himself: “Here is a low-cost, high-energy coal of 14 to 15 per cent volatile matter and ash-in-situ of nine or 10 per cent. It is not being used anywhere in the world at the moment, but I’m sure the world will find a way to use it.”

One of his early endeavours to promote the use of this coal was to ‘almost hijack’ a technical mission by the major Japanese steel mills in 1989.

“I found out that the mission was coming to Australia and I got their itinerary. I knew the mission leader Mr Ohtaki from Nippon Steel very well so I rang him up in Tokyo, which was not normally done because you were supposed to go through the trading companies,” Ken said.

“I told him I’d noticed the mission was going to Curragh, that there was a gap in their schedule and suggested that they come to Jellinbah. We’d opened the pit for a bulk sample and had exposed a seven-to-eight metre thick seam.

“KT and I gave them a brief presentation over lunch.”

The mission recognised the benefits of this operation – a thick coal seam, low strip ratio, good mining conditions, close to infrastructure and at the low end of the global mine cost-curve, so the members went back to Japan to explore the specification and potential applications.

“We didn’t hear much for three or four months,” Ken said.

“Then KT and I were in Japan on one of our regular visits and were talking to the commercial people at Nippon Steel. I asked Mr Mitsui if Mr Ohtaki, the technical man, was in. Ross Stainlay and Ken Bateman during a visit

to Hakadale, Japan, in June 1991.

“Mr Mitsui said to Mr Ohtaki, ‘these guys are talking about Jellinbah East. You’ve seen it, what do you think of it?’ He said, ‘you should see it!’ All we had to do was show them that the coal had some use.”

By looking at the coal seam in horizontal sections rather than as a whole, Ken discovered that the bottom part of the seam had slight coking coal properties, which had the potential to provide Jellinbah with a more diverse market base. The mine introduced selective mining with the top portion of the seam to be sold as a thermal coal and the bottom as a semi-soft coking coal. Due to its high fuel ratio, the thermal coal was only suitable for cement plants and power stations with circulating fluidised bed (CFB) boilers. There were a handful in France and Belgium, and two in Japan – one owned by Nippon Steel, the other by Kobe Steel. In the first five years of Jellinbah’s life, the two Japanese steel mills took substantial tonnages.

One of the issues Jellinbah faced in marketing to potential metallurgical (steel making) coal customers was the absence of a coal preparation plant. Apart from removing stone, rocks and rubbish, the preparation process helps produce a consistent product.

“The challenge was to prove that we could mine a low-ash, steel mill suitable product without the normal comfort of a preparation plant,” Ross said.

“It was a matter of taking adequate steps in terms of clearing off the top of coal, mining procedures, stockpiling and paying special attention to quality by sampling and testing.”

Ken Bateman continued to explore potential uses for Jellinbah coal. He recalled that on one of his visits to the Usinor steelworks at Dunkirk, prior to Jellinbah, there was mention of a 10/10 coal – 10 per cent ash and 10 per cent volatile matter.

“What were they testing for?” Ken wondered. “What about coal injection? Coal injection wasn’t new but the industry was only using high-volatile coal at that time.”

In fact, pulverised coal injection (PCI) installations had been fitted to many Japanese and European blast furnaces since the late 1980s.

“Most mills thought that it was essential to achieve rapid burnout of coal in the blast furnace

“It was a matter of taking adequate steps in terms of clearing off the top of coal ...,” Ross Stainlay said.

Coal stockpile at Jellinbah East.

“All we had to do was show them that the coal had some use”– Ken Bateman.


Keith Teske (second from left), Faith Dempsey and some customers during a site visit.

An excavator prepares to load coal into a haul truck, Jellinbah Central.

raceway and so focused on high-volatile coals – particularly the type from the Hunter Valley,” Ross said.

However the Jellinbah team began to promote the advantages of low-volatile coals over high-volatile coals for PCI, based on the higher energy coke replacement ratios, ease of milling and the subsequent economic benefits.

Prior to the development of Jellinbah East, former co-owner of Yarrabee mine John Rawlins had been discussing low-volatile PCI with the Japanese for two years with only limited success.

“The Japanese were ultra-conservative. One of the difficulties we had in the marketplace was we were only a small mine and, at that time, there weren’t any other producers of low-volatile PCI coal,” Ross said.

“We were in the process of trying to develop this market into the Japanese steel mills. Although there was some interest in it from a technology point of view, there was a great deal of nervousness – if the only supply you’ve got is one small mine in central Queensland then you’re very vulnerable to interruptions to supply. So from the point of view of developing the market, it really was essential to have greater volume and some diversity.”

On the issue of low-volatile PCI, Jellinbah’s competitive advantage over Yarrabee was its technical marketing strength – it had the ‘know-how’ to overcome the technical issues raised by the steel mills. Every time an issue was raised, the marketing team would respond promptly. Ross had developed a database of technical papers and a database on each steel mill that Jellinbah dealt with, covering operating data, coke consumption and so on. Mine visits were frequent.

However, convincing the Japanese steel mills to switch to low-volatile PCI was an arduous journey. For each potential customer there would be an introductory meeting where the coal specification would be discussed. Three or four meetings later, the potential customer might take a drum sample, then a few meetings after that a trial hold of 7,000 to 15,000 tonnes.

A few meetings later, the marketing team would be invited for a works visit where an appraisal would be given. Finally after many months of negotiations, a trial contract might be signed.

“It wasn’t easy and credit has to go to Phil Bennett at CoalTech,” Ross said.

“Phil was our technical consultant and helped us with the fundamentals of coal, applications, reviewing technical papers, searching for conference proceedings and so forth

“I remember the first time I sent a fax from an aeroplane. We were about to land in Marseille, southern France, for a meeting at the steel works and something came up about the replacement ratio as I was getting on the plane, so I sent off a fax to Phil from the plane (it cost a fortune) and, by the time we’d landed, he’d had the calculations worked out and the story prepared.”

Jorge Caldeira from Brazil was also invaluable to the marketing team. He was a coal expert and coke oven manager who Ken Bateman knew from his earlier visits to the Brazilian steel mills before joining Jellinbah. When the Brazilian government privatised the steel industry, Jorge contacted Ken and he was appointed as Jellinbah’s technical agent. Jorge remains a full-time Jellinbah employee based in Brazil, meeting customers around the world as the group’s ‘technical backstop’.

Meanwhile during a visit to Sumitomo Metal Industries’ Wakayama steel mill, Jellinbah’s perseverance in the PCI sector had finally paid off.

“It was American Independence Day because there were fire crackers in the street and it was probably 1992,” Ross said.

“We had a dinner the next day and the Japanese sat down and presented this sheet of paper with many calculations outlined. They had recognised that coke replacement ratios matter and that this coal had a particular merit.”

Following this ground-breaking meeting, Sumitomo became the first customer to use Jellinbah East coal for pulverised coal injection beyond trial applications. This was no great surprise to Ken Bateman who found Sumitomo to be innovative and open to trialling new technology. Sumitomo has a trading relationship with Marubeni. Nobby Fukui said at that time the Japanese steel mills were accustomed to using high-volatile coal for PCI.

“They were concerned that low-volatile coal might produce too much burnt carbon in their blast

Faith Dempsey (far right) accompanies customers during a site visit to Jellinbah East.

Deborah and Ross Stainlay and Jorge Caldeira cruise away the afternoon during Jorge’s visit to Australia in August 2003.

Sumitomo became the first customer to use Jellinbah East coal for pulverised coal injection beyond trial applications.


Scott Kidston (fourth from the left), Faith Dempsey and Marubeni representatives during a customer visit to Jellinbah East.

furnaces. Of course that was not the case. No-one else but Sumitomo Metal was courageous enough to try it, and they found that low-volatile coal performed much better than high-volatile coal because it replaced more coke in the blast furnace,” Nobby said.

Gradually other mills followed suit, and sales of Jellinbah East PCI coal grew in Japan, Europe and Brazil. Senior Coal Technologist Cameron Tasker joined the company in March 1999, reinforcing the marketing team’s technical expertise.

Jellinbah’s success at developing a low-volatile PCI market opened the door for the construction of new mines in the Bowen Basin, including South Walker Creek, Foxleigh, Coppabella and Moorvale. Yarrabee was also able to tap into this market.

However, it wasn’t plain sailing. Setting a benchmark price for low-volatile PCI coals was challenging.

Jellinbah would use coke prices as its reference point because it believed PCI coal was replacing coke; whereas the steel mills would use thermal coal as their reference point because they felt they were replacing thermal coal.

Given this price uncertainty and the myriad technical issues associated with low-volatile coal, Ross foresaw major challenges for this fledgling sector of the industry if the major players didn’t network effectively. He organised monthly lunch meetings for the low-volatile coal producers’ marketing people.

“It was not about markets and pricing; it was a forum to make sure we all understood the merits of the coal and its application, and could counter any technical issues. For example, ‘the coal’s too soft’, ‘the mills vibrate’, ‘we’ve got too much dust’ or other properties of the coal that the buyer raised. All these coals do have some issues, but rather than discount to overcome some perceived plant operational issue, let’s make sure someone like Phil Bennett is available to respond to those issues or to test the coal,” Ross said.

These network sessions continued until the market was well established for this type of coal.

The technical strength of Jellinbah’s early marketing team was critical to the establishment of a low-volatile PCI market. Convincing customers to trial a new product in their blast furnaces and

Monique and Barry Olver.

addressing the subsequent technical issues required a thorough knowledge of the fundamentals of coal and its applications. Over time the steel mills acquired their own technical competence. This, combined with changing marketing dynamics and competitor activity have required Jellinbah to adopt a different marketing strategy with a much more commercial focus.

Barry Olver, an experienced marketer, joined Jellinbah in 2006 as General Manager Marketing and has driven this new strategy. These days Jellinbah has a more diverse product mix, including hard coking coal from Lake Vermont and customer-specific blends. The company has a strong commitment to its top-tier customers, has introduced coal delivered pricing (CFR) in addition to freight on board pricing, it closely matches mine production with sales and has a greater emphasis on direct business. Coupled with the early technical foundation, this new approach has helped annual sales grow from around 3.2 million tonnes in the 2005/06 financial year to more than 11 million tonnes in 2013/14.

CEO Greg Chalmers said not only did Jellinbah’s customers appreciate reliability of supply and consistency of product, but they appreciated the relationships they had developed with the marketing team.

“I have travelled with Barry and his team to meet with many of our customers. I have found, first-hand, that our customers are quite vocal in their appreciation of the openness of their dealings and the prompt support they receive from Barry and the rest of the marketing group,” Greg said.

CraCkS beGin To appear

Meanwhile in the early 1990s, a family atmosphere had started to develop in the Brisbane office, which led to one employee tagging Jellinbah as the ‘carey, sharey mining company’. It was a small team with a big workload and KT had big expectations.

Ross recalled that, “the rules were that there were no rules; no procedures, no rule books, no policies – just make it happen.”

Former General Manager Finance Bob Adams agrees. “We weren’t micro-managed. We had to look

Action during a Jellinbah East Joint Venture golf day in 2002.


at the big issues and KT didn’t worry about the small things. It meant that our eyes were on the core business, not bureaucracy. Decisions were made very quickly and the company was pretty agile. KT talked about an open-door policy so that meant you could talk to him anytime, you could talk to the directors; everyone was easily contactable. Relationships were really important. KT employed young people, people I think he saw had potential, but hadn’t had the full experience, so he got a small team that was really enthusiastic and highly committed. It didn’t matter what discipline you had, you were a member of the team, and we got on well socially.”

While there was an expectation of working hard and delivering results, there was also recognition of the importance of family and having fun.

“Once, even twice a year, the families would go off to a resort together. My wife really valued that because I spent a lot of time working – long days, six days a week – and that robbed her of her time with me, so to be taken away with our kids to a resort, she thought that was great,” Bob said.

Faith Dempsey recalls a special birthday party. “When KT turned 40 he hired a mini-bus and we all went down to the beach, right on the border at Coolangatta. At that time there used to be a restaurant on the sand and we hired it out. Everyone brought their kids. It was a really big family.”

Former marketing assistant Jodie Randall agrees. “There was always some sort of function on the horizon to have a bit of fun, even if it was just Friday drinks. It was a nice environment.”

And there were the family Christmas parties as well. Held at Chairman Warwick Parer’s house, featuring Santa, a jumping castle and clowns, there was plenty to keep the kids amused.

However, by the mid-1990s, the relationship between the original shareholders was becoming strained. There were disagreements around investment decisions and concerns that KT was making business decisions for the company without the approval of the other shareholders.

It came to a head at a board meeting in June 1995 when a resolution was passed “that all representatives of major shareholders holding executive positions in the company do immediately resign from those executive positions effective forthwith”, effectively sacking KT from his role as CEO.

Happy days! Jellinbah Christmas party at Customs House, Brisbane, 1997.

The Three Amigos: Julie Krarup, Jodie Randall and Marcelle Simpson.

“Once, even twice a year, the families would go off to a resort together. My wife really valued that”– Bob Adams.

KT attempted to have this decision set aside in the Supreme Court in September 1995, but failed.

A mediator, Sir Laurence Street, was brought in and, by 3pm on the day of the mediation process, agreement was reached that Gary, Sam and Jim would buy-out KT’s share in the company.

Ken Bateman temporarily filled in the CEO role until the new CEO, Alex Wilkins, was appointed. Alex didn’t stay with Jellinbah long. In a little over a year, he had resigned and was replaced by Harold Shand. Harold resigned from the boards of the QCMM group of companies in July 2000 to take up his new executive post.

Ken Talbot went on to establish another successful mining company, Macarthur Coal, and took a number of Jellinbah staff with him, including Bob Adams.

Leigh Whitton, Warwick Parer’s son-in-law, was head-hunted from a Sydney-based company and took over Bob’s role in October 1997.

In the late 1990s a number of coal companies had adopted poor foreign currency risk management strategies. When Leigh arrived, Jellinbah had purchased some exotic structures from Macquarie Bank, which were putting a severe strain on the business’s finances.

“The hedge book was pretty ugly,” Leigh said.

“The dollar had crashed and we were stuck at a much less advantageous rate. We ended up in a position where the losses on the hedge book were probably more than the value of the company. I had to go to the board and say that I had done some projections and had to suspend dividends until further notice. Eventually we were able to trade out of it. It was about board education, controlling cash and communicating with the banks so they could understand that we could trade our way out. Overcoming the hedge book was probably the thing that I found most challenging and most satisfying during my time at Jellinbah.”

In November 1998, Advance Queensland Resources and Mining (AQRM) – the entity that operated Jellinbah East – changed its name to Jellinbah Resources Pty Ltd, primarily because the mine had been operating for almost a decade and the operator had become synonymous with the mine and the Jellinbah name.

In March 1999, Faith Dempsey left Jellinbah to establish her own coal logistics company, TransCoal. Over the 11 years she had been with Jellinbah, she had progressed to the position of manager marketing and marketing services. In 1996, she was appointed by the chief executives

[Pix (8) E]

With a vessel in port at Gladstone ready to be loaded and no export permit, Faith Dempsey hits the phone. The Department of Primary

Industries and Energy in Canberra had to approve all coal prices before permits would be issued. In 1989, Jellinbah East coal did not

command a high price and so Faith had to work her magic.

The Boonal rail loading facility at sunset.


of the Blackwater system mines to start and chair the Blackwater User Group, which comprised nine mines, two power stations, QR and Gladstone Port Authority (GPA). In this role she helped reduce the group’s rail freight by 30 per cent by working with the rail and port authorities to better utilise rolling stock and to implement the GPA’s website. Faith found that although the group’s members wanted the same outcome, they were pulling in different directions. She believed centralising the logistics of the Blackwater system under the auspices of an independent entity could produce a better result.

“I believed that by using a centralised approach, the Boonal coal loading facility on the Blackwater rail system could be maximised without undue capital expense, so I approached John Rawlins and Harold Shand with my concept and they agreed. I finished with Jellinbah on 5 March 1999 and started up as TransCoal on 8 March 1999, co-ordinating trucks and trains into Boonal, and the shipping for both mines. Boonal increased from 2.8 million tonnes to five million tonnes per annum under this approach without the need for major capital expansion,” she said.

These days TransCoal exports 25 million tonnes of coal a year for nine coal mines through every Queensland corridor by modelling each mine’s future production and booking their shipping

to match. It also calculates five million tonnes per annum of despatch and demurrage for Castleton Commodities, a large international shipping company.

The sale of Gary Zamel’s share of QCMM to Anglo American in 2002 caused a great deal of uncertainty within Jellinbah’s Brisbane office. A couple of years before the sale, Gary realised he wasn’t enjoying his role in the business anymore. At that stage he had been a shareholder for 14 years and felt it was time to move on.

“I enjoyed the fact that we’d built a fantastic mining company and I’d got a huge amount of enjoyment and experience out of doing that, but it was becoming too hard at a board level,” Gary said.

“We weren’t working cohesively and we weren’t working as professionally as I would have liked. I felt the problems were going to continue and it got to a stage

where I said, ‘you know, I’ve got ownership in a really successful mine which is worth a lot of money, I think it’s the right time for me to move on’,” he said.

Faith Dempsey views a trail cargo being loaded at the Port of Gladstone, 1989.

Gary Zamel and Alex Wilkins.

“I enjoyed the fact that we’d built a fantastic mining company and I’d got a huge amount of enjoyment and experience out of doing that, but it was becoming too hard at a board level”– Gary Zamel.

Gary received proposals to buy his shareholding from a number of parties.

One of them was from existing shareholders and joint venture partners. Nobby Fukui said Jim Gorman approached Marubeni and Nissho Iwai to join him in negotiating to buy out Gary’s shareholding. Sam Chong later joined the three of them.

“At the very last moment, Nissho could not agree with Jim, Sam and us on a price. While taking time to form a consensus among ourselves, Gary decided to sell to Anglo, so we failed,” Nobby said.

Anglo American’s proposal was the most attractive, and Gary completed negotiations with that party.

The sale of Gary’s shareholding to a multi-national mining company was a shock to the Jellinbah employees who were used to the personal nature of having individual shareholders.

Executive assistant Julie Krarup recalled, “We all thought it would go on indefinitely with the three of them – Gary, Sam and Jim,” she said.

“It made everyone feel that if the other two shareholders also sold then we could possibly lose our jobs. Bigger companies could take over and get rid of us all, so we weren’t quite sure what was going to happen.”

Unsure of the implications of Anglo coming on board, Leigh Whitton and Harold Shand prepared redundancy packages as a precautionary measure.

“It was a worrying time,” Jodie Randall recalled.

“I remember Harold sitting us down in the boardroom. He had put a retrenchment package in place in case it got to that. Of course, it never did, but he took care of us all.”

The anGlo ameriCan influenCe

Before Anglo American came on board, Jellinbah was run along the lines of a family business. Sam and Jim shared office space with the Jellinbah executive on the 27th floor of 12 Creek Street, where they also ran their private business interests. The board meetings were informal. Business was carried out on a handshake and mutual trust. There were no policies and limited written contracts in

Julie Krarup, Tim O’Brien and Greg Chalmers.

Stephen Lonie, Nobby Fukui, Mark West and Dan Cawte at a Jellinbah East Joint Venture dinner in 2002.


Jellinbah moved from the 27th to the 7th floor at 12 Creek Street in 2002. Visitors are now greeted by office administrator Vanessa Thomson.

place. Chief Financial Officer Tim O’Brien recalled Harold reminiscing at an anniversary celebration about the way things used to be.

“He said we didn’t have a mining contract with Tony Champion (for overburden removal at Jellinbah East). We’d been operating for 10 years on a handshake and it wasn’t until some bank came along and told us we needed to have one that we created one, signed it, threw it in the bottom drawer and never looked at it again,” Tim said.

Things were about to change.

Mark West, former General Manager Business Development with Anglo Coal Australia (which later became the metallurgical coal business unit), had the lead role in negotiating the purchase of a 33.33 per cent equity in QCMM.

“Anglo American was interested in growing its coal business in Australia. It did a lot of work in the coal space and had a bottom-up view from steelmakers and others about what was happening in the market. Anglo American felt its portfolio of coking coals had a gap – low-volatile PCI – and that was an area it wanted to fill,” Mark said.

“At the start of the negotiation process there were two single third-shares being offered. Anglo American saw the potential of getting management control and marketing the product as an Anglo product, but that didn’t eventuate. Only one shareholding was for sale. Anglo American had a choice – did they get in or didn’t they? There was support from the board, so we took a minority position.”

Anglo American felt the absence of effective governance systems at Jellinbah was a significant business risk and encouraged a number of changes including the appointment of an independent chairman, Stephen Lonie, a former managing partner at KPMG. Tim acknowledged these changes.

“Steve brought a lot of corporate discipline to the boardroom. He introduced a much higher level of formality to the QCMM Board procedures and governance procedures in line with what Anglo American would have expected,” Tim said.

“I think companies get to a size where they just can’t function anymore as a bunch of mates hanging out, and Jellinbah was getting bigger.”

- Tim O’Brien

Other changes introduced around this time included the separation of offices for the shareholders and the executive, a move from the 27th floor, 12 Creek Street, to smaller premises on the 7th floor, increased reporting requirements, a formal review of all management positions, and a cost-cutting program, which culminated in the board telling Leigh Whitton to make his two most senior staff – legal counsel and manager accounting services – redundant in late 2003.

Ready for his next challenge, Leigh instead accepted a retrenchment and manager accounting services Tim O’Brien was promoted to Chief Financial Officer. A further change, which was to prove highly profitable, was that the board requested an independent re-evaluation of Lake Vermont, an initiative that was supported by Anglo and Marubeni. The initial re-evaluation was undertaken in 2001 and a more detailed study in 2003 by Peter Isles, a highly respected mining engineer who had held senior management positions with Utah and BMA before establishing his own consulting business (for further information, see the Lake Vermont chapter).

In January 2004, Greg Chalmers was appointed Jellinbah Group CEO. The position had remained vacant for almost 18 months after

Harold Shand’s resignation, while the board evaluated the company’s business performance and decided what its future requirements would be. The new CEO’s skills needed to match Jellinbah’s new direction. After working in a business development role with Thiess, Greg was keen to get back into a more task-focused job. He had previously developed and operated the Crinum underground mine in Central Queensland and Mt Owen open-cut mine in the Hunter Valley of New South Wales.

“Jellinbah had a quietly good reputation. Clearly the opportunity to lead a business, which I hadn’t done before was a great challenge, but even more important was the opportunity to work in a business that was small enough for every executive manager to genuinely influence the business,” he said.

“The big end of town is really good at teaching you basic skills that you need to be an engineer or a supervisor, but it’s not always good at letting you use those skills.

“Jellinbah’s standards in all respects – housekeeping, safety, technical, decision-making capacity – were all very high and, therefore, presented a fantastic base to expand on, taking advantage of the opportunities that we had.”

[Pix (8) M]

Greg Chalmers joined Jellinbah in January 2004.

Charmaine Harch and Leigh Whitton with their farewell gifts ... black cockatoo sculptures of course.


The Jellinbah Brisbane office team.

The payroll team: Rita McMenamen and Ann Robson. The Finance Department: Scott Nicholas, Donna Lowndes, Trent Lockhart and Mary Rose Cruz.

The Accounts Department: Emily Echin, Marcelle Simpson and Michelle Minnie.

Julie Krarup, Tim O’Brien and Greg Chalmers.

Carl Pritchard.


Hiroyuki Iwanami, Tim O’Brien, Sam Chong, Greg Chalmers and Nobby Fukui celebrate Marubeni’s success at buying out

Jim Gorman’s share of QCMM.

and Then There WaS one

In the mid-2000s, Marubeni learned that Jim Gorman was being approached from a number of quarters to sell his share in QCMM. Jim was becoming less aligned with Jellinbah Group management and concerned about the financial implications of potentially developing Lake Vermont. Nobby Fukui asked Harold Shand, who was sharing an office with Jim, to let Jim know of Marubeni’s interest.

Marubeni’s primary motivation for becoming a shareholder – moving beyond joint venture status – was to break the deadlock that existed on the QCMM Board regarding the development of Lake Vermont. The minority joint venture partners were frustrated that the QCMM Board would not approve the development of the mine.

Jim did not support its development and neither did Anglo American. Peter Dowling, who was a director on the QCMM Board and a friend of Jim’s, and Steve Everett, who was Jim’s alternate on the board, didn’t believe the proposal was prudent.

“I didn’t support the Lake Vermont project and neither did Jim or Steve. We thought it was too risky. We were troubled by doubts surrounding the availability of rail and port access, the high costs of development and some uncertainties around markets and where they were heading. We thought in view of the fact that the private shareholders had an existing, already highly profitable operation, there was too much risk in a new venture of this scale, given the uncertainties,” Peter said.

“Jim was worried about the cost of development in particular. Jim was fond of saying, ‘there are no prizes for the person who spends the most money.”

In addition to discussions with Marubeni about selling his shareholding, Jim was also being approached by some of the other joint venture partners, stockbroking houses and investors from China, India and Singapore.

“Discussions took some time before agreement was finally reached with one of the entities – Marubeni.”

Marubeni was happy.

“Finally we did a deal. Maybe we were too soft or maybe it was too easy for Jim to get a good price, a good deal,” Nobby said.

In the end, the deal was finalised very quickly with virtually none of the usual conditions around warranties, guarantees and so on. It was ‘walk in, walk out’, and was finalised on 14 September 2007. On 21 September 2007, the QCMM Board agreed to proceed with Lake Vermont and the following week the joint venture partners also agreed. After many years of wrangling, it then took only two weeks for the project to get the go-ahead.

This whole process was significant for another reason. It meant that 19 years after QCMM was established, only one original shareholder remained – Sam Chong.

The Jellinbah Marketing Department: Michelle Tuck, Paul Heagney, Alison McConaghy and Barry Olver.

Jellinbah Group

In 2009 Queensland Coal Mine Management Pty Ltd (QCMM) changed its name to Jellinbah Group Pty Ltd because the QCMM name was not well recognised. With the establishment of Lake Vermont mine, the company also wanted to ensure the global marketplace recognised Lake Vermont’s products as belonging to the Jellinbah organisation.

diVerSifyinG Jellinbah’S markeT baSe

Before the Global Financial Crisis hit, Jellinbah was basically a one mine, one product business that sent 70 per cent of its product to one market – Japan. In early 2007 the Japanese steel mills cut production by 25 per cent, sharing the pain equally across their suppliers. CEO Greg Chalmers said although the situation was not “business threatening”, it was “unpleasant”. Jellinbah had a higher proportion of its business tied up in Japan compared with its competitors and needed to diversify its market base.

“We thought we had an enduring and balanced relationship with our customers, but when it came to the hard tin tacks of business, it was them before us. While our past strategy of having long-term partnerships had served us well, we were at the stage where we would be better served by diversifying the business, so we set out to find other markets and sell more consistently elsewhere,” Greg said.

“We started to develop our profile in India and South America. While we had some activity in those areas, we started to push our effort and grow the business. At the time we completed the development of Lake Vermont, its products enabled us to move into the Chinese market.

“We have subsequently reduced our dependence on the Japanese market to slightly less than 35 per cent. This diversity of geography and product types, to some extent, helps to isolate us from the problems that might be experienced in particular markets or by individual customers. I think this strategy has served us extraordinarily well and represents a significant change from the necessary approach we used when we were growing up.”

Jellinbah now sells its coal – around 11 million tonnes per annum – throughout north Asia, India, Europe and South America, and is developing a broader customer base as it identifies new opportunities.


Jellinbah EastJellinbah Today

Jellinbah East is a highly productive open-cut coal mine, operating in two pits. The original pit, Jellinbah Central, is owner-operated, and Jellinbah Plains is operated under contract by Leighton Contractors. With a combined workforce of around 480 people, Jellinbah East produces more than 4.6 million tonnes of clean coal per annum.

Jellinbah East 3938 The Jellinbah StoryOverburden is loaded by excavator into a haul truck at Jellinbah Central.

The Jellinbah East deposit is 30 kilometres long and has in-situ reserves sufficient for around 40 years of operation at the current rate. The major seam is the Pollux Seam, which is approximately eight metres thick. It dips to the east and further down dip, splits into the Pollux Upper and Pollux Lower with 40 metres of waste material (interburden) in between.

Overburden drilling and blasting is followed by conventional removal by hydraulic excavator, truck and dozer push. Coal is mined by excavators and transported by truck to a 1,200 tonnes-per-hour crushing and screening plant where the coal is sampled and analysed.

Around 75 per cent of the coal is so low in impurities that it can be selectively mined and sold unwashed as PCI coal. The remaining 25 per cent is higher ash coal, which is processed in the coal preparation plant prior to blending with the by-pass (unprocessed) coal. The product is then trucked 25 kilometres to the Boonal rail siding where it is loaded onto trains and transported to the RG Tanna Coal Terminal at Gladstone.

Jellinbah Central

Mining at Jellinbah Central began in February 1989 with the first coal exposed a month later. Overburden was removed by scraper under contract by Tony Champion (Comserve Pty Ltd), Peter Champion (Peter Champion Pty Ltd), Greg Martin (GK Martin Pty Ltd) and Arthur Lowe (AC & LG Lowe Holdings). For reasons known only to Ken Talbot, this group of individual contractors was known on the Jellinbah books as AD Champion & Associates and was usually referred to as “the Champions”. Tony and Peter are brothers and Arthur was their uncle. As time went on, other family members joined the crew including Ron Champion (brother), Vic Lowe (uncle), Trevor Lowe (cousin, son of Arthur) and Max Champion (cousin). In the early days, coal was mined by Bluff Mining. These days coal is uncovered using conventional stripping operations. Two seams are mined in this pit – the Pollux and Aries seams. The Aries is 1.5 metres thick and lies 20 to 30 metres above the Pollux. Jellinbah Central produces around three million tonnes of run-of-mine (ROM) coal a year and, at current rates, has a pit life of considerably more than 30 years.

Jellinbah

Jellinbah means black cockatoo in the local indigenous language.

Haul trucks head off on night shift.

Jellinbah East 4140 The Jellinbah Story

Jellinbah South

In 1994 Jellinbah Mine Manager Peter Thorsen advised the Champions that he wanted to develop the Jellinbah South pit. They discussed among themselves the best way to manage the additional workload and decided that Arthur and Trevor would take on Jellinbah South. However, Tony, Peter and Greg sent down three of their Caterpillar 777 haul trucks to help out. Conventional mining techniques were used although the seam was quite steeply dipping.

In 1994 Comiskey Earthmoving took over managing the contract and continued mining until June 2001 when operations going north reached the Boonal haul road and the pit was closed. Joe Comiskey was a pioneer of steep dip mining. At Jellinbah South he used a system called ‘tomming’ which provided wall stability in the pits.

“A tom is a barricade across the pit and is similar to a pillar in underground mining. You leave blocks across the pit, mine the coal out in between two blocks, then you put another block back, roll it back in, take out the next tom which allows you to get to the next block of coal. We were at Jellinbah South for six years and never lost any coal,” Joe said.

Jellinbah plains

Jellinbah Plains, north of Jellinbah Central, was opened in March 2001 as a conventional dip mining operation to replace production from Jellinbah South. Jellinbah Plains has a steeply dipping seam and was converted to a safer, more efficient terrace mining operation in mid-2005 due to more challenging geology. This configuration comprises six terraces and the pre-strip, each around 25 metres high. While drilling and blasting is more time consuming using this mining technique, it is safer (avoids high endwalls), mining is more efficient, and the coal mining flow is spread more evenly across the various terraces as mining progresses. Around 2.2 million tonnes of run-of-mine (ROM) coal is produced from Plains annually, mining the Pollux Seam only.

For around 10 years, Comiskey Earthmoving carried out drilling and blasting, overburden removal, coal mining, crushing, topsoil removal and rehabilitation at Jellinbah Plains.

Calling the union’s Bluff

Bluff Mining was a non-profit, service entity established by QCMM with nominee shareholders. Tony Champion was a director. It was established as part of a strategy to overcome union issues by keeping QCMM at a distance from mine employees. Harold Shand had appeared before the Coal Industry Tribunal in Sydney with CFMEU heavyweights John Maitland and Tony Maher and had managed to get QCMM and AQRM excluded from being a respondent to any union award. “There was a strong argument in those days that if the CFMEU could get linkage back to QCMM and AQRM then all staff, including those in Brisbane, could get caught up in the colliery awards, which is what we were trying to avoid,” Harold said. Bluff Mining owned the dozers, graders, excavators and front-end loaders at the crusher, and employed the operators of this equipment.

If mined cleanly with minimal dilution, 100 per cent of the coal from Plains is by-pass. After crushing to export size, it goes directly to market without washing. Plains coal is also Jellinbah’s highest quality coal. As a consequence, the original Plains contract contained incentives to produce specification coal and penalties if specification was not achieved. This incentive contract was the only one in the Bowen Basin at the time. “We got a bonus for coal that was in spec and a penalty for coal out of spec. All in all, it worked wonders,” Joe said.

Jellinbah Plains was originally designed to a depth between 60 and 80 metres. “Eventually

we went down to 100 metres deep and we introduced multiple benches. It was one of the neatest and most productive pits in the Bowen Basin. Once we’d set the mine up, it was easy to move the dirt back behind ourselves as we progressed northward. It was very, very efficient and operated like clockwork. A lot of people came and looked at our operation,” Joe said.

Joe is proud of his achievements at Jellinbah Plains. Over the decade his company operated there, coal was only ever marginally out of specification a handful of times and the team achieved a coal recovery rate of 98 per cent, compared with 80 to 85 per cent at other

mines. Jellinbah CEO Greg Chalmers said that, in technical terms, this was a remarkable achievement, setting an industry benchmark and the standard for Jellinbah Group for the future.

“Another aspect of Joe’s performance that was consistently outstanding was the excellence of post-mining rehabilitated landform he achieved, once again setting industry benchmarks,” Greg said.

The Jellinbah Plains operation increased in size and complexity over time and the job was re-tendered. John Holland Group won the tender and started operation in April 2011.

Jellinbah Plains terrace mining operation.


In December 2012, John Holland informed Jellinbah Resources that it was withdrawing from the mining business altogether and wished to assign the contract to its sister company Leighton Contractors. The management team accepted the request as it was the least disruptive option in the circumstances.

new mining areas

To maintain optimal blending and minimise the need for coal washing, three new mining areas will be progressively developed. Central South began mining with a box cut in Ramp 17 in 2010, with Central North (between Jellinbah Central and Jellinbah Plains) and Mackenzie North (north of Mackenzie River) to commence within five years. The Central North area is within current mining leases. In 2011 Jellinbah lodged a mining lease application with the Department of Natural Resources and Mines to develop the Mackenzie North pit, and it is likely that, after extensive environmental and flood modelling studies, a mining lease could be granted in mid-2014. If granted, the reserves contained within the area would extend the life of Jellinbah East by about 40 years.

The Jellinbah approach

At Jellinbah Central the management team took a different approach to the way it structured its workforce with three distinct teams – overburden, coal mining and coal clean-up. General Manager Ian Cooper believed this approach enabled distinct specialist skills to be developed and maintained.

“We’re mining coal in lifts and trying to keep things clean, so the focus is on getting the coal mined cleanly, still doing it efficiently but making sure that that extra care is taken to mine to the quality that we need. In overburden removal, however, the whole focus is on

“I really like the place because Ian Cooper can get on the phone to me and come down and just start talking to everyone. He’s realistic. He’s very passionate about safety, which is excellent. You know you can do a risk assessment or a JSA (job safety analysis) and know he will ring up and ask you about it. I’ve never seen that in an SSE (site senior executive)”– Geoff Hamer, leading-hand fitter.

Joe Comiskey (left) during a customer visit to Jellinbah East.

Jellinbah Central’s first female truck driver, Irene Winter.

productivity. It’s about how quickly we can move the dirt onto the trucks. Accuracy in terms of cut levels and ash levels, doesn’t apply. It’s all about cycle times and efficiency. Clearly these are different skills – accuracy versus efficiency – and the guys seem to take pride in having these different skills,” Ian said.

Being a small company means Jellinbah can be dynamic and its employees are not afraid of doing things differently. For Ian Cooper, the company’s marketing approach during the Global Financial Crisis in 2007-2008 and Jellinbah East’s rail strategy were two examples of thinking outside the square.

“During the Global Financial Crisis, there were lots of issues with our regular customers taking coal, so our marketing people went to China. A lot of companies didn’t want to deal with China because you have to pay for the freight to deliver the coal to their port, whereas other customers pay for the coal as it goes onto the boat. We sold roughly one million tonnes of coal to China that year and still managed to meet our financial targets. Many companies said no to China and cut their production.

Coal loading at Jellinbah East.

Ian Cooper.

“It’s more of a family way of working and we try to keep that to a certain extent. It’s a bit hard as the coal mine grows, but it’s been good. I still like it here” – Jason Boto, open-cut examiner.


Dan Mylrea.Ian Cooper leads a tool box meeting.

John Morgan with Clayton Smith in the background. Nathan Young and Robert Princen.

Helen Gonzales was the first female dozer operator at the Jellinbah Central coal handling and preparation plant. She is now a truck driver.

Phil Naylor.

Neil Wilson. Tony Kuhl.


If you cut production it’s always harder to pick it up again, so we tried to keep production constant,” Ian said.

Ian said Jellinbah was more proactive than other mining companies.

“We take a different approach rather than just following the status quo and we do that with whatever we can in terms of the business. There’s a lot more thinking outside the square to get things done. I think we were one of the first companies in Queensland to develop a rail contract with QR (now publically listed Aurizon) that had both bonuses and penalties. The end result for us is that if QR doesn’t perform in one quarter, our rail freight in the next quarter is

done at a cheaper rate. If they do a really good job and they get above the target, we pay a little bit extra for the next quarter. This approach focuses QR’s attention on delivering the number of trains that we need.”

family and a CommuniTy SpiriT

For Ian, Jellinbah East’s story is not just about taking an unwanted resource and making the mine a success, it’s about integration with the community.

“There are people here who have been in the community for a long time, some have properties here and others have had two generations of family members work at the

“It’s a pretty good mine to work at and the morale’s great on our crew – ‘A’ crew. If you need to know something, the guys are always there to help. It makes it good to come to work every day” – Craig Dodd, trainee truck driver.

mine, so it’s really a growth of opportunities for local people as well,” he said.

Sue Olive, Jellinbah East’s mother figure, came to Blackwater with her family when she was 13. Her father Bill Andrews was developing new mines for the Utah Development Company. In October 1996 the then Jellinbah General Manager Scott Kidston visited Sue at her farm between Bluff and Dingo and asked her to come and work for him in an office administration role. Scott and Sue had worked together at Curragh.

“In the old days you never saw any jobs advertised at Jellinbah. You got a job because you knew someone. If you recommended somebody, you were responsible for that person.

Everybody did the right thing. It was just the way it was because we were small. It was a family. There were a lot of contractors but they all just fitted in. It didn’t matter where your pay packet came from, everybody was treated equally. We never had any problems. We never had any absenteeism. It was just terrific. What makes Jellinbah different is the way we treat our people. They are not just a number. They are a person. We care. The managers know people’s names and they ask about their kids. The Champions, Joe Comiskey and Greg Martin were just magic people. They were never too busy to stop and ask how your family was going. You can have the best machines in the world and you can have the best coal in the world, but if you haven’t got the right people driving the machines, well you’ve got nothing,” Sue said.

Sue’s husband Dennis is an open-cut examiner/supervisor at the mine. Their sons Jeff and Ben also worked at Jellinbah. With some work experience during high school under his belt, Jeff started as a tradesperson’s assistant in the workshop when he was 16. He went on to become an open-cut examiner. Ben started as a trainee plant operator and became a dragline operator at Curragh. Sue retired from Jellinbah in October 2011.

Peter Champion’s son Mick started helping his father at the mine back in 1992 while he was still at school.

“I used to come out and help Dad with servicing the machines on the weekend. It actually got to the stage where he taught me to drive the Caterpillar 777 dump trucks. I put my name down to come out here on work experience and I drove the dump trucks for three weeks. About two weeks after I finished grade 12 in 1994, I started at Jellinbah. I drove the 777s for three years, the rubber-tyred dozer for 12 months then I left to go to Coppabella. I came back in 2008 as a supervisor and relief operator, and I’m training for my OCE ticket. I find that Jellinbah is very friendly and very family orientated. I’ve been away for 10 years and came back and it feels like the same place. It has the same culture. Everyone from staff to the operators are all easy going, and there’s no rivalry. If you have any family troubles the mine is really good in that way and lets you have as much time off as you need; they stick by you.”

The mine also has family-friendly rosters. The overburden crews operate on a six-day roster with two Saturdays in three off. The coal crews work four days on, three days off. Maintenance is carried out on Sundays.

Dennis Olive.

Mick Champion.


(Left, centre bottom and right) Children enjoy the Jellinbah Christmas party, but it’s also a chance for adults to catch up. (centre top) Sue Olive, Greg Chalmers and Ian Cooper.

“We’ve got good lifestyle rosters. I’m on four-day roster so I get a long weekend every weekend. How good is that?” Site Safety Representative and plant operator Robbie Bond said.

Jellinbah East is famous for its Christmas party.

“We always have a great Christmas party,” Sue said. “I think it’s fantastic. It’s the only mine that does it now. Christmas is for the kids and family and it’s the only day we can say thanks to the wives and partners.”

The party was the brainchild of Peter Thorsen, Jellinbah East’s mine manager from 1993 to 1996. Peter wanted to recognise the long hours the employees were putting in and to do something special for their families. He hired the Bluff Football Club’s facilities and organised full catering, presents for the children and games. These days there is a side show alley, jumping castle, big dippers, electronic bronco and pony rides as well. Peter had some difficulty convincing the first Santa Claus to participate.

“Dan Smith, a grumpy old guy fitted the bill as Santa Claus. He was short and a little round but it took me three months to convince him. We had the first party on a Saturday. It was a stinking hot day and Dan was dressed up in his Santa suit. Billy Richmond drove into the football grounds with Dan on the back of his ute. Santa had all the presents and the kids gathered around him – it went really well. I went over to say thanks to Dan, and I will never forget this, a kid came over and wanted to talk to Santa. Dan had used up all his goodwill by this stage and said, ‘go away kid (not his exact words), Santa wants a beer!’”

Jellinbah’s Christmas party is not restricted to site employees. The original shareholders used to come up and mingle, and Sam Chong still attends every year.

“Everyone knows who Sam is and they are comfortable enough to bail him up and say, ‘G’day Sam, how’s it going?’ and talk about the business,” Tim O’Brien said.

“With Sam there’s still a personal touch and I think for the mine site that means the Jellinbah family concept is still alive. They are working for a person, not a multi-national based in another country. Sam said to me as we left one Christmas party that, ‘we must always remember this when

Santa (aka David Scales) and Matthew Scales at the 2002 Jellinbah Christmas party.

Dennis and Sue Olive at the 2002 Christmas party.


“Greg Chalmers turns up. Sam Chong turns up. The board turns up and they have their meetings on site every three months or so. We can see them, they’re real people and that makes a big difference” – Heath Saunders, maintenance superintendent.

Trevor Lowe and Peter Champion at Peter’s mobile workshop, 1990.

Overburden removal at Jellinbah Central.

we’re running this company that we have an obligation to all these families.’”

The Christmas party is so popular that it outgrew the football club some time ago and is now held at the Bluff Racing Club.

To provide practical support to the Bluff, Blackwater and surrounding communities, Jellinbah has a local sponsorship/donations program that contributes around $150,000 a year to a range of educational, medical, sporting and other types of community initiatives.

The most substantial assistance is given to the Bluff State School’s P&C to fund the salary of a teachers’ aid. Due to a drop in student numbers, the school was in danger of losing this position, so Jellinbah stepped in.

“We provided funding for the teachers’ aid to allow them to put more time into individual students, which I think is important,” Ian said.

Another major initiative is providing funding, along with other local mining companies, to Queensland Health to ensure there is always a doctor at the Blackwater hospital.

“We also sponsor people to go to sporting and cultural events across Queensland, Australia and internationally so they get the opportunity to go to bigger centres to compete.”

TaleS of yeSTeryear

After 25 years of operation, Jellinbah East remains one of the most productive mines in Australia. Ian attributes much of this success to the unique mine culture.

“Our people take pride in their work, pride in their equipment and also pride in their achievements. When new people come into the work group, they get aligned to that culture very quickly in terms of what’s expected of them, what the group norms are and how they should be performing in their roles. They get pulled into line very quickly by their work mates if they try to deviate from the Jellinbah way of doing things. That’s both good and bad,” Ian said.

“The good thing is that we retain that culture, that pride in doing the job well and achieving, but if something needs to be changed, it does

Ken Talbot and Tony Champion.

Peter Champion on board his burnt out Caterpillar 633 scraper.

take a fair bit of change management to get that to happen. I think this culture stems back to the days of Tony Champion. He was out there all the time managing the people and what they did. There was a very strong focus on productivity, a very strong focus on looking after equipment and making sure that the areas were tidy, clean and set up well.

“I think that sort of culture has been developed as time’s gone on because we haven’t had a large turnover of employees. As people have come in they’ve actually conformed to that culture.”

Jellinbah East’s employee turnover is around one person a year.

Tony Champion’s first association with Jellinbah East arose when his brother Peter had burnt the engine of his Caterpillar 633 scraper while working at the mine’s first test pit. The hose blew on the turbo-charger and he couldn’t turn the engine off. He asked Tony to come up from Sydney to check whether it was worth trying to save the machine. “My advice when I saw the amount of heat was it would break your heart trying to get it going again,” he said. Peter was sub-contracting to McIlwraith McEachern, a mining contractor carrying out overburden removal at Yarrabee mine as well as Jellinbah’s three test pits.

Former Yarrabee co-owner John Rawlins recalls the first time he met Peter Champion.

“He walked into my office at Yarrabee and he had soot and sweat all over him. He was almost in tears. He had a scraper that he had refurbished, it had caught fire and burned. He had come around to our place because Jellinbah didn’t have any phones at that stage.”

When Yarrabee switched from being an owner/operator to using a contractor, it sold its mining equipment. The Champions and Greg Martin bought four of the mine’s Caterpillar 657 scrapers and sub-contracted to McIlwraiths. Yarrabee was working in overburden stripping campaigns of six weeks to two months, so when the Champions weren’t working there they could work on the test pits at Jellinbah.

Getting environmentally friendly

Environmental consultant Ray Ison became involved with Jellinbah East about a year before mining started.

“They had planned to develop a trial pit on the exploration tenure to get some coal; a whole shipload, not just a few samples for lab testing. They started mining the original pit on what’s now ML2418 to extract coal for this trial shipment. After the second shipment, the Mines Department said Jellinbah should apply for a mining lease – in those days you could do


Small contractor helps fledgling mine

There were a number of small mining contractors operating in central Queensland in the late 1980s. Yarrabee had employed a number of them, including Alistair MacKellar’s company MWA Constructions, which carried out overburden removal. McIlwraiths bought into MWA and the business underwent a number of ownership and name changes over time, including McIlwraith McEachern and then McIlwraith Minerals. McIlwraiths was managed by Keith Ross and, according to Peter Thorsen, the contractor was very supportive of the Jellinbah East operation – McIlwraiths offered very understanding payment terms to the fledgling mine. Jim Gorman agrees. When Jellinbah lost the financial support of GPI, it had to “go cap in hand” to its contractors to discuss payment options. In the early days, the mine was only able to pay its contractors after payment for its shipments were received.

trial mining under an authority to prospect – so I was responsible for preparing the approvals for the trial pit and the lease application and I have been the mine’s environmental consultant ever since,” Ray said.

“I have been fortunate in having a simple brief. As one CEO said, ‘I don’t want to know I have an environmental issue; I want to know it has been solved.’”

During development of the trial pits, Ken Talbot decided that Jellinbah would produce an environmental impact statement (EIS) even though it wasn’t then a regulatory requirement. Ray carried out soil surveys, vegetation assessments, addressed all the relevant issues (including archaeology) and produced a rudimentary EIS, which was available for public scrutiny.

Whenever Jellinbah acquired a new tenure, it would produce an EIS.

“KT wanted to set a high standard for the company and right from day one he insisted on an EIS,” Ray said.

These days there are much stricter legislative environmental requirements in place and the mine naturally adheres to them.

first overburden removal contract

When work for Jellinbah East’s overburden removal went out to tender, Ken Talbot encouraged Tony Champion to put in a direct bid rather than continue to work as a sub-contractor.

At the time Peter Thorsen had started working as a senior mining engineer based in Brisbane and had previously known Joe Koch, Jellinbah East’s first independent mine manager.

Peter recalls that in the lead up to Christmas 1989, Tony submitted a straight forward, hand-written bid for price per cubic metre of overburden moved, plus fuel, with Jellinbah to provide the dozers.

“It was Christmas Eve and Joe Koch called up Ken Talbot and said if we’re going with Tony Champion, who was a lot cheaper than the others, we had to buy a dozer to rip the overburden for his scrapers.

“Ken said to me, ‘Peter, go buy a D11.’ ‘Alright Ken.’ So I called up Rick Harrison at Hastings Deering, someone I knew from a previous job. I said, ‘Rick, I want to buy a D11.’ ‘No worries Peter. Have you got an order number?’ ‘Hang on Rick.’ ‘Ken, do we have an order book?’ ‘No.’ So I had to go over the road to Penfold’s Stationery

Tony Champion and Jeff ‘Gough’ Hamlin.

Peter and Tony Champion with their new Caterpillar 777C haul trucks in the mid-1990s.

in Eagle Street and buy one,” Peter said.

Tony was back in Sydney and got a call from KT saying that he had won the overburden contract at Jellinbah East – “a Christmas present for you and for us too,” KT said.

A couple of months later the dozer appeared on site, much to the delight of Steve Humble, also known as Big Bird, who became the mine’s first dozer operator. Big Bird earned his nickname because his facial expressions reminded his colleagues of the Sesame Street character Big Bird. His mop of blond hair reinforced this impression. Steve was fond of saying, ‘Humble by name, humble by nature’, and he had a voracious appetite. He was known to park his dozer up near the office and raid the fridge, including taking the general manager’s lunch.

Meanwhile, Tony had very particular views on how the Jellinbah East operation should be set up.

“I wanted to have a mine where people doing the same standard hours every week got the same pay no matter what their job was; where the pay packets didn’t need to have a name on them, where you could throw them in the middle in a heap and say, ‘take one’. The union attitude across the coal industry was if you drove an excavator you got more money because it required more skill than driving a dump truck.

I said, ‘what’s the highest tier you can get as an operator?’ ‘The excavator.’ ‘Right, everyone will get paid the same as an excavator operator – whether you drive an excavator or the little D4 dozer that cleans up – it’s all the same, there’s no difference, and that worked very well,” Tony said.

He also fostered a ‘one man, one machine’ strategy to encourage operators to treat their machines as their own, and it paid dividends.

“Loader operator Jeff Hamlin had a box made by the fitters to keep his boots in and he drove the loader in his socks. I kid you not, the cab of that machine was cleaner than most hospitals,” Tony said. These days operators keep their boots on to meet safety requirements. Tony had nicknamed him Gough because there were so many other men on site at the time called Jeff.

Tony said the operators had a real sense of pride in their work.

“There was a real team effort and the operators were proud of their work. They started work at six o’clock. They still talk about the days when the first load of coal went into the bin at a quarter to six. They were quite proud that they had a load of coal in the bin before they had clocked on,” he said.


“... watching 657 scrapers operating in pairs is the prettiest thing in earthmoving,” Scott Kidston.

Sky’s the limit with scrapers

Tony Champion is absolutely passionate about scrapers. AD Champion & Associates started mining at Jellinbah Central with four second-hand Caterpillar 657s and, by keeping them well maintained and operating them carefully, was able to remove incredible amounts of overburden. “I remember when we were working on the third test pit and Cyril Golding had come down for a look. He said to mine manager Joe Koch, ‘I’m not leaving this pit until one of those scrapers breaks down. I tried to run them and the longest I got was 20 minutes.’ Joe said, ‘you might be here for a while Cyril because they’ve been here for four days and I think one of them might have blown a hose and was down for an hour.’ Scrapers are twin engine machines and are often called ‘double trouble’. They work in a push-pull operation and are very efficient. They have a bale on the front. The second

scraper comes up behind the first scraper and drops its bale over the first one, pushes the load in the first one and as soon as it’s loaded, the blade is lifted out of the ground. There are four big Caterpillar engines and the scrapers virtually load instantly.” Tony believes the Champions put scrapers back on the map. “We showed that if they were operated properly, as [former Utah Development senior manager] Bill Andrews said, the four Caterpillar 657s could produce as much as a dragline. At Jellinbah we were in a position that not only did we want to make them work, but we had to. If they broke down we didn’t go home until they were going again. The other mines just drove them like idiots. We actually put more dirt in them, drove them steady and respected them. It was just the ‘cowboy’ element that the other mines couldn’t get on top of.”

Jellinbah East General Manager (1996-2000) Scott Kidston supports Tony’s view on

scrapers. “You wouldn’t find an earthmoving person who wouldn’t think that watching 657 scrapers operating in pairs is the prettiest thing in earthmoving. You can watch trucks, draglines and that sort of thing run all day, but to see 657 scrapers when they work properly, well …,” he said.

Tony likens them to synchronised swimming and believes everyone loves scrapers. “If you had visitors on site, it wouldn’t matter if they were a grandmother or Elton John, you’d take them to watch the scrapers. Half the time you’d have to drag them away because they’d never seen anything like it,” he said.

“Of course we outgrew scrapers as the pits got deeper. We blended them with trucks for as long as we could. Then we went into throw blast operations and dozer push. We believe we were the first people to ever work 657s in throw-blasted overburden. By then we were down to material that was too bony, too hard for scrapers.”


Former Yarrabee co-owner John Rawlins (right) with a colleague at the mine.

A coal train on the Boonal haul road prior to the road being sealed with bitumen.

Sharing with yarrabee

At Jellinbah East there has always been a focus on keeping costs to a minimum. Rather than build a haul road and train loading facility, the mine owners negotiated with neighbouring Yarrabee mine to use its facilities. According to John Rawlins, the original three-year agreement with Jellinbah was that it could use Yarrabee’s haul road and rail load out at a rate per tonne. The schedule of rates started off relatively high and became cheaper per tonne as the volume increased.

“That worked quite amicably,” John said. “We were quite happy. They were very tough times in the coal industry in those days and we were happy for the extra income and they were happy to be able to get their product out without having to put out a huge amount of capital to build a road and a rail loading facility,” John said.

Difficulties arose a few years later when the mine needed more security than the access contract: Jellinbah wanted to acquire 50 per cent equity in the facilities. Agreement could not be reached on a price and the negotiations became protracted. Around this time Yarrabee’s mining leases came up for renewal and, unknown to Yarrabee, Jellinbah applied to the Department of Mines for half

ownership of the haul road and train load-out. Ultimately Yarrabee’s leases were renewed but with a lease condition that it had to negotiate and reach an agreement with Jellinbah for access on commercial terms.

“Essentially we picked up the reins from where it had stopped, negotiations continued and ultimately we did reach an agreement on the price for 50 per cent of the capacity, which suited us and suited Jellinbah. The road operated forever afterwards like that,” John said.

Jellinbah’s equity was purchased through Capregin. When the Jellinbah East Joint Venture was established, QCMM did not negotiate a management fee with its Jellinbah Joint Venture partners to run the mine, which is normal practice. The shareholders felt that if Capregin could attain equity in the Boonal haul road and load-out facility, that oversight could be redressed. Capregin charges the joint venture an access fee at commercial rates.

Water supply was another symbiotic opportunity for Jellinbah East and Yarrabee. In the early days Jellinbah was frequently short of water and Yarrabee had an excess supply in its pits.

Mine manager Peter Thorsen was often worried about water supply.

“We used to use a lot of water for dust suppression. At times you couldn’t see the crusher, it was just a big pile of coal dust and, with the trucks going down the unsealed haul road, there was dust everywhere. I’d put a stick in the dam, go out the next day and the stick would be dry – the water was continuing to go down. I’d be doing calculations in my head, watching the storms go past in the afternoon and wondering how I could call up Talbot and say, ‘KT, we’re about to run out of water.’ Finally we got this pipeline in from Yarrabee which was really good. They had heaps of excess water and it was the first time that we didn’t have to worry about water.”

Jellinbah East leading hand fitter Geoff Hamer was working at Yarrabee when the pipeline was installed.

“We had pits full of water. An old fella called Dan Smith and Billy Richmond were the two Jellinbah fitters and they used to pump about eight kilometres to their crusher using a 90-mill or four inch pipe. They had to add another pump because the water just dribbled out the end. It was almost a full-time job for Billy Richmond running up that line because the diesel pumps had to be topped up,” Geoff said.

Because Jellinbah didn’t process its coal at that time, the moisture content was quite low, so

Brian Lloyd

Brian Lloyd was the crushing superintendent. In addition to knowing everything there was to know about the crusher, he was also a dab hand at managing production.

According to former Jellinbah East General Manager Scott Kidston, Brian was an ‘old school’ bloke and was fond of saying, ‘if you can’t do it, get out of my way and let me’. Brian provided some of the industry experience needed to complement the young Jellinbah workforce. He had operated and run many crushing operations in his working life.

“Brian was a very good leader and a very hard worker. His great skill was to take a group of men of varying levels of experience and create a team. He had the ability to motivate his team and knew how to plan and get maximum production from every minute available to achieve maximum production output,” Scott said.

“With Dan Smith looking after maintenance, they formed an unlikely team that saw millions of tonnes of coal crushed at Jellinbah at very low cost.

“Among others, Brian was someone I could turn to with a problem as he brought an understanding of how a certain situation would be viewed through the eyes of the workforce. I truly valued his experience. He was a very solutions focused person. When faced with a daunting operational challenge, there was no better person to have by your side than Brian Lloyd. He was the sort of person you’d go to war with.”

Scott said Brian benefited from Jellinbah’s health program with Dr Toby Ford. Plagued with chronic back pain, Brian had considered retiring, believing his future was in a wheelchair. However with a referral from Dr Ford, he headed down to the Wesley Hospital in Brisbane for rehabilitation.

“I can still remember the day that Brian returned to work at Jellinbah after his intensive treatment. He came up to me and said, ‘I feel 10 years younger and stronger than I’ve ever been,’” Scott said.


dust was also an issue at the port. In keeping with Jellinbah’s focus on managing costs, the mine owners tried to increase moisture of the coal onto each vessel by using a garden hose which, unsurprisingly, was unsuccessful.

Ross Stainlay convinced the board it was worth investing about $80,000 in a properly engineered dust suppression system – the first installed at RG Tanna Coal Terminal – solving the issue and, once again, setting the standard for other companies to follow.

These days Jellinbah East has good storage capacity and an associated pump system. The site slopes east to west in line with the natural water flow and runoff water is able to be diverted away from the pits. Even in periods of flooding, the mine is able to resume production in a matter of days. The main water issue for mine planning and development is in relation to the flood plain on both sides of the Mackenzie River. Jellinbah has constructed a series of levy banks to protect the mine from flooding following abnormal rainfall events.

mining equipment

The arrival of new mining equipment was always cause for excitement among the Jellinbah workforce. The mine purchased its

Dan Smith

Dan Smith was the manager of the crushing plant at Jellinbah East and there was nothing he didn’t know about the crusher. He was renowned for continuously tinkering with the crusher and keeping it going in adverse conditions. Peter Thorsen said Dan had been a fitter with McIlwraiths in the early days. “When Bluff Mining took over most things, Ken Talbot suggested that Dan and Bill Richmond, a serviceman, should form a company – D&B Services – to perform contract work on site. The temporary crusher took a lot of Dan’s time and when the permanent one was built it became Brian ‘Pom’ Lloyd’s and Dan’s baby,” Peter said.

“Dan spent a lot of time maintaining the belt tracking and cleaners. We kept getting lumps of coal caught in the throat of the feeder breaker and Pom and I would go in with an electric jackhammer to clear it up. Dan’s solution was to take his beloved

‘gas axe’ to the feeder breaker and completely redesign the throat. We barely had an issue with it after that.

“He kept coming to me with purchase orders for more steel in the name of improving the crusher. Even the manufacturer was impressed with Dan’s work. He also spent a lot of time and thought over sprays on conveyors for dust control, and checking flow.”

Tony Champion recalled that, “Dan knew the crusher so well and often came out from doing repairs very black.”

Dan was also a member of the Bluff Lions Club and asked Peter if Jellinbah could donate its used machinery batteries for a mobile breast cancer screening unit, which provided a vital service for women in remote areas like Bluff.

“It’s a very, very good place to work. It’s had its moments but it has been a good job, very well paid and I get on well with the people here” – John Dicker, overburden truck driver.

The Jellinbah team looks over the Kobelco excavator.

first Hitachi excavator in June 1992 – an EX1800 – with a 9.5m3 overburden bucket and a 14m3 coal bucket. Due to the material density and blasting practices, the 9.5m3 bucket was replaced with a Jaws 11.75m3 bucket, however this bucket was rarely used. Preference was to use the larger bucket in overburden. The mine’s next excavator was a 135 tonne Kobelco SK1350 from Kobe Steel. The decision to buy a Kobelco over a Hitachi, some people claim, was to impress the management team at Kobe Steel and to hope the goodwill would encourage the company to buy more Jellinbah East coal.

A team including manager Peter Thorsen, excavator operators Shaun Smith and Trevor Barr, and Tony and Peter Champion went to Kobe Steel’s Takasago factory near Kobe to inspect the machine just after the Kobe earthquake.

The excavator arrived on site soon after, but it was an inauspicious start. The machine came with the body and tracks in one piece. The only assembly required was to attach the boom and the cab, and this was done by two Kobe Steel representatives outside Peter Thorsen’s office.

They started to walk the excavator out.

“About an hour later one of the guys knocked on my door,” Peter said.

“’We’ve got a problem,’ he said. We jumped in my car and went down to have a look and it was really sad – the excavator was lying almost on its side with both track frames hanging off it – with all the chaos of the earthquake, every bolt on the track frames of the excavator had only been finger tightened in the factory. We ended up jacking it up and fixing it but it was never my favourite machine.” The Kobelco was Jellinbah’s first coal excavator and Trevor Barr was its first operator.

In November 1995 the mine returned to Hitachi to buy its third excavator – an EX1800-3 with a 14m3 bucket. It had been exhibited at the AIMEX, a mining exhibition at Sydney Showgrounds and Tony Champion decided to take the crew down for an inspection.

“Usually just three or four of us and the mine owners went down to AIMEX,” Tony said.


Lyn Gaskell

Lyn Gaskell was the administration assistant to Peter Thorsen and later to Scott Kidston. She had a pilot’s licence and kept a small plane at the Blackwater airstrip. Peter recalls a strange incident when he was working back on site one evening. “The office was next to the haul road and I heard what I thought was an aeroplane very close by. When I went to take a look, sure enough there was a plane landing on the haul road and it was Lynnie. I said, ‘I’ll say it to you once, Lyn, and once only. You do not land your aeroplane on my haul road!’” Scott Kidston recalls a hairy flight to Mackay with Lyn and Dan Smith to check out the feasibility of using some old molasses tanks as water storage containers next to for the crusher. “It was a beautiful day when we headed off but the closer we got to Mackay, the darker it got. It was obviously raining in Mackay and Lyn started to fidget. We managed to land in the pouring rain, got a car and had a look at the tanks but didn’t end up buying them. We got back on the plane and flew home, hanging onto the seat with white knuckles,” Scott said.

“I said to Peter that the guys had been doing the right thing, so with the exception of one or two people, we took the whole crew down. Some of them had never been out of Queensland before. That first night we took them on a ferry ride on the harbour. They had never been to Sydney, never seen the harbour bridge and had never seen the opera house. Their eyes were hanging out of their heads. Then we went for a walk through King’s Cross because no-one wanted to go to bed – I was keeping an eye on them though to make sure they came home!”

When they returned to site Shaun Smith took control of the new Hitachi. Two years later, Jellinbah East was averaging two million tonnes per annum and had shipped 10 million tonnes to customers in Asia, South America and Europe.

In January 2001, the mine bought a new Hitachi 3600 excavator and three new trucks, enabling production to increase to around three million tonnes per annum. By this stage Jellinbah needed to have more control over its coal quality than clean mining techniques alone could provide, particularly regarding ash levels, so it decided to build a small coal preparation plant that could be used on a part-time basis when required.

The mine engaged QCC to build a low-cost plant under a build, operate and transfer arrangement. The 350 tonnes-per-hour plant was commissioned in February 2003. It has three main circuits, a dense medium cyclone, a teetered bed separator and a later addition was a Jameson Cell for fine coal treatments. Roche Mining, a division of Downer EDI Limited, operated the plant and in July 2010 it reverted to owner operation.

The mine purchased its fifth excavator – a Hitachi EX5500 – in February 2004 and the following month shipped its 30 millionth tonne of coal. Annual mine production around this time was four million tonnes per annum and, in June 2005, the new crushing plant was commissioned.

low profile shattered

Jellinbah East always kept a low profile and shied away from publicity. In fact it was many years before a sign was erected off the highway indicating the location of the mine. Much of this attitude stemmed from Ken Talbot’s concerns about union interference.

As a non-union site KT didn’t want his team mixing with the unionised workers who lived in Blackwater, so Bluff was selected as Jellinbah’s dormitory town. This low profile was shattered one day in the early 1990s when the guys on site

Max Pit Dam.

couldn’t resolve a question about the number of states in the United States of America.

Tony’s brother Ron considered himself well versed in current affairs and the dozer operator Big Bird thought he had stumped Ron with this question.

After a trip to Brisbane on the Friday, Peter Thorsen caught up with Tony Champion in the workshop on the following Monday.

“Tony came over with a six pack of cream buns for me,” Peter said.

“If you had a bet with anyone on site it was

always a bet for six cream buns from the bakery. ‘Okay Tony, tell me about it.’ He said, ‘while you were away on Friday the argument about the United States went around and we thought about how to solve it.’ Ron came up with an idea believing there was one person in Australia who knew the answer. ‘Who’s that?’ I asked. ‘John Laws. So we thought we would send a letter to John Laws, ask him the question and get the answer.’ So they wrote the question on a plain piece of paper, went into the office and put the paper through the fax machine. They forgot that when it came out the other end it would have Jellinbah Central Mine on it. John Laws got

the piece of paper and on national radio said, ‘I’ve got a question from the boys at Jellinbah Central Mine and they want to know how many states there are in the United States, and I can tell you there are 50.’ So that shut up the argument and Tony said, ‘considering what KT may do to you, these cream buns are yours!’”

max pit

The best quality coal at Jellinbah East was found quite by accident. Tony Champion and Scott Kidston had been discussing the mine’s serious water shortage and sent Max Champion, who

Gary Zamel, Max Champion and a co-worker discuss the merits of keeping the pit clean.


Vic Lowe

Vic Lowe was Tony Champion’s uncle. He wasn’t a young man when he started at Jellinbah operating a rear dump – the oldest truck in the fleet. According to Scott Kidston, Vic was a funny bloke and a real character. “I remember in the mornings everyone would be standing around the go line getting ready for the day. All the trucks were lined up and old Vic would come out and say, ‘it’s a good day for the race,’ and no-one would know what he was on about. We’d say, ‘what race is that Vic?’ He’d say, ‘it’s a good day for the human race, boys.’

“It’s a care factor and mateship. Most of us know our work mates’ partners and their kids, although that is diluting a bit. Surprisingly, it hasn’t diluted the cohesiveness of our work group” – Robbie Bond, Site Safety & Health Representative and plant operator.

operated a small excavator used for coal clean up, off to dig a hole to the west of the operating pits.

At knock-off time Tony went to pick up Max and asked him how he went.

“’Not much good looking for water here, I don’t know whether a dam would leak,’ Max said. I asked why and he said rather than clay and soil, the area was full of soot. So I jumped out of the ute and went over. He was right. It wasn’t that far down and it was soot. I told him that in the morning I wanted him to dig there as deep as he could because where there’s soot, there’s coal underneath it. So he started digging this great hole and about 10 o’clock he was still out there digging, so I went out to take a look. I could see all this black stuff lying around and I said, ‘how’d you go?’ he said, ‘oh there’s only about six inches of it – the rest is coal!’ Being larrikins we threw a sample in for testing, thinking this wasn’t any good, it couldn’t be. We got a call about 10 minutes after the results were released with someone asking where sample number six had come from. We were the ones in for a surprise because the person on the other end of the phone said, ‘do you realise this is the best coal that has ever been sent from Jellinbah?’”

Scott Kidston said it was an incredible discovery.

“The significance of it was that it was so much better than our other coal. It was low in sulphur and low in ash. We always had to work so hard to be clean to meet the customer’s spec, and this was like gold!” he said.

“And it was in the wrong place. There was no reason why there should have been any coal there. The coal seam dips to the east, so the shallowest coal was where mining started then it got deeper. The next lot of coal to the west is Curragh, which is five or six kilometres away.”

This satellite pit was called Max Pit after Max Champion. Jellinbah East mined about 1.2 million tonnes from Max Pit and blended its coal with other Jellinbah coal to improve overall quality.

Ross Stainlay said the discovery of Max pit delayed the need to construct a coal preparation plant for a number of years. After a successful mine life, Max Pit was, ironically, converted into a water storage dam.

Jellinbah East produced good-sized barramundi.

Scott Kidston (second right) and the board during a mine visit.

fishing anyone?

There were a number of keen fishermen on site who believed water storage dams would benefit from ‘aquaculture’ and there was a big, deep dam at the northern end of the mine that they had their eyes on.

Scott Kidston, Mick Bird and Bruce Barratt hatched a plan to stock the dam with fish. They researched the fish already present the local system – barramundi, yellow belly and silver perch – they ordered quite a few fingerlings and then released them outside of work hours.

A number of years later when Dan Cawte was general manager there was a flood that caused the dam to overflow. Dan rang Scott one afternoon and said, “mate, you’ll never guess what I’m looking at. I’m at the back of that dam and there’s a massive barra just flailing around in six inches of water!” Not only had the fish survived in the mine water, but they had flourished. Although suitable for eating, Dan said he wouldn’t dream of it. “It would be like eating a family pet,” he said.

life-of-mine contract

It wasn’t all fun and games though, and the departure of Ken Talbot from the company in 1997 put Tony Champion in a precarious situation as his mining contract was only verbal, sealed with a handshake.

He headed down to Brisbane to talk to the board about securing his employment future.

“Warwick greeted me on the steps and said, ‘these guys are pretty anxious to sign up if you’re happy’. We went from a handshake to a life-of-mine contract – the first one ever. It was only challenged when Anglo came in. Harold came to see me and I said, ‘don’t worry about it; just put it on a normal contract, we’re not going anywhere.’ So we signed a five-year contract with a five-year option,” Tony said.

When KT set up Coppabella mine, Tony and Peter dissolved their partnership and Peter went up to Coppabella. Peter took almost half the haul trucks. To restock their fleet, Tony bought four Caterpillar 777s from Leightons in Western Australia and two new Komatsu 785s, and Greg Martin bought a new Komatsu 785 haul truck. Arriving in July 1998, the new Komatsus were the first to be brought into Australia.


[Pix (3) DSCF00556 Ross Stainlay & Nobby]

Tony Champion (front centre), Scott Kidston (front right) and the Jellinbah crew.

Scott Kidston (right), Ross Stainlay (back) and mine visitors.

Success built on solid relationships

Relationships with quality people like Tony Champion have underpinned Jellinbah’s success right from day one.

Scott Kidston believes the success of any business is dependent on the people involved.

“If you can get that right, if you can get the right mix, and everybody is happy and wants to be there, then you can overcome almost anything,” he said.

“At Jellinbah we had a unique deposit. There’s no doubt about that. We had an amazing group of people who were visionary in the marketing of the coal; pioneering really. Batman and Ross Stainlay found a place in the market for this particular type of coal and didn’t accept the industry norm. We had a pretty remarkable leader in Ken Talbot, particularly in the early days. There is no doubt that the mine wouldn’t have become what it is today without KT, his leadership, his knack for business and his knack for pulling things together. Jellinbah was a unique contract operation. The coal was relatively shallow and relatively easy to mine, but in that environment, in that industry, it doesn’t just happen. Guys like Ross Stainlay don’t come along by accident. They are there for a reason. And KT saw the value of having somebody like Tony Champion involved in the

operation. It wasn’t because he could write a massive proposal or anything like that. People were taken on not necessarily because they were top dog in their field but because of the sort of person they were, and in the Jellinbah environment they excelled. It was such a family orientated environment and when the chips were down you could overcome almost any problem because of the relationships we had.”

Open communication was one of the keys to maintaining those relationships and Jellinbah East’s two-way radio policy created a lot of goodwill among the workforce. Rather than having one channel across the whole site, there were dedicated channels for each work area. At most sites talking about something other than an emergency or work-related instructions on the two-way radio was strictly taboo. Not so at Jellinbah. To foster team work, good morale and to relieve boredom, general banter among the crews on the two-way was acceptable. They could talk about whatever they wanted within reason. Monday mornings they discussed what they did on the weekend, leading up to the weekend the conversation focused on the football competition and in between, good hearted ribbing.

This tradition continues.

Deborah Stainlay, Ross Stainlay and Nobby Fukui.

Jellinbah hospitality

Another initiative that fostered goodwill was the Red Rooster lunch tradition. It all started when Tony Champion asked his wife Cheryl to bake a cake for Big Bird’s birthday. She and Peter Champion’s wife Irene decided it would be a great idea to provide lunch as well so they picked up some Red Rooster chicken with peas and roast potatoes and headed out to the mine. Big Bird had no idea what was planned and when Tony told him to come up to the workshop, he walked in, saw a big cake on a plate, and the whole mine site there to congratulate him, and was pleasantly surprised. With plenty of cake left over, Big Bird’s wife and children were able to join in the celebration at home as well. The Red Rooster lunch was such a success and clearly appreciated by the crew that Tony and Scott felt it was a worthwhile investment and so it became a tradition for quite some time.

It wasn’t just the Jellinbah employees who benefited from this type of hospitality, so did the joint venture partners and customers. Effort was always taken to host guests at the general manager’s house rather than in a restaurant or hotel.

Ross Stainlay was attuned to the guests’ special

needs and would always provide tips regarding their likes and dislikes.

“Robyn and I would host a big dinner at our house and, at that stage, our kids were seven, six and four. I still remember Nobby Fukui, who was Mr Marubeni for many years, sitting in our lounge chair, our kids walking down the hallway in their pyjamas with these little tins of koalas and kangaroos in their hands, ready to present to him,” Scott said.

Another time Ross told Scott one of his Japanese visitors, who didn’t speak English very well, loved fishing so he entertained him with home videos of fishing trips to Stanage Bay and Mackay. In preparation for a visit by a TATA Steel representative from India, Ross organised to pick up some vegetarian takeaway from his local Indian restaurant in Brisbane, packed it in an Esky and took it up to Bluff for dinner at the general manager’s house. The visitor, impressed by their efforts, made some naan bread or roti to accompany the meal. Ross joked that it must have been a world record for the longest distance takeaway!

employee health program

There is a very strong work ethic at Jellinbah East and in Scott Kidston’s day crew members

“We’re down-to-earth people doing a job and keeping as safe as possible. I’ve found that no-one ever leaves. They really care about people here. If something happens in your family, there’s flowers and phone calls. It’s one of those places where you know that people actually think about you. If you’re

missing in a big place, if you don’t turn up, no-one really knows for a while”

– Heath Saunders, maintenance superintendent.


[Pix (3) Tony Champion Dan Cawte; Pix (5) K]

Dan Cawte

Chris Lee’s memorial plaque at the native garden, near Jellinbah East’s muster area.

Mick Champion pays his respects to Chris Lee.

often came to work when they were sick with severe flu, chicken pox or other debilitating ailments. They didn’t want to let the team down – when they weren’t on site, there was no-one to operate their equipment. Scott was concerned. He admired their dedication but felt something needed to be done to look after their health. With approval from the then CEO Alex Wilkins, he initiated one of the first employee health programs in the Queensland coal industry. He engaged Dr Toby Ford from Brisbane to visit site periodically. A consulting room was set up and employees would be relieved from their duties while they visited the doctor. It was a successful program and a number of employees owed early detection of their health issues to Dr Ford. Jellinbah still has an active health program. Dr Ford continues to visit site regularly to perform general consultations and executive health checks every two years.

Chris lee

Without a doubt, the darkest day at Jellinbah East was 15 March 2000 when Chris Lee was fatally injured while working under a rear dump truck in the workshop. Chris was a fitter and supervisor, who had been trained by Hastings Deering in Townsville. He was married to

Aron, had a toddler Michael with another son Christopher on the way. He was a world motorbike champion and loved to ride on the weekends. According to Scott Kidston, he was a real gentleman and a nice bloke.

“From the mine’s perspective, Chris was everyone’s ‘go to’ man as far as mechanical things go. He made no distinction between who was who – there was no mine and contractor – everybody was in it together, and he was such a help to us,” Scott said.

Chris and Tony Champion were close.

“If there was work to be done, Chris used to stay back and work with me and I would take him home,” Tony said.

“We’d be late, we’d talk and we’d buy an ice cream on the way home, just taking our time. Meanwhile our wives would be throwing dinner out.”

Following the tragedy, the Jellinbah East family, particularly Tony and his wife Cheryl, rallied around to support Chris’ family. Tony remains close to Aron and her sons call him grandad.

Sue Olive remembers Chris fondly. “He was 10 feet tall and bulletproof,” she said. “He always had a smile. Whatever had to be done, he did it. It was such a heart wrenching thing to happen. I don’t think a day goes by that we don’t remember it.”

Coal loading at Jellinbah Plains.

As a result of the accident, Jellinbah East reassessed its safety management program, rewrote many of its standard operating procedures and introduced a rigorous safety training program. In memory of Christopher John Lee, a native garden has been established near the muster area meeting point where his mates still pay their respects.

Changing of the guard

Dan Cawte joined the mine in August 1998 as a senior mining engineer. When Scott left in April 2000 to become a small business owner on the Sunshine Coast, Dan took over

the role of general manager.

Around this time a change in mining legislation required mines to adopt a more risk-based approach to safety. With such a strong focus on safety following Chris’ death and the new legislative requirements, Dan felt it was important to take the existing Jellinbah culture into account and that initiatives shouldn’t be aimed at the lowest common denominator.

“Implementing the new safety legislation was a big challenge but we had a lot of good people involved on site and a desire to get it right. One of my concerns was introducing blanket rules that could be seen as unnecessary or silly,

making the implementation more difficult. We needed to keep it real. If you’re at risk, use your PPE,” Dan said.

One of Dan’s early challenges was to negotiate an enterprise bargaining agreement (EBA) with CFMEU delegates, Chubb Saunders and Robbie Bond. Although Jellinbah had not had a union lodge for many years, there had always been a union presence. Over time, the number of union members increased. Despite employment terms and conditions being documented in a common law agreement, the union delegates felt this was no longer sufficient. Under the prevailing law at the time, the union was entitled to negotiate


“It was pretty good in the early days. There were only about 65 of us here then. Everyone knew what they were doing and just got on with their job. There were scrapers, coal trucks, overburden trucks and two diggers, and you had to look after them” – Tex Moorehead, grader operator.

and have the conditions of employment document in an EBA. The EBA was subsequently negotiated and the relationship between the union and site managers remains harmonious.

According to Chubb, there is no ‘them’ and ‘us’ attitude on site.

“We sometimes get into a gentlemen’s disagreement, but we sort it out,” he said.

The workforce and managers take pride in this relationship, which has resulted in no industrial lost time due to a local issue since the mine began.

Sealing the boonal haul road

The proposal to seal the Boonal haul road in 2000 was quite controversial at board level.

CEO Harold Shand believed the safety and maintenance benefits justified the significant investment. He was tired of disappearing into huge clouds of dust as trucks passed him on the haul road.

“I faced absolute opposition from Jim Gorman but we’d done the numbers. On a safety issue alone, then on the economics because of tyre

wear and tear, it was about a nine-month payback,” he said.

The decision may have been relatively easy to make, but according to Dan Cawte, the execution was quite challenging. Most bitumen roads are not designed to carry such heavy vehicles on a continuous basis, so technical design expertise for this type of project is rare.

Boral was appointed to design and construct the road using a two-seal process. Work was carried out in October in hot conditions. However, the stones on the bitumen seal, designed to sit between the rubber of the tyres and the tar, got flattened under the heavy loads of the road trains. This caused the tar to come to the surface, leaving a gooey mess.

“I remember driving down the haul road just south of the entrance to Central with Tony Champion shortly after the bitumen started having its problems. It was very hot, the road surface had melted and the sound of the car on the road was like driving in water,” Dan said.

Eventually the issues were resolved, resulting in a road that had an above average life. It was resealed 12 years later.

Tony Champion retires

One of the highlights for Dan during his time at Jellinbah mine was getting to know the many characters around the place which, with a focus on family and relationships, was a world very different from the big end of town.

“A very fond memory for me is working with Tony Champion. We would spend one to two hours each morning looking at each work face, planning the day and the week ahead, and trying to understand issues and nip them in the bud. Tony taught me a lot and I am really grateful for that,” he said.

Joe Comiskey won the tender to operate the Jellinbah Plains pit in 2001. With previous experience at Jellinbah South, Joe understood the mine’s steeply dipping conditions.

In early 2006, two major events took place at the mine – Tony Champion retired in March and the mine took over as owner/operator of Jellinbah Central in April.

When Anglo joined the Jellinbah share registry, Tony signed a five-year contract with a five-year option. He was well into the five-year option when Dr Ford asked him whether he planned to renew the contract.

He was concerned about Tony’s health and told him if he renewed the contract, he believed he would die on site.

“You still come to work at four o’clock in the morning and you still go home at 10 o’clock at night,” Toby told Tony.

“You’ve got a mobile phone and two two-way radios. If there’s a problem at the mine you get the call and it doesn’t matter what time of night it is. You’re not getting away with that. You’re not bulletproof and your blood pressure is through the roof.”

Tony had a long, hard think about his health

Tony Champion at Ramp 4, Jellinbah Central.


“It’s a very friendly, family-orientated mine and everybody gets on. It’s not real big which is good and you know everybody in the place. I love being here. I like the way it’s run, the people and the good atmosphere” – Tony Fraser, coal truck driver.

and decided not to renew his contract. He gave the board 12 months’ notice and, despite considerable encouragement not to retire, stuck to his guns.

As it turns out, retiring from Jellinbah East didn’t signify a real retirement (who could imagine that it ever would?).

He bought an old engineering shop on 13 acres on the Bruce Highway, north of Rockhampton, which he brought back to life and developed into an industrial estate. When he left Jellinbah, he and his son Bernie began restoring old Mack trucks and now they have the largest collection of antique Macks in the southern hemisphere.

Not only that, this collection attracted the tenancy of the Mack dealership. Tony lives in Yeppoon and drives up to Rockhampton every day.

“I arrive about seven and go home late. According to my wife, I put in as many hours as I did at the mine – so much for being retired! For 16 of the almost 20 years I was on site, I was the mine superintendent of one of the largest private mining set-ups in Queensland and I was director of Bluff Mining. I don’t miss the stress. I’m still kicking and these days I’m having a lot of fun.”

Tony Champion is highly respected by those who have worked with him. He is described as “an outstanding individual” (Warwick

Parer); “a man of his word – someone you can trust” (Harold Shand); “one of the reasons for the success of Jellinbah” (Ken Bateman); “a thorough gentleman” (Dan Cawte); the person who “created a very good culture at the mine site that was succeeded by the people there” (Nobby Fukui); and “an honourable man” (Tim O’Brien).

When the board was formally advised at the November 2004 meeting that Tony did not wish to extend his contract, the directors asked the management team to assess alternatives for the operation of Jellinbah Central, including an owner/operator option.

“A lot of people comment on the condition of the machines. You can hop up in one of the old trucks and you’d think it was only 12 months old, it’s just immaculate inside and the operators look after them” – Mick Champion, supervisor.

Greg Chalmers, Nobby Fukui (Marubeni), Charlie Chichibu (Sojitz) and Sam Chong in front of an almost new Hitachi EX5500 excavator, which

was Jellinbah’s largest and most expensive acquisition at that time.

At the October 2005 board meeting, CEO Greg Chalmers presented the management team’s recommendation to appoint Golding Contractors as the principal contractor for the pit for five years. He said the owner/operator case (which included buying Tony’s equipment and employing his workers) was a very close second best alternative.

The management team felt the Golding option offered a better risk/return profile. The directors discussed their opinions regarding the risk/return profile and formally submitted their preferences at a board meeting the following week.

With the exception of Peter Dowling and Stephen Everett, the directors at that meeting preferred the owner/operator option and a resolution was passed that the Jellinbah Central pit would become an owner operation.

Tim O’Brien recalls an insightful comment by Anglo American director Neville Sneddon during this evaluation period.

“We put a lot of work into assessing the options and the decision-making took place over a few board meetings. I remember Neville making a comment to the effect that management’s preference for contracting was because we had a fear of flying,” Tim said.

Nevertheless, it was a big step for the company to take. Its business approach had always revolved around engaging mining contractors and keeping costs down. Now Jellinbah was directly responsible for hundreds of employees and owned many millions of dollars’ worth of mining equipment.

Moving to owner operation didn’t seem to have any negative impacts on the employees. When the employees went on their Easter break they were Tony Champion’s people. When they returned, they worked for Jellinbah.

Tim O’Brien describes the transition as seamless.

“They had the exact same jobs, with the exact same buddies, the exact same equipment, were working at the exact same place, and had the exact same pay and conditions. Nothing had changed other than the name on the payslip; nothing at all. The transition was seamless,” he said.

The right people produce results

Dan believes the quality of the people and the systems in place at Jellinbah East have contributed to the mine’s success.

“For Jellinbah to operate in the metallurgical coal market without a preparation plant showed that


“Jellinbah Mine was one of the most productive mines in Australia. That was one of the things that gave us a boost” – Jack Beasley, loader operator on the coal trains.

we had the right people and right systems. We had great quality control and were rarely out of spec. The processes in the pits made sure we got the coal out cleanly and we tried to get every crumb out without contaminating it. The whole mine is neat and tidy – the roads are neat, the drains are neat and everything looks organised,” he said.

“The operators were top shelf. Jeff was an excellent loader operator and could achieve the same productivity on his loader as an excavator.

Craig was a terrific excavator operator, was very production focused and led the way with consistent and productive overburden removal. Tex was an outstanding grader operator. Because he was very good at what he did and was so productive, I didn’t need to give him detailed instructions; he self-managed and did a great job. Jack, loading road trains, was always reliable. Darryl was very good on the dozer as was Steve (Big Bird), who was proficient on most of the gear on site. They thrived on tricky jobs. I just gave them general instructions; they were responsible for the work, understood how to do it, and got on with it.

“Big Bird was the site safety representative for many years and we used to work well together.

He was a lot of fun. I remember one day he took my car and drove into the pit while I was back in my office. He must have forgotten that I had a radio in my office and I heard him on the two-way pretending to be me telling the guys they were doing a great job. ‘Keep it up guys,’ he said. I called him up and said, ‘you’re definitely foreman material Bird!’

“We’ve also been lucky to have some really good staff over the years. I can’t mention them all but a few people who really made my life easier at Jellinbah mine were Sue Olive, Matthew Esdaile, Daniel Marcus and Paddy Kearney. Sue was a tremendous support in the office and was the backbone of the site administration for many years. Matthew spent several years at

“At other mines if the transmission in a machine was playing up, they put another one in. Here you find out what’s wrong with it. That’s your job and what you’ve been trained to do” – Bruce Street, fitter.

Jellinbah mine before coming to Lake Vermont. Daniel had boundless energy and Paddy was consistent and loyal.”

In April 2005 Dan was appointed General Manager Development, responsible for capital projects, tenures and so on. He was replaced as Jellinbah East General Manager by Ron Willis. With the development, commissioning and operation of Lake Vermont, Dan’s role has changed over time and, since 2007, most of his time has been dedicated to that operation.

“I really appreciate the faith that the owners – Sam, Gary and Jim – showed in me by letting me run Jellinbah East. At that time I was in my early 30s and it was a big decision to

Jellinbah East nightscape.

give someone of my age that responsibility. I also appreciate the faith the board and the management team continue to show in me in my current role,” Dan said.

“In the early days everyone lived here. It was only a small group and we got on. Everyone knew everyone’s wives’ names. We hung around together after work, had barbecues, came around for a drink or watched football at the pub. As it got bigger, that seemed to change and people moved away with the change of rosters and ‘drive-in, drive-out’” – Chubb Saunders, loader operator.


Lake Vermont“iT’S a CurraGh look-alike”

In December 1992, the Queensland Government announced that it would be removing restrictions on all land in Restricted Area 55 (RA55), which contained most of the state’s proven coal resources, including virtually all the prime coking coal. The purpose of releasing these areas was to enhance land access for coal exploration (QGMJ, December 1992). Lake Vermont (RA280), was included in the stage-two release which became available for competitive tender from 1 July 1993. Applications closed on 4 January 1994.

Sam Chong was very interested in Lake Vermont.

77Lake Vermont76 The Jellinbah Story

[Pix (2) 130402 309-43 pano]

Some of the Lake Vermont team during the official opening of the mine expansion on 18 April 2013.

“When I worked for Utah, I had a chance to look at all the restricted areas. When Lake Vermont came up for tender, I thought it was a good opportunity because the shallow, open-cut areas in central Queensland were becoming depleted as the big companies had picked them up,” he said.

Sam suggested that the Jellinbah Group should tender for the area but initially the board was not keen, primarily because it thought the coal quality was too similar to Jellinbah East’s. So he discussed his idea with some Chinese companies who were interested and he took them up to central Queensland to look at the area. However, when Sam mentioned this to one of the Jellinbah Board members, the board had a change of heart.

“I got a phone call suggesting that Jellinbah should tender for Lake Vermont. So I said, ‘ok, it’s logical to have the whole thing together,’” Sam said.

Jellinbah submitted a tender for $1.25 million. When Sam dropped it in the tender box, he was surprised that there didn’t seem to be many other tenders.

“In February 1994, we were informed that our bid was successful,” he said.

Lake Vermont mine is a joint venture between the Jellinbah Group (70 per cent) Marubeni

(10 per cent), Sojitz (10 per cent) and AMCI (10 per cent).

Through its affiliate Nova Coal, AMCI has had a long-standing association with Jellinbah. It had a 300,000 tonne per annum off-take agreement to market Jellinbah East’s coal in Europe. AMCI co-owner Hans Mende said Nova had introduced the coal to a number of steel mills in Europe.

“The Belgians showed interest in switching from pure high-volatile coal to a mixture of low-volatile and high-volatile, so suddenly we found a market in Europe for Jellinbah coal. We offered it to France, and Usinor became a significant buyer, and to Cockerill in Belgium, which is now ArcelorMital, so that was the beginning of our marketing relationship. Nova Coal was the marketing agent for around 10 years but as Jellinbah gradually became more directly involved in customer contacts, Nova’s role diminished,” Hans said.

“We got to know the owners of Jellinbah very well. When they applied for another lease, Ken Talbot suggested that we take an equity position and we felt comfortable with that.”

Marubeni and Sojitz were already joint venture partners in Jellinbah East and were happy to continue the relationship. Marubeni Coal Department General Manager Koji Iwama said

the coking coal resource at Lake Vermont was very attractive.

“At that time Marubeni didn’t have many investments in coking coal. Jellinbah East was more a PCI or thermal type of coal and that’s why Lake Vermont was a good match for us,” Koji said.

Former Marubeni Coal Department General Manager Nobby Fukui said initially the entity established to hold Lake Vermont was Bowen Basin Coal (BBC).

“Ken Talbot had a big desire to become managing director of a listed company and he placed the Lake Vermont EPC (exploration permit coal) in BBC as the entity to progress the project. He offered Marubeni and Nissho (Sojitz) the opportunity to each become 10 per cent equity shareholders of BBC. At that time, AMCI was already a 10 per cent owner of that company. Marubeni was quite agreeable to make BBC a listed company, but it did not eventuate,” Nobby said.

Instead the mine was developed through a joint venture arrangement.

It took more than 13 years from granting of the EPC for the Lake Vermont Joint Venture to agree to develop the tenement and this caused frustration among the minority joint venture partners.


“We were expecting very big potential at Lake Vermont,” Nobby said.

“Some of the shareholders of Jellinbah were not so convinced and could not make a decision to develop Lake Vermont at the appropriate time. We missed many opportunities.”

The first comprehensive study investigating the potential of the Lake Vermont resource was undertaken in 1994, shortly after BBC acquired the tenure over the area. This first work, published in February 1995, identified that the resource had the potential to produce a range of products, including high quality coking coal from both seams. However, it seems this early work was set aside during the turmoil of Ken Talbot’s departure from the company and it resurfaced 18 years later, after the mine had been constructed.

However, given the low key and successful nature of the Jellinbah East mine, plans for Lake Vermont were modelled on its sister operation – a small-scale, PCI/thermal coal mine.

Marubeni had other ideas.

“We were expecting that Lake Vermont should have much bigger potential than the management team was proposing at the time, so we asked them to do further exploration,” Nobby said.

This request was supported by Anglo American. Peter Isles was brought in around September 2001 to do a quick review of the tenement. Peter has a consulting business specialising in mining project feasibilities and approvals, and he previously held senior management positions with Utah and BMA.

“My first study was to look strategically at the Lake Vermont opportunity and basically come up with a range of options for the owners to consider,” Peter said.

The options ranged from selling the tenement at one extreme, to the ‘do nothing for now’ option, through to buying the adjoining Saraji mine and developing both areas as a very large mining operation.

Despite a cool reception to those options by the Jellinbah Board, Peter was asked to provide advice on how a mine might be developed. He put together a collection of specialist consultants, including the Minserve Group, Parsons Brinckerhoff and Sedgeman, to assist with this process. Because of

Koji Iwama (Marubeni), Yoshiyuki Nunomura (Sojitz), Greg Chalmers, Seiji Taguchi (Marubeni) and Daisei Yamamoto (Sojitz)

during Greg’s first visit to Tokyo in March 2004.

The official opening ceremony of Lake Vermont in November 2009, with Sam Chong, Greg Chalmers, Mark Tzannes (AMCI), Mr Asada (Marubeni President) and Shigeru Nishihara

(former General Manager, Coal Department, Sojitz Corporation).

Peter’s experience in project development, and having worked as a manager in most of the disciplines required in this study, he was able to understand all the issues and integrate the outcomes into a cohesive project.

“As part of that development work we started looking at the geological model, which was a mixture of government exploration undertaken decades before, Lake Vermont’s own exploration programs, which were significant but with a focus on the south-west part of the deposit area, and some of the old, original Utah exploration work,” Peter said.

“We started looking at the geological model at a much broader scale than the area that Lake Vermont staff had been favouring. It looked anomalous. It didn’t look correct. It was showing significant faulting when logic suggested that there shouldn’t be anything major there.”

On a punt, the geological modellers removed the old Utah data and reconfigured the model. The combination of the government and company data without the Utah information produced a very nice looking open-cut deposit of quite staggering proportions.

“The project that Lake Vermont staff had been working on through the 1990s had targeted around a 35 million tonne resource – to be developed as a thermal coal mine in the half to one million tonnes per annum range,” Peter said.

“We went back to the owners and reported that ‘you’ve got a quarter of a billion or half a billion tonnes here, and a significant chunk of it is definitely minable using open-cut methods.’ The other thing we said was, and this came out of the work that Eugene Gallagher at the Minserve group had done for us, ‘this coal can be sold as a thermal coal, but in reality the mine is a Curragh look-alike. It’s a coking coal/PCI resource. You can target the high end of the coal pricing spectrum – feed stock to the iron and steel industry producers, not the power station customers’, which dramatically changed the economic potential of the resource.”

“Consequently in 2003 we worked up a revised feasibility study for a much larger open-pit mining operation – four million tonnes annual product, as I recall. Originally Jellinbah had been looking at a fairly small thermal coal mine like the original Jellinbah mine start up and we were flagging four million tonnes of coking coal and PCI coal a year, so it was a very different project.”

“If you’re writing a text book about open-pit coal mining in central Queensland, use Lake Vermont. It’s got two rather juicy, thick coal seams, nicely separated by interburden, not too deep, some faulting but nothing too scary, a good strip ratio. The early economics of the project are good. It’s just a hell of a good project.” – Peter Isles

Lake Vermont product stockpile.


Peter and his team carried out further exploration work, coal quality analysis, mine planning, coal preparation studies, coal preparation plant feasibility studies, and looked at infrastructure requirements (water supply, transportation, electricity), land access and so on.

One of the advantages Lake Vermont had in terms of land access was that it had purchased the Mockingbird Downs property, which effectively picked up the sweetest spot in the deposit, a decision lauded by Peter.

“Lake Vermont management had done a dead-set clever thing way back and had purchased Mockingbird Downs property, which was about 80 per cent of the starting sweet spot. An excellent move way back,” he said.

Having previously worked for BMA, Peter found himself in a strange situation having to negotiate with that company for access across the Central Queensland Coal Associates (CQCA) leases to the existing railway line.

“As BHP we had quite a dialogue with the Jellinbah people about their development for Lake Vermont and it’s fair to say as BHP we weren’t particularly cooperative. Then some time later when I was on the other side of the table having to talk with the same BHP people myself, I started to get an inkling about just how arrogant we were,” Peter said.

“Lake Vermont needed a connection to the railway system and the only way it could get it was to cross the CQCA mining leases – Saraji and

Dan Cawte with the twin coal preparation plants and the coal handling facilities.

Norwich Park. When I got involved we spent a lot of time working with BMA to get a rail corridor from Lake Vermont to QR’s rail line on the western side of Saraji. Eventually we secured a route with a lot of conditions and rigmarole.”

On 27 October 2005, after an extensive environmental impact assessment, mining lease ML70331 for Lake Vermont was granted to BBC.

GeTTinG The Green liGhT

In April 2005, Dan Cawte was appointed General Manager Development and began to get involved with a range of pre-feasibility and feasibility studies on Lake Vermont. The studies underwent a number of iterations, looking at different scales of operation, delivery and ongoing mining methods. After careful consideration, the QCMM Board resolved to terminate the Lake Vermont project on 29 June 2007, citing infrastructure risk and marginal returns.

Several months later, when Marubeni finally succeeded in buying Jim Gorman’s 33.33 per cent share of QCMM, the future for Lake Vermont began to look brighter. On 21 September 2007 the board reversed its previous decision and resolved to proceed with the mine. A week later the Lake Vermont Joint Venture unanimously approved development. Prior to this approval, Jellinbah CEO Greg Chalmers had engaged Thiess to do some preliminary work on Lake Vermont. Having worked briefly for Thiess, Greg had a good understanding of the organisation’s capabilities.

“Before deciding to proceed with the project, after an evaluation of other offers and proposals, a decision was made that we would be running with Thiess so then it was a matter of sitting down with them and negotiating the construction and operations contracts. Getting the right outcome from this negotiation was a critical step in getting the green light to start the mine,” Dan said.

Russell Todd, from Jukes Todd and Associates, was brought in to help Dan prepare the contracts. Russell had a 15-year history working for Thiess. He and Greg Chalmers had successfully delivered a similar outcome at Mt Owen mine in the Hunter Valley in 1995-96, Greg as the BHP owner’s representative and Russell as the Thiess construction manager. At Lake Vermont, Russell focused on the commercial terms of the contracts while Dan managed the technical issues.

Lake Vermont’s Caterpillar fleet.


“Because the Jellinbah Group is a very small team, the strategy was not to break the work up into a lot of packages. We wanted to keep it as a single point of accountability and the concept was we wanted to deal with one major contractor,” Russell said.

“Because Lake Vermont is a greenfield site and it was such a commitment for Jellinbah, we didn’t want to be in a position where we had a potential delay between the construction phase

The ultra-class Leibherr 9800 800-tonne excavator loads overburden into 360-tonne Liebherr T282 haul trucks.

and the mining phase. With the one contractor we still had a handover process from construction to mining, but it was much easier to do the transition with one rather than two contractors. As part of our risk management strategy we wanted the mine up and operating as quickly as possible. Thiess was able to offer a package that met all those requirements. The first contract was the infrastructure development contract – design and construction of the entire infrastructure necessary to get the mine to an operational

stage, including the access road, rail line, the office block, the workshop, the fuel systems and the coal preparation plant. Concurrent with construction of the infrastructure, Thiess started the development of the mine itself, stripping the overburden so that when the coal preparation plant came on line there was coal available to feed it and commence operations. The second contract was for the mine operations and maintenance.”

Russell’s help was invaluable.

“Russell was a tremendous help in the development and negotiation of the first construction and mining contracts. He has the ability to see the big picture but also understands the detail. We have been lucky to have him on the team,” Dan said.

On 9 October 2007, the first construction and mining contracts were signed with Thiess and work started in earnest.

After such a tumultuous journey and having been given the green light, Lake Vermont was faced with yet another challenge – the Global Financial Crisis (GFC).

“We had already committed to these big contracts and when the GFC was in full flight, we had already spent 95 per cent of the money on the job and the mine was all but built. There was talk within Jellinbah of mothballing the project as there was a lot of nervousness about

the market. We said, ‘we’ve already sunk the money in the infrastructure, we’ve already got these contracts that we’re committed to – we have take-or-pay commitments for water, rail, port and electricity. If we exit, it’s going to cost anyway. We must keep going,” Dan said.

The Jellinbah Board took a long-term, strategic view and, despite a bleak world economy, the project continued.

Lake Vermont’s coal preparation and handling facilities.


An excavator loads overburden into a haul truck.

Greg Chalmers congratulates the Lake Vermont team during the official opening of the mine expansion.

Lake Vermont’s first sod, for mining purposes, was turned in October 2008 and the first trial coal was railed out in January 2009. Practical completion of the construction project was reached in February 2009. The mine went from zero production up to its nameplate capacity of four million tonnes within six months, having completed construction on time and on budget, which is unusual for an infrastructure contract, particularly when largely delivered during a construction boom.

Developing a new mine is one thing, but placing a new product in the marketplace is quite another. At the time of practical completion, there were no customers signed up for Lake Vermont sales and, despite the GFC, the mine’s coal quickly became very well accepted.

“Barry Olver and the marketing team in Brisbane did a great job. They worked hard to make sure they could place a brand new product in a difficult market,” Dan said.

“Our product was really well accepted both technically and commercially. From what was potentially going to be a real struggle, we came close to meeting our production targets in that first year.”

CEO Greg Chalmers said the production and sales outcomes represented one of the most remarkable start-up stories for a mining enterprise in recent times.

“We went from start up to full production within six months and from no customers to fully sold within six months. Yes China came at the right time, but Dan, Barry and their teams’ remarkable dedication ensured that the good fortune that the Chinese market presented was fully captured,” he said.

Lake Vermont produces two products simultaneously in the coal preparation plant for the run-of-mine raw coal feed – a high quality hard coking coal (60 per cent) and PCI coal (40 per cent). The raw coal is separated by size and density, with the finer, lighter coal making up the hard coking coal and the coarser heavier fraction being the PCI. At around 10 per cent, total moisture content was better than expected for the hard coke product, and so was the coke strength after reaction.

Lake Vermont is a highly productive open-cut mine, currently operating in two pits, with another three pits planned for development as the mine progresses. Coal is mined from two seams – the Leichhardt, which averages 3.2 metres in thickness, and the Vermont which is around 5.6 metres thick, along a strike length of more than eight kilometres. The seams dip gently to the east and are

“Barry Olver and the marketing team in Brisbane did a great job. They worked hard to make sure they could place a brand new product in a difficult market”– Dan Cawte.

Sam Chong adds some perspective to the size of the 360-tonne Liebherr haul truck.

separated by 30 metres of interburden. Both seams produce high quality hard coking coal and PCI coal after processing. Overburden drilling and blasting is followed by conventional removal by shovel, truck and dozer push. Coal is mined by excavators and transported by truck to the two 800 tonnes-per-hour coal preparation plants where coal is processed, then sampled and analysed. The coal is directed to product coal stockpiles and later loaded onto trains bound for the Port of Gladstone, the Dalrymple Bay Coal Terminal near Mackay and the Abbott Point Coal Terminal near Bowen.

The Jellinbah Group has a small on-site team and the mine is operated under contract by Thiess.

“The way this mine has been structured – in line with the mine operations and maintenance contract – has allowed the Jellinbah Group to stay very compact,” Dan said.

expanSion planS

While construction of Lake Vermont was still in progress, the on-site Jellinbah team and consultants were already working on the feasibility for an expansion. Initial plans considered a two million tonnes per annum expansion, but Dan and Russell believed it would be more cost-effective to build the infrastructure – including a duplicate coal preparation plant – to accommodate four million tonnes per annum and increase production as required.

“The main reason for expanding was on the success of the first build and operation. The other thing underpinning it is the resource that we’ve got is very large so it can sustain a much larger operation for a significant period of time. At four million tonnes per annum, we’d be operating for 50 or 60 years and, at eight million, we can still be operating for 25 to 30 years,” Dan said.

In 2010, Russell and Dan, on behalf of Jellinbah Group, negotiated with the Thiess Sedgeman Joint Venture to construct the expanded coal preparation and handling plant. This contract was signed on 31 January 2011. Construction work started on site in August 2011. The expansion included the construction of an 800 tonnes-per-hour coal preparation plant identical to the first plant, and a new hard coke product handling system which is shared by both plants. The expanded coal preparation and handling facilities were completed and commissioned by December 2012. A new workshop, other ancillary facilities and civil works were also constructed to support the ultra-class mobile equipment.


“Lake Vermont is one of the most competitive mines in Queensland,” according to Koji Iwama, who represented Marubeni at the

official opening of the Lake Vermont expansion.

Team work ... Dan Cawte, Angus Ball and Tony Bambrick.

As part of the expansion, Jellinbah also negotiated a six-year mining contract with Thiess, effective from 1 January 2013, to increase production from four million to more than six million tonnes per annum, with the intent that production will be further increased to eight million tonnes in 2015. The negotiation of the new contract was a complex and protracted affair, and the ability to resolve significant issues with Thiess was uncertain until the very end.

“We had secured the equipment necessary to run the mine ourselves, and there was also a great deal of interest from other contracting organisations in taking over the operation from Thiess,” Dan said.

Dan and Russell, supported by Darren White of McCullough Robertson, were Jellinbah Group’s negotiating team, with Greg Chalmers contributing at a senior level when required.

“There was never a dull moment during the 12-month negotiation and Russell would often ask me, ‘Dan, are you having fun yet?’ I would provide varying responses (some of which cannot be printed), but overall the answer was ‘yes’. Although the protracted negotiation probably strained the relationship between Thiess and Jellinbah at a corporate level, on site, the relationship remained solid, a testament to the Thiess site management team. The new contract was eventually agreed and was signed on 20 July 2012, with the relationship between the parties improving ever since,” Dan said.

With the new contract signed, Thiess decided to mobilise ultra-class mobile equipment for the expansion and purchased two 800-tonne Liebherr 9800 excavators and two fleets of 360-tonne Liebherr T282 haul trucks, which complemented the existing two 650-tonne Liebherr 996 excavators and 240-tonne Caterpillar 793 haul trucks. Building and maintaining haul roads for these heavier machines was expected to be a steep learning curve.

Employee numbers were boosted from 400 to almost 700 and Thiess was careful in the recruitment process to ensure the culture of the organisation could be maintained while almost doubling the workforce.

One Lake Vermont operator compared the mine’s culture to cordial – “you’ve got to make sure that it’s strong enough so that when all the newcomers come, you don’t dilute it.”

Thiess Finance and Commercial Manager Toni Swift said Thiess had been selective in the recruitment process to make sure the candidates’ values aligned with the Thiess values – passion, trust, innovation and excellence.

Toni Swift and the Thiess leadership team.

Jeff Pattel in a Thiess leadership team meeting.

According to Koji Iwama, Lake Vermont is one of the most competitive mines in Queensland.

“Expanding Lake Vermont was one of the best decisions we made,” he said.

“Although the mine started when we had the GFC in 2008, we were able to sell a lot of coal to China. We had a difficult time at the beginning of the project, but we successfully overcame that period and increased production to four million tonnes. Because Lake Vermont is evaluated by our customers as a very good type of coking coal and, at four million tonnes we were comfortably sold out with requests for more coal, we decided to go to the next step and double the mine’s capacity. The expansion was successfully completed in 2013.”

However, one of Lake Vermont’s limiting factors has been its employee accommodation facilities. The original camp had a capacity of 637 beds and it has been difficult to acquire approval from regulating authorities for more. Accommodation levels have a direct impact on mine production. The quantity of overburden that can be moved is a reflection of the number of fleets on site, which is dictated by the number of people that can be housed in the camp.

“One of the jobs we’ve got moving forward is to look at the accommodation issue,” Dan said.

TranSplanTinG The Jellinbah CulTure

Although it was impossible to replicate the Jellinbah family atmosphere at Lake Vermont – there were, after all, only two permanent Jellinbah employees – establishing and maintaining effective relationships was an important consideration for the team.

“I’m trying to bring a lot of the flavour of the way contracts were managed at Jellinbah East to here. So we don’t write letters to each other all day long. We try to be in the space where we can sit down together and say, ‘well there’s an issue, how can we work it out?’ Then we agree on a path and away we go without being heavily contractual about it. We’re working together for the same outcome,” Dan said.

Toni Swift concurred.

“We have an open and transparent relationship. I feel that the client never acts in a dominating


“We have fun,” says Colin Mulligan (right).

Recycled tyres are used to delineate work areas.

fashion but in more of a consultative way, which gives the site leadership team the confidence to do our jobs. We know that Dan trusts us and in times of crisis, we work well together,” she said.

Thiess Production Mining Manager Jeff Pattel said a professional relationship existed between Jellinbah and Thiess.

“It does go over and above the normal client/contractor relationship; there’s respect for one another as professionals,” he said.

“We feed off one another. Dan won’t tell us how to do anything, he’ll say, ‘Jeff have you thought about this or thought about that’ – there are options.”

Colin Mulligan is Thiess’ Project General Manager.

He’s passionate, proactive, clear about his expectations and lives, breathes and works for the mine 24/7.

Toni said expectations on the leadership team were very high.

“I think we hold ourselves to those expectations and we all work diligently to achieve them. We work hard, but the team is also very good at putting an element of fun into that work. Innovation is also a strong point of Lake Vermont. We have always had a cost focus but we try to go beyond identifying cost savings by implementing things that mean safer, more efficient and more effective work practices. A lot of this is a reflection of our leader Colin Mulligan,” she said.

According to Colin, a lot of innovation is nurtured through the management team meetings.

“We have fun,” Colin said.

“Instead of sitting down with minutes in front of us and ticking them off … A, B, C, D … from top to bottom, we’ve created a work bench in our planning office. It’s like a flight deck – you can see the mine on a drawing and we rehearse what we’re going to do on a daily basis. One of the guys said he needed a motorbike to do the water samples, so we got a six wheeler motorbike,” he said.

“We like to change the way people think a little bit. We need to mark the highwall, but you’re not

“We have fun”– Colin Mulligan.

Dan Cawte and Colin Mulligan ... working together for a common outcome.

allowed to get within 10 metres of it or a rock may fall on your head, so how the hell do you do it? We bought a paintball gun to mark the wall.

“We started the Pink Paint Campaign. We gave everyone a can of pink spray paint and said ‘if you see a rock in the haul road and the grader can’t remove the rock immediately, paint it pink so everyone driving on the road can see it’. It creates a bit of fun and adds to safety awareness and tyre life.

“We bought some five megapixel Go-Pro weatherproof cameras so if the OCE (open-cut examiner) sees something on his rounds, he can record it, put it in a computer and show people instead of putting them on a bus and taking them out for a look.

“We use recycled tyres to delineate work areas for dozers and trucks to avoid collisions. The tyre acts like a referee, ‘no, no, no, you can’t go on that side of the tyre’. The mines inspector had a look at it and said it was simple but very, very effective. It’s back to basics, keep it simple and sustainable. It’s not another procedure. It’s there. It’s tangible. It works.”

The quirky approach to highlighting rocks in the haul road, good driving and exceptional maintenance practices has resulted in Thiess achieving one of the best levels of heavy vehicle tyre life in the industry, important when they can cost as much as a car.

“We’ve got 793 haul trucks running around out there with 14,000 hours plus on them when the industry average is 10,000 hours,” Jeff Pattel said.

But, there’s also a serious side. The company has addressed a range of fatigue and employee health issues. Originally Lake Vermont had a roster of five days on, five days off. Most employees live on the coast, which is four hours from the mine. By moving to a roster of seven days on and seven days off, they could reduce the number of annual commutes from 73 to 52. Rather than make a unilateral management decision, the proposal was put to a vote across the site and with 98 per cent support, it was passed then implemented. The mine also has a limit on the number of hours employees can work within a 28 day period – 56 hours per week on average – as another means of managing the fatigue of rostered employees.

And there have been practical initiatives too. Rather than having one starting point for all employees with one crib area, Thiess introduced a number of mobile crib huts, which were placed at various work areas


The Lake Vermont workshop has plenty of capacity to cope with a mine expansion.

around the mine. They have been furnished with multiple fridges and microwaves. Although not standard equipment, exercise bikes have also been installed in the crib huts to encourage employees to keep fit. At the beginning of each roster, everyone gathers at the central meeting point for a briefing, then at the start of each subsequent shift they go straight to their work areas.

After his own experience of weight gain from over-indulging at the camp’s mess in town, Colin has been aware of the need to address healthy eating habits with the workforce.

“I gained 10 kilograms, but have managed to lose most of that,” he said.

Colin has put up healthy eating posters and limited the number of containers people can use to pack their crib and introduced healthy salad options at evening meals. There is also a well equipped gym at the camp.

A dozer forms the product stockpile.

The road ahead—in for The lonG haul

Dan said he had noticed a dramatic turnaround in morale over the past two years at Lake Vermont.

“It has gone from being quite a negative place to a really positive, ‘can do’ environment. Two years ago people didn’t want to be here, whereas now they do, and you can really feel it,” he said.

Plant operator Gary Browne agrees. He said he was treated well and the conditions were good.

“There’s a lot more opportunities here compared with a lot of other mines. I started here as a truck driver. I had no other experience at the time and since then I’ve got my other competencies. My experience at other sites was that the guys had been on trucks for five years and still hadn’t got onto the other machines. The feedback that you get here is always positive. As best we can, we do our job and try to keep the managers happy. That’s the name of the game. If they’re not happy, we’re not happy,” he said.

And what of the future of Lake Vermont? Already there are whispers of another expansion as Jellinbah holds mining development leases to the north and to the east of the existing mine. These leases contain a number of prospective open-cut and underground resources with similar coal properties to those being produced in the current operation. Work is well advanced in converting these tenements to operational mining leases using a staged approach. The team is focusing on the areas immediately adjacent to the existing mining lease.

Dan has enjoyed his role in getting Lake Vermont up and running.

“It’s not every day you can come to work and say, ‘there’s a cow paddock, let’s go and build a mine.’ It’s been excellent and I’m looking forward to big things to come,” he said.

A coal train enters the Lake Vermont rail loop.

It has been a remarkable journey for the Jellinbah Group. From humble beginnings, it has grown into one of the most productive, profitable and respected coal companies in Australia.

The group has beaten tremendous odds; overcome significant challenges, including limited start-up capital, the dramatic and very public loss of a finance partner, an unwanted product that had no natural home in the marketplace, shareholder tensions and partings, legal wranglings, the retirement of a key contractor and the deadlock over development of a major asset.

Jellinbah has not only overcome adversity, it has thrived.

95What lies ahead for Jellinbah Group94 The Jellinbah StoryThe Jellinbah Group Board and CEO: (front) Ken Foots, Stephen Lonie, Carlos Davila (back) Kazushige Harano, Greg Chalmers, Paul Chong, Sam Chong and Yuji Hayashida.

Although blessed with two incredible deposits with thick coal seams, low strip ratios, good quality coal and proximity to existing infrastructure, Jellinbah’s people, the Jellinbah family, have been the key to this company’s success.

It started with four men who wanted to own a coal mine, but to use Gary Zamel’s words “We could never have dreamt where this business was going to go.”

“We just knew day-by-day we had to do it right, do it differently, do it smart, think outside the box and be creative. We were crazy; risk takers. It all happened because a team of us came together at a particular point in time, with a

particular opportunity, working in a particular way, and we interacted together as a group.”

Over time Jellinbah has built on this foundation and adopted a more strategic business approach. The introduction of a more rigorous business planning process, including life-of-mine planning that feeds into an annually updated, detailed five-year plan, have helped Jellinbah to flag and navigate the ‘road bumps’ and determine the ‘natural size’ and direction of the business. A detailed project planning process has also been introduced. CEO Greg Chalmers believes there are a number of critical elements to delivering successful project outcomes such as the development and expansion of Lake Vermont.

“Firstly, you need to plan well and do not make the decision to proceed unless the planning is complete. The size of the project management team is less important than the quality and commitment of the people and their range and diversity of skills. You do not have to build the thing yourself. You do need to know what you want, but you can rely on others to deliver the nuts and bolts,” he said.

“There are contractual structures that will ensure that even a small principal will get what it intended. I have also found that certainty of price is more important than the cheapest bid.

“Finally, it’s important not to change the scope of a project during construction. If issues are

Lake Vermont’s rail loop, product stockpile and the coal handling and preparation plant system.

96 The Jellinbah Story 97What lies ahead for Jellinbah Group

identified during construction, you are far better off to complete what was planned and modify after practical completion.”

Jellinbah’s business model sets it apart from its contemporaries. There is a strong focus on the cost of production with fixed costs kept to a minimum. A lot of thought goes into the most appropriate means of resourcing the business. There is a mix of full-time and part-time employees, long-term contractors and specialist consultants who are engaged when required.

“We stretch ourselves on the job. We are flexible in what we tackle and, as an employer, we are extremely flexible in recognising the different needs of each of our employees because we recognise them as individuals, not just employees,” Greg said.

“We do not allow costs to get fat in the good times nor do we produce marginal tonnes at costs that embed a structure that cannot be readily shed in more difficult times. If it works for us in the hard times, we take the same approach in a boom and will not accept cost imposts that are fixed rather than variable.

“Jellinbah is an immensely robust business and a lot of it has come about because of the entrepreneurial flair of Ken Talbot and his cohort. It’s a robust business based on good, not

great, coal resources and great people. We’ve managed to keep the cost of extraction low and to keep ourselves low on the cost-curve, and we have little debt. All this means we are in a position to look forward to sensible and profitable growth, but not growth for growth’s sake.”

While some of the old timers yearn for the past, when Jellinbah was a small, close-knit family, the company still retains much of that culture – concern about people, pride in work and the workplace, a willingness to think outside the square, and a commitment to quietly getting on with business without any fanfare.

The Jellinbah Group will continue to grow its existing business and, according to Jellinbah’s current Chairman, Stephen Lonie, will look for new coal opportunities, mainly within Australia.

“Jellinbah East has a well-defined current 40-year life-of-mine plan. It has good equipment, competent operators and is sound infrastructure-wise. The challenges will be to continue to get the volume out at a competitive cost, and to go across the Mackenzie River to the north,” he said.

“Lake Vermont is Jellinbah’s best development opportunity and it has a lot more potential than what we have explored in detail to date. Stephen Lonie (right) chats with Colin Mulligan at the official

opening of the Lake Vermont expansion.

The next step will probably be to develop a satellite operation further north of the current operation, and that is already in the concept stage. Greg Chalmers has a mandate to follow coal opportunities in Australia and he is also looking at some other coal mining options around Queensland. Over the past few years, we have particularly focused on developing Jellinbah’s existing resources because the price for other coal projects was not sustainable.”

Underpinning Jellinbah’s strategy, according to Stephen, is a simple mantra – Jellinbah must be a safe, reliable and efficient producer.

“How we differentiate ourselves in the marketplace is on Jellinbah’s quality and reliability. If we say we are going to do something, we do it,” he said.

CEO Greg Chalmers said Jellinbah had many natural attributes including coal quality, strip ratio and geographic location. “With competent stewardship and supported by the skilful and talented ‘family’ members, these natural attributes afford us the opportunity to sit low on the competitive cost curve. Provided we manage the enterprise safely and continue to have shareholder and community support, there are many more chapters to be written in the Jellinbah story.”

An excavator loads coal into a haul truck at Jellinbah East.

98 The Jellinbah Story

biblioGraphy

interviews conducted by Sandy Worden

7 November 2012: Faith Dempsey

12 November 2012: Sam Chong

25 January 2013: Harold Shand, Ken Bateman and Warwick Parer

31 January 2013: Bob Adams

5 February 2013: Peter Isles

5 February 2013: Marcelle Simpson, Julie Krarup and Jodie Randall

11 February 2013: Ray Ison

11 February 2013: Ross Stainlay

12 February 2013: Mark West

14 February 2013: Peter Dowling

14 February 2013: Peter Thorsen

15 February 2013: Tony Champion and Scott Kidson

19 February 2013: Leigh Whitton

20 February 2013: Gary Zamel

22 February 2013: John Rawlins

26 February 2013: Hans Mende

28 February 2013: Tim O’Brien

4 March 2013: Jack Beasley

4 March 2013: Robbie Bond

4 March 2013: Jason Boto

4 March 2013: Mick Champion

4 March 2013: Ian Cooper

4 March 2013: John Dicker

4 March 2013: Craig Dodd

4 March 2013: Tony Fraser

4 March 2013: Helen Gonzales

4 March 2013: Tex Moorehead

4 March 2013: Chubb Saunders

5 March 2013: Sue Olive

5 March 2013: Heath Saunders, Geoff Hamer and Bruce Street

6 March 2013: Gary Browne

6 March 2013: Dan Cawte

6 March 2013: Colin Mulligan

6 March 2013: Jeff Pattel

6 March 2013: Toni Swift

8 March 2013: Stephen Lonie

5 April 2013: Harold Shand

6 April 2013: Koji Iwama

9 April 2013: Russell Todd

10 April 2013: Nobby Fukui

5 May 2013: Joe Comiskey

15 May 2013: Greg Chalmers

21 May 2013: Jim Gorman

other

Queensland Department of Mines (October 1988). Queensland Government Mining Journal, p. 146.

Queensland Department of Minerals and Energy (December 1992). Queensland Government Mining Journal, p. 16.

QCMM Board minutes.

Jellinbah Group Board minutes.

Jellinbah Book [DIGITAL]

Documents

Transcript of Jellinbah Book [DIGITAL]