May 2014

Brendan Swifte

M-TEX

Who are we?What do we do?

Geofabrics distributes geosynthetic products throughout Australia & the surroundingregion.

We operate 3 companies –• Geofabrics Australasia – manufacturer & distributor in Australia• Maccaferri Australia – distributor in Australia (85% owned by Geofabrics)

• Maccaferri NZ – distributor in NZ, PNG & the Pacific Islands (85% owned by Geofabrics)

Our customers could be said to be in the engineering construction sector (ie“horizontal construction”) –

35% roads & highways35% mining & oil/gas10% landfill10% railway5% coastal & sports sectors5% retail & building

Who are we?

Who are we?

Who are we?

What do we do?

What do we do?

What do we do?

How do we do it?

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How do we do it?

How do we do it?

Mining procurementexamples (PPE)

ALCOA

• > 3,000 people in Australia & > 60,000 employees globally• There are some global agreements with companies like Rockwell & Honeywell,

otherwise it is all regional supply agreements• Procurement of uniforms would be through the “Alcoa commodity management group”• He suspects Alcoa would have blanket purchase agreements & that Alcoa would source

through the major suppliers that they have worked with for years (eg Protector, All-safe).• He is unsure of how a supplier would make contact other than cold calling• Alcoa do conduct market testing of supplier pricing• Alcoa are in the middle of a procurement project whereby they are reducing complexity

in their supply chain – they are taking 60% of suppliers out of their system (ie 40% oftheir suppliers provide 80% of Alcoas needs)

Richard WallisProcurement Officer/Alcoa Global ProcurementAlcoa of AustraliaPeel Regional OfficeWA

ALCOA cont.

Alcoa has tender specific evaluation criteria & each tender will have KPI’s. They currentlyhave a very good procurement spread-sheet which includes – for example -

- essential weightings (a supplier has to score 5 to not be dismissed from tender)- meets scope & quality- good safety record with Alcoa- flexibility on scope & schedule- allows fabrication off-site- price

- Evaluated weightings- prepared to negotiate- Quality of tender proposal- Resources & capabilities- 90 days payment terms- History with Alcoa

Ethical standards is a must. Alcoa cannot be associated with any procurement that is not100% “clean”. There will also be performance standards – eg uniforms to resist heat orchemicals.

Shane BewryGeneral Manager – Commercial ProjectsArrium Mining & MaterialsVic

ARRIUM (formerly OneSteel)

• Arrium was spun out from BHP steel (BlueScope & OneSteel)• Approx 7,000-8,000 people in Australia, & have 2 mines – Whyalla & Cooper Pedi• They have 10-15 people in procurement in Sydney (“category management”) but tend to

use a decentralised model. They have just completed the PPE tender (mentionedProtector & All-Safe)

• In mining, companies tend to differentiate between direct & indirect spend –• Direct spend = purchases by the mine = 10% of spend• Indirect spend = centrally procured = 90% of spend (eg contract mining tenders, freight,

capital equipment, energy etc)• The tendency is to encourage Business Units or mine sites to manage their own spend.• The challenge in companies with centralised procurement is to get the sites to listen to

“corporate”. So you need to secure the “corporate tick” as well as selling to eachindividual business unit or site

• For PPE, “corporate” will market test a basket of generic goods & send the informationback to sites, but accountability rests with individual site.

• “Mining is essentially a series of decentralised fiefdoms”

ARRIUM cont.

There is currently enormous pressure on mines. In response, they are stripping out cost inthe value chain. For example, if it costs $60/t to mine & the sell price is $150/t – then thechallenge is to maximise volume & costs are secondary, whereas if the sell price is $100,then the challenge is more complex & cost efficiencies come into play.

Arrium only do mine planning. Their mine operations are fully contracted, so Arriumessentially “buy & sell contracts”. Contracts include –

- Drill & blast- Haul road construction- Milling- Railway

One question arising from this discussion is “who is your customer?” That is, is it the mineowner or the contract mining companies?

Summary

Geofabrics is all about selling.As such, Geofabrics should be all about the customer.

We have traditionally been pulled into the resources sector through our customers,whether they be earth movers, liner installers, geotechnical designers or civil contractors

looking to expand their reach.

To stimulate demand for our products & solutions, we “get out & educate” people aboutthe benefits of our products. We spend a lot of time with designers, to ensure a

geosynthetic solution is used instead of a traditional solution. We will even send peopleoverseas to get face-to-face with the key designers & engineers.

Every business is different, but this model has worked for Geofabrics in the past 35 years.Our market is evolving & changing, but our emphasis on selling will endure.

THANK YOU