What lessons for the future can be learned by looking back at the remarkable story of an iconic Australian mining company?
Building a culture that fosters creative problem-solving is a hallmark of success in start-up businesses. In the early stages a can-do attitude is vital, together with a healthy dose of optimism and self-belief. Shortage of capital drives leanness. Multi-tasking, shared responsibility and taking risks can, if things go well, eventually lead to innovation and extraordinary company earnings.
In recent decades, this approach has been seen frequently in the technology sector. But there was a time when the same hunger was apparent in mining. Companies with little capital attracted imaginative people who could think differently about a problem; then managed to turn a few measured risks into unimaginable wealth when new deposits were discovered, or when a different technical solution substantially altered mining or processing methods. These were outcomes that rewarded shareholders and sometimes catapulted companies to the next tier of the industry.
One of the best examples of this success was Western Mining Corporation (WMC). Like many other companies of the era, WMC started life as a small-time gold explorer and miner in the 1930s. The company honed its exploration and mining skills in outback Western Australia, and then transformed itself into one of the world’s major producers through a consistent pipeline of exploration successes; firstly, bauxite and then in quick succession iron ore, nickel and copper-uranium. To discover one major minerals province in a company’s history is remarkable – to discover several is extraordinary. As recalled by author, historian and former WMC executive Gilbert Ralph, WMC also used imaginative methods in its exploration of oil in Australia and the USA; and in the case of phosphate, introduced a new processing technology to produce a range of high-quality fertilisers. It was sustainable success – the aspiration of every company regardless of industry.
But how is it that one company could enjoy a long period of extraordinary growth, while others during the same period struggled and then simply disappeared?
Firstly, WMC managed to prolong the attitude of its small-company roots; it recognised, out of operational necessity, that success was dependent on local initiative. In its early days, communication to remote areas was poor, so decisions needed to be made locally. This required a high level of trust in localised management. The company succeeded in attracting people who could work autonomously in a tough geographic environment and get things done, which in turn bred a can-do attitude. In the words of former CEO Hugh Morgan, if something could be fixed with fencing wire, then it often was. Head office in the very early days was run by a small team of just six people, who were also hands-on. And so, the genetics of the company were formed.
Furthermore, the early absence of any meaningful operational support from head office, coupled with the tyranny of distance, meant that operations had to rely on the resources at hand, pushing more responsibility down the organisation to the lowest levels. As observed recently by consulting firm VCI in its latest State of Play report, innovation originates from those closest to the issue. This was a defining practice of WMC.
Secondly, the company progressively recognised that the fixed market price for gold (as it was then) limited its prospects. To grow, WMC needed to diversify and this meant doing things and going into commodities where it had little or no previous experience. The company chose an exploration-led strategy, and its early successes shaped everything that followed.
Roy Woodall, WMC’s renowned head of exploration, believed that successful exploration outcomes were a combination of thinking differently and investing in the ongoing development and education of geologists to ensure they had the most current industry knowledge. He emphasised that exploration was a science, just as mining was a science and not simply extraction. In the recently published WMC history Mandarins and Mavericks, Roy summed up the prevailing attitude of the time: seeing what other people see; but thinking what no one else has thought before.
The third defining characteristic of WMC was its willingness to take risks. The journey to success was littered with small failures and challenges that were quickly forgotten, but the successes, when they occurred, came to define the company. Few, if any, were fired for a failure, provided the intent was right. It was part of the ethos of WMC to ‘have a go’.
Finally, the culture of WMC was different. People today remember colleagues in a familial way. Culture is nebulous to define, but former long-term employees will most often cite a sense of being valued, and a feeling that they belonged. Hierarchy was mostly invisible except on organisational charts; and successive leaders from the Chairman down maintained a constant presence at site, understanding first-hand the intimate details of business performance and the invariable production bottlenecks. The company’s prevailing attitude was that all problems could be solved. And in the words of the late Sir Arvi Parbo: persistence wins.
However, in the 1980s, the business of mining began to change, and external pressures challenged WMC’s traditional model of local operational accountability. Increased government bureaucracy created demands of all mining companies, and the industry had to quickly adapt by bringing in experts to match these demands, creating its own centralised bureaucracy to deal with a burgeoning regulatory regime that covered everything from environment and health to listing rules and reporting requirements. In the 1990s, technology exacerbated the change, as all companies including WMC sought to reduce administrative duplication. This became a tipping point for WMC, catalysing changes in leadership and operating paradigms across the business.
‘To discover one major minerals province in a company’s history is remarkable – to discover several is extraordinary.’
While the ‘can-do’ culture remained, WMC, like all listed companies, now had to factor risk on multiple levels into many of its decisions. As boards came under increasing pressure from shareholders, and decisions were subject to greater media scrutiny, management needed to exercise greater caution. Business processes that may have previously empowered discretionary rights in managers quickly become standardised and in many cases systematised. However, as the balance tipped rapidly from autonomy to conformance for other miners, WMC tried hardest to preserve its traditional roots that fostered individual innovation.
Even in the last years leading up to the takeover by BHP, WMC remained the most progressive of Australian miners in its attitude to safety, the environment, gender equality, technology and people. Under the leadership of Hugh Morgan and then Andrew Michelmore, WMC produced more than 25 CEOs who went on to lead other companies.
While many former employees may lament the passing of WMC, its legacy lives on through the enduring connections that former employees made between each other. It was a business school, a mining school and an extended family – all rolled into one. It fostered curiosity, invested in innovation, and genuinely tried to empower its people.
It will be a very special company that can replicate WMC’s achievements and create the same sense of belonging that continues to endure amongst its many thousands of former employees.
Charles Reis is a former WMC executive and an independent advisor to the resources industry.
Image 1 & 2: courtesy Gilbert Ralph and WMC Group Historical Collection.
Image 3: courtesy Charles Reis.