Founded in New Zealand in 1960 by Malcolm McConnell and Jim Dowell, the company of their names’ sake is fast becoming a principal player in the mid to large range tunnelling market in the Pacific Rim region. Last year (2008), TunnelTalk visited four of the company’s current tunnelling projects last year to appreciate the scope of the undertakings and to know how each is contributing to the company’s expanding portfolio of experience and adding to an impressive list of previous successes. The four projects visited are the award winning access tunnel contract for the new Pike River coal mine development on the west coast of New Zealand's South Island; the Rosedale outfall and Hobson Bay sewer tunnel contracts in Auckland, New Zealand; and the Bogong hydropower headrace tunnel in the Snowy Mountains of northern Victoria, Australia. The first article in the series is the Pike River site visit report.

The prize at the end of the tunnel contract is a large valuable deposit of premium quality hard coking coal. Getting to it has required excavation of a 2.3km long, 5.5m wide x 4.5m high access adit as well as a lengthy permitting process to establish a mine in virgin rain forest controlled by the Department of Conservation (DoC) in the Paparoa Ranges on the west coast of New Zealand’s South Island near Greymouth. After eight years of design and feasibility studies and lengthy consenting processes to overcome considerable public opposition, an access agreement from the DoC to develop the 58 million tonne deposit was granted in 2004.

Pike River Coal Ltd is a single asset publicly traded company whose principal stakeholder is New Zealand Oil and Gas Ltd. A series of capital raisings, including a float on the New Zealand and Australian stock exchanges in July 2007, raised the $246 million capital to develop the resource. Work on the access road at the site started in December 2005 and tunnel excavation started in September 2006 towards an initial date for start of coal production by August 2007.

Portal to the coal reserve

As a mining company, Pike River could have developed its own access adit, but “there was much to do besides, in creating this brand new mine,” said Peter Whittall, General Manager, Mines for Pike River Coal. “We decided to let a fast-track design-build civil contract for the main adit. Of three proposals submitted, the tender presented by McConnell Dowell proved successful.”

Progressing this contract, however, has been far from straight forward. Short-notice changes in scope, to better suit geological conditions and mining operations; a delay of more than three months to get through a particularly difficult 180m reach of fault zone conditions; increases in cost and materials consumed; and a time extension of more than 10 months; and it could be expected that this contract was heading for trouble. On the contrary. It has gone on to win the highest category of the prestigious New Zealand Contractors’ Federation Hirepool Construction Awards for 2008. Management skills and contractor flexibilities were tested to the maximum but each situation confronted has been resolved, so far, on the site and between the two parties involved.

Jumbo in the tough drill+blast adit

“Our initial contract was to excavate the 2.2km adit and the 4m diameter ventilation shaft,” explained Joe Edwards, Construction Manager for McConnell Dowell. “Under negotiated terms, this increased considerably to include a change in the horizontal and vertical tunnel alignment, extra tunnel excavation to the base of the ventilation shaft, extensive shaft surface works and construction of large caverns and substantial in-situ concrete structures for the high-pressure washout mining system and operation at the pit bottom. Our original 20 month construction contract has increased to more than 30 months at the site and our original NZ$22.7 million contract grew by $44 million with the scope changes and the changed ground conditions.”

History and business strategies

McConnell Dowell is today, a wholly owned company of South Africa’s Aveng Group. Aveng acquired an initial 63% interest in the company in 2000 via its acquisition of South African-based construction company LTA Ltd, which it combined with its takeover of South Africa’s Grinaker construction company to form Grinaker-LTA. LTA acquired the 63% share of McConnell Dowell in 1999 from Canadian construction company Dominion Bridge. Aveng acquired the remaining 37% of McConnell Dowell in August 2003.

Company organization as of July 2008

Through this ownership, McConnell Dowell has access to the financial strength of the Aveng Group balance sheet to operate successfully in the competitive construction environment. It has the financial backing to obtain the necessary insurance, bonding and bank financing to prequalify for larger and more complex construction projects.

Along with the Bogong hydro scheme, Pike River access tunnel, the Rosedale outfall and the Project Hobson sewer tunnel in Australia and New Zealand respectively, McConnell Dowell has completed also the 1,200m long conveyor decline at Mandalong mine development in New South Wales, the 3.4km long Senoko to Gambas cable tunnel in Singapore, and roadheader excavation of the southern tunnels section of the double-deck Eastern Distributor highway tunnel project in Sydney. The company has more than 100km of successful tunnel construction to its credit with many more to come. As well as working in collaboration with group partner Grinaker-LTA in the African market, it plans to pursue vigorously a comprehensive program of utility and transportation tunnel projects planned in New Zealand and Australia and elsewhere in its regions of activity.

The company employs approximately 5,000 personnel and in fiscal year 2008 registered a turnover of A$1.45 billion, up by 40% on the previous year and a profit of A$73.45 million up by 46% on the previous year. During the year, the company won $1.65 billion of new work and had A$1.52 billion of work in hand going into the new financial year. For the past five years, the Engineering News Record survey in the US has ranked the company among the top 100 construction companies in the world.

Founded in 1960 in New Zealand by Malcolm McConnell and Jim Dowell, the company is perhaps best known for its well established presence in the field of pipeline construction. It has completed many long distance, award-winning pipelines some of the largest oil, gas and other commodity conglomerates in the world, including DOW Chemicals, Saudi Aramco, British Gas (Transco), Alstom Power, and Sasol, Dubai Aluminium Ltd, Newcrest, and Hamersley Iron, and in many parts of the world, including Azerbaijan, Taiwan, Papua New Guinea and Mozambique.

Through its history, the company has maintained an active tunnelling division with original owners and founders, Malcolm McConnell and Jim Dowell, completing many utility tunnel contracts in New Zealand in the 1960s and 1970s. A major tunnelling project that won international recognition, was the Blue Mountains sewer transfer scheme for the regional towns outside Sydney, Australia. The 20km long tunnel through Hawkesbury Sandstone was excavated using an Atlas Copco JARVA TBM and claimed three TBM tunnelling records including the best advance of 172.4m in a day and 703.3m in a single week – records that are still claimed today. Through its wholly owned Stockton Pipelines subsidiary in the UK, the company offers horizontal directional drilling expertise. In 2003 Stockton Pipelines won an outstanding design achievement for completing the longest rock crossing in Europe for its 1,500m crossing under the River Severn.

Of the company’s five business units, the tunnelling division, under divisional Director David Logan accounted for 11% of the 2008 total revenues and represented 18% of the total work in hand going into 2009. A large portion of the A$73 million spent in 2008 on capital investment was spent buying specialist underground tunnelling equipment including two LOVAT TBMs and a jack-up barge. The expenditure will provide strategic advantages for bidding new work.

Managing the unexpected
The greatest hold up was during the months of July and August 2008 when it took more than four weeks to get through a major fault zone. “Getting through this 60m of highly disturbed rock with wide seams of clay gauge and sets of sheared coal measures, held us up for four-five weeks. There was the possibility of methane gas infiltration, which required that we bring in explosion proof equipment, and very slow going on short rounds with much increased immediate support needs. We needed to switch to NATM support systems and required primary, secondary and tertiary support with areas needing more support behind where convergence monitoring dictated.”

Pit bottom works were added in November 2007 and were progressing at full speed on the pit bottom caverns and side passages over a seven-month programme to excavate more than 18,000m³ of rock and cast more than 1,910m³ of reinforced concrete and shotcrete. Although complex, the work was completed on time and without any major troubles.

Coal mine development - Pit bottom caverns (above & below)

For the most part, the tunnel development works were expected to be excavated in hard, 200MPa metamorphised gneiss with an RMR of more than 73. “There was a support Class II and III in the tender documents and provisions for a Class V in the poorest of rock conditions, but no Class IV,” said Edwards. “We considered this insufficient, because progress in Class II was anticipated at 3m/round for an average of +9m/24h day. In Class V, with an RMR of 12, this reduced to 1m rounds and about 2m/day.” With design of primary support being the contractor’s responsibility, McConnell Dowell included in its tender a support Class IV to take care of anticipated blocky conditions. “This was very fortunate for us because most of the tunnel, as mapped every day by the URS geologist Seth Tiddy, and audited by the client’s engineer, is built in support Class IV conditions.” This comprises a standard pattern of seven to nine 2.1m long resin grouted rockbolts for a 1.2-1.5m round and spacing to suit the round across the 5.5m span with overlapped 2m x 4.5m mats of galvanized wire mesh and a 200mm thickness of polyfibre shotcrete where required. “Class II anticipates much more competent gneiss requiring only 1.8m-long spot bolting needed in each 3m round.”

Due to restrictions in setting up a concrete batching plant on DoC controlled land, wet-mix shotcrete was trucked in from Greymouth, some 1.5hr drive away.

The shotcrete was retarded for 13 hours and varying doses of accelerator were added at the nozzle.

“We have used split-sets with wire mesh to hold the mesh to the excavated profile,” said Edwards, “but these cannot be guaranteed as support elements for the minimum 20-year design life requirement. That is also why we used polyfibre instead of steel fibre in the shotcrete. Shotcrete will crack for whatever reason and corrosion of the steel would set in. The grouted rockbolts have performed well although, in these blocky conditions we were losing a lot of grout into the rock. Water inflow along the tunnel hasn’t been excessive, at about 10 litres/sec measured at the portal, but conditions in the fault zone were unstable and became wet in the coal.”

Vent shaft collar pour

Other post tender, pre award, changes included requests by the client to install a continuous conveyor mucking system, and to operate 24h/day, 7day/week instead of installing the conveyor upon completion of the tunnel excavation. The tunnel had to get through as quickly as possible to start earning return on capital, and a continuous conveyor would allow coal production to start as soon as the deposit was reached, and while the main mining operations were being established.

“The continuous conveyor has had several fortuitous advantages,” said Edwards. “It reduced movement up and down the tunnel on its unsealed invert, and allowed us to increase productivity by using a bigger LHD (load, haul, dumpers) to load drill+blast muck into the conveyor hopper. It also reduced the number of turning bays on the alignment to three – one a 610m, 1,100m and 1,850m. We had planned to use ADTs (articulated dump trucks) for hauling muck but to get similar production with ADTs we would have needed 40 tonne capacity vehicles and these would have been too heavy for the bridges that need crossing on the haulage route. For continuous production we added crews to work three 8h shifts/day, 7 days/week, on a six on/two off rotation.”

From the continuous conveyor, muck is delivered into a large muck bin at the portal and from there into dump trucks for onward disposal.

When TunnelTalk was on the site in early August 2008, tunnelling had just passed through the extended fault zone and drill+blast had resumed to finish the final 150m-170m to intersect the coal deposit. There was however concern to move to explosion-proof mechanical excavation sooner rather than later, even through the face was in hard sandstone. The week of the visit, McConnell Dowell was mobilizing the mine’s new WIRTH mining roadheader and subsequent reports confirmed that the access tunnel struck coal at the predicted location in mid October and that coal production on the conveyor belt had started. Since then, McConnell Dowell has advanced the main access adit to junction with the bottom of the ventilation shaft where it will establish the chamber from which the raise boring operation will progress. But that too is somewhat of a saga. Initially the tunnel was a straight run on uphill gradients to Bore Hole 9 where it took a sharp 90° turn and advance on a steeper 1:5 gradient to intersect the location of the shaft at Bore Hole 13.

Access to any shaft location on the steep rugged topography of the DoC land required helicopter transportation in any case and the need for more room for a helipad and sufficient lay down space demanded a shaft relocation.

Continuous conveyor muck hauling through the tunnel with installation of the two water pipes needed for the ‘monitoring’ or high-pressure washout mining operation. A 12in water pipe delivers 9,000 litre/min at 2,000psi pressure for the extraction process, and an 11in pipe transports the coal as a slurry to the processing plant established outside the perimeter of the reserve. There is a recycling pipeline of some 27km between the coal seam through the access tunnel and the pit bottom caverns to the processing plant and back.

“No proposed shaft site was easy,” said Edwards, “but this was the best, even thought the average gradient through the site was 1:2.5 and was bordered on either side by near vertical ravines.”

The cutterhead of the 4.2m diameter raise was sledged into the tunnel and the 70 tonne surface unit, broken down to smaller pieces and carried to site using a 4.5 tonne capacity helicopter. The cutterhead will be lowered down the raise and taken out through the tunnel once finished. Mesh, bolts and shotcrete as needed, will finish the shaft for its 20-year design life.

Adversity to accolade
In winning the Contractors’ Federation Construction Award in August, the Pike River development project was described as “technically and geologically complex” requiring “innovation and development of specific on-site support systems” to master “major logistical, technical and geological challenges”. Joe Edwards for McConnell Dowell paid tribute to everyone involved with the project saying “we have a very dedicated and hard working team on site and we enjoy a very good relationship with the client and the client’s Engineer.” As extra recognition, this is only the second time a tunnel has won the 64-year award series, after the Manapouri second tailrace tunnel in 2002, and the accolade beat out strong competition from highway, dam, and bridge building projects. It also trumped regular winner of the prize, Fletcher Construction, New Zealand’s largest road infrastructure contractor and 3-4 times bigger than McConnell Dowell in annual turnover.

Set up of the WIRTH miner

In an interview with TunnelTalk, Peter Whittall, General Manager for Pike River justified the increased costs saying; “yes, overall costs have gone up, but there is no argument here. All the issues encountered are covered in the terms of the contract. The scope changes, additions, and unforeseen conditions that have caused delay and cost increases are at Pike River’s expense. It is painfully obvious now that the rock was not as competent as projected but that hasn’t jeopardized the overall ability to complete the project. Advance was slower and more costly but McConnell Dowell maintained progress through all and was reasonable when negotiating the extras in the scope of works.”

Even in the current economic down turn and despite reporting a $1.14 million loss on this year’s accounts for develop works and one-off costs, Whittall explained that the high quality coking coal remains in demand. “The initial public offering (IPO) in July 2007 was heavily over-subscribed and a NZ$97 million rights and bond issue in March 2008substantially completed the funding required. This is now a $246 million fully funded project with a mining permit for 40 years; an estimated deposit of 58 million tonne; and our hydraulic monitoring [high-pressure wash-out] system of mining, is a flexible, low capital-intense operation that provides a relatively low cost/unit of high-grade coal.

The ventilation shaft is due to come on-line in the March 2009 quarter and we expect to mine about 160,000 tonne of coal until by June 2009, when our full mining capacity rate of 1 million tonne/year for a commercial life of 18+ years becomes operational.” Even recent dramatic falls in resource prices haven’t dampened the spirits. The coking-coal is used principally for forging steel and the 30% decline in the New Zealand dollar against the US dollar in the past six months should buffer a lot of the expected decline in next year’s coal prices. The project really does have that win-win feel-good factor about it and it is congratulations to McConnell Dowell and all involved on an award winning operation.

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