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Professionals Fyson & Associates

96 Brookman Street Kalgoorlie

08 9080 9200

08 9021 5187

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How is the Australian mining industry really going?

9 Aug 2013 iProperty Network 0 Comment

Contrary to much of the media reporting on the state of the Australia mining industry the reality is that it is in very sound shape. Companies are taking the opportunity to fine tune their operations following the easing of the labour markets. Whilst much is made of the Chinese economy’s slowdown it still has a very healthy growth rate as does most of Asia as well as Africa and South America. What we are seeing is the transition from new project construction and development to the operational phase. We all know that it takes many more people to build a mine of a gas processing plant than it does to run them on a day to day operational basis so why are we all surprised when the employment pendulum swings as it inevitable does? The Pilbara has been through a massive expansion phase with many new iron ore mines and gas fields brought into production over the last decade but that rate of new construction was never going to be sustained in the long term.

Operating mines and gas projects require a very different set of skills in their workforce as they move from design, construction and project management into the operational phase where the focus turns to managing costs and optimising returns for shareholders. The transition sees a change in employment needs with an  inevitable overall reduction in the workforce. This takes the pressure off the employment market and affords the opportunity for companies to be more selective on who they employ so they can start to get some rational restructuring of working hours and their overall employment costs, which got so far out of hand when people were able to make excessive demands and get away with it. The last decade has seen the cost of developing new projects in the Pilbara get out of hand and there is now a real opportunity to redress that so that we can bring new projects in on time and at a more commercially realistic cost.

Many new miners are emerging in Gold, Nickel, Iron Ore, Silver and Copper with high grades and healthy margins even in this apparently weak commodity market. It needs to be kept in mind that the $AU was as high at $1.06 US at one point not long ago and is now at 90c which makes a big difference to the revenue stream and evens out the commodity price bumps.

The message out of this week’s Diggers and Dealers forum in Kalgoorlie is optimism with costs now being brought under control and far more longer term confidence in all our major commodities. The mood was also upbeat for Kambalda and its surrounding nickel and gold mines.

mining

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