Has the mining industry turned the corner? Is this the beginning of a new boom? Many people are starting to say so.
Has the mining industry turned the corner? Are we approaching the beginning of a new boom? Many people are starting to say so.
Amongst the expert commentary this year a common prediction has been that exploration will begin to increase and new companies will be floated on the Australian Stock Exchange. If that happens, and if history can be used as a predictor, then job vacancies will increase, suppliers will begin to expand their business again and eventually (and perhaps most importantly) new operations will begin.
Let’s have a look at some of the commentary.
In June this year the analysts at PricewaterhouseCoopers calculated that mining and resources companies had written down $200 billion against their asset books over the past five years. The point being made in the study was about the size of the downturn the industry had experienced.
Resources sector talking positively
But the response from the sector was perhaps not what you’d expect. Actually, it was overwhelmingly positive. The worst, they said, was over. By June commodity prices had started to recover, share prices had surged, mining production lifted and investors were once again showing some love to explorers.
In an article on the ABC website , the managing director of explorer Impact Minerals, Dr Mike Jones, said miners once again have a spring in their step: “We’ve got money in the bank, we’ve got an active drill program, it looks like we’re getting some good initial results and it doesn’t get better than that until you drill the big one. Our office is in West Perth and there has been a definite change in the walk of people in the street just over the last two or three months.”
Federal Government helping build the industry
Dr Jones wasn’t the only one talking positively. In the Australian in August this year, Federal Minister for Resources and North Australia Matt Canavan pointed out: “Last year Australia exported record amounts of coal and iron ore, and we are on track to become the world’s biggest exporter of liquefied natural gas. The resources sector now employs double the number of people it did before the boom and, as a share of our economy, it is at a record post-war high of nine per cent.”
The minister argued that while investment was down, now is the time to start exploring for new mineral resources and the Federal Government was chipping in $100 million to a special exploration fund.
“The mining sector will continue to thrive, in part thanks to its record of innovation,” Mr Canavan said. “Australian mining is a world leader and the pressures of the past few years have brought out the best in the industry. Labour productivity over the past year is up more than 20 per cent. The Queensland coal industry now exports 2800 tonnes a person, up 170 per cent in just four years.”
Plenty of opportunities ahead
There are also new commodities, like lithium — essential for creating batteries — which are set to help drive the next boom. That’s already being played out on the stock market, where the developers of lithium projects are seeing their company’s share prices surge.
So there are plenty of positive signs and lots of positive talk about the shape of the mining industry and what’s ahead of us. Whether this really is the beginning of the next boom, only time will tell.