Australian miners need a new mantra


11 December 2012:  A deceleration in capital investment is set to be one of the key challenges facing miners over the next year according to Deloitte’s recently released Tracking the Trends 2013. The annual report considers the top ten issues likely to impact the global mining industry in the coming year and identified rising costs, demand uncertainty and resource nationalism as some of the other key concerns likely to place pressure on the sector during 2013.

Deloitte Australia consulting partner, Mike McNulty, said that shrinking margins were presenting challenges for project owners, but a new mantra of ‘quality over quantity’ would help the Australian mining industry remain buoyant well into the future.

“Major miners have responded to recent changes in market conditions by deferring major projects and looking at alternate ways to both finance and develop these projects,” Mr McNulty said.  

“There has undoubtedly been a history of significant cost blowouts on most major capital projects over recent years which have been compounded by Australia’s relatively poor productivity, the recent rapid escalation in costs and the shortage of key skilled workers required to manage these large and complex projects.”

“If we’re going to remain competitive it’s critical that all project owners, not just the big international players, start focusing on developing and executing strategies to control costs and deliver greater productivity,” he said.

“For the Australian mining industry, the days of quantity over quality evaporated when commodity prices started returning to earth and, in future, projects are going to have to prove not just that they have the resources in the ground but that they can put dollars in the bank as well.”

Mr McNulty said this shouldn’t be seen as a negative for the industry, but rather as a shift.  

“There is real opportunity in the market now for producers who can develop a clear strategy to achieve profit and productivity, while also being able to keep their nerve and stay the course while the current uncertainties in the market play out.”

The Top Ten issues identified in Tracking the Trends 2013 are:

  1. Counting the costs: Paying the price of bullish behaviour
  2. Managing demand uncertainty: Conflicting market indicators magnify volatility
  3. Capital project deceleration: Quality trumps quantity in the project pipeline
  4. Preparing for the M&A storm: Market indicators point to rising deal volumes
  5. Governments getting greedier: The cash cow is bleeding amid heightened resource nationalism
  6. Combatting corruption:  Miners are being held to higher standards
  7. Climbing the social ladder: A new level of responsible behaviour
  8. Plugging the talent gap: Long-term skills shortages still loom
  9. Playing it safe: Looking beyond historical data to improve safety outcomes
  10. At the IT edge: Getting the most out of emerging and existing technologies

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