Green shoots visible, despite challenges

LOCAL miners are set to cut more jobs over the next 12 months, but there are signs the industry is starting to adjust to the tough new conditions.
Green shoots visible, despite challenges Green shoots visible, despite challenges Green shoots visible, despite challenges Green shoots visible, despite challenges Green shoots visible, despite challenges

 

Andrew Duffy

According to a new report from Newport Consulting, 80% of mining leaders are set to cut jobs this financial year, up from 50% last year.

About 78% are also set to lower capital expenditure, up from 44% in 2014.

On the positive side, 16% of those interviewed said they were cautiously optimistic about growth prospects for the next 12 months – more than double the amount last year.

Newport managing director David Hand said the conflicting numbers showed that even if there were signs of a recovery in the mining sector, the rebound was in its early stages.

“Miners are doing it tough but for the first time in three years there are green shoots, a flicker of life in the sector,” he said.

“They are fighting back to remain competitive. Some are reducing the number of mines operating as they focus on becoming more efficient and productive while they wage war against the tough economics of doing business in Australia.”

In other positives, the report showed mining leaders were more confident about the outlook for commodity prices over the next 12 months, with one in two expecting prices to stabilise.

Productivity remains a key challenge, however, along with regulations, tax and unions.

Elsewhere, Newport said the renegotiation of take or pay contracts in the coal regions of New South Wales and Queensland would result in reduced volumes and more mine closures.

Opportunities over the coming year included the consolidation of operations, a greater focus on the customer and further cost cutting and productivity gains.

“The story for the mining sector is about productivity recovery following underperformance,” Productivity Commission chairman Peter Harris said.

“One opportunity is addressing the flexibility of resource allocation at the national, state and local planning levels.”

In other parts of the industry, Newport said miners had taken on many of the infrastructure investments they hoped to receive from the government over the past few years.

Moving ahead, the industry called on Canberra to act quickly on industrial relations reform.

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