AUSTRALIA’S RESOURCE MINISTER raised questions about the future of the country’s lucrative mining industry yesterday, when he controversially indicated that the mining boom was “over”.
Speaking to ABC radio on Thursday, after major mining company BHP Billiton announced it was delaying a major project as China slowed and commodity prices fell, Martin Ferguson said “the resources boom is over”.
However, Ferguson later moved to qualify his message, saying he only meant to refer to commodity prices and that the investment sector was still strong: “The boom in commodity prices is over… But the mining boom, in terms of construction, is not over. It speaks for itself: A$270bn in committed capital investment.”
Australia’s mining boom has attracted thousands of Irish emigrants in search of employment, and yesterday’s comments raised questions about the prospect of future employment in the industry.
BHP, the world’s largest mining company, announced a 35 per cent drop in second half profits as it said it will be forced to shelve its $US30 billion Olympic mine expansion. The project would have created the world’s largest uranium mine. It comes on the back of several announcements from other companies such as Shell Oil, who are pulling investment from Australia.
Slow-down is relative
However, experts told The Journal.ie that the situation is far from bleak.
Professor J Stephen Daly, Head of the UCD School of Geological Sciences, said that while there had been a short term slow-down in global demand for resources, the minerals business in Australia was still making a sizeable profit.
Daly described BHP’s decision to shelve the expansion of Olympic Dam – one of the few mines in the world to contain gold, copper and uranium – as “a big hiccup” in the context of employment as the company would have direct hired people across a range of positions for the project and, in turn, stimulated the wider economy.
However, while noting that a close eye should be kept on China’s economy, he doesn’t believe Irish people searching for low-skilled mining or engineering jobs in Australia should fear recent developments – saying that any slow-down in demand is relative to the massive boom recently experienced in the country.
The most vulnerable workers in the industry are those working in exploration – and particularly those employed in smaller companies – Daly explained, but he added that such careers tend to demand a high level of mobility and flexibility as standard.
‘The highest margins in the industry’
Meanhile, British-Australian multinational metals and mining corporation Rio Tinto told TheJournal.ie that it was continuing to view the Australia’s mining industry as a healthy choice for investment.
Earlier this year, the company and its partners invested US$3.5 billion (€2.8 billion) over a four-year period in order to expand iron ore production at its Pilbara, Western Australia operations.
“These operations enjoy the highest margins in the industry, low relative capital intensity, and we have one of the strongest track records in the mining industry for completing projects on time and on budget,” a spokesperson for the company said.
“That is not to say that there are not headwinds in Australia (and) our CFO Guy Elliott highlighted some of these earlier this month when we made our half year financial presentation,” he said. “In particular, the Australian dollar has continued to strengthen in recent times and there are productivity issues in Australia, which we are addressing by tackling our structural costs and investing in technology such as automation within the mines, ie driverless trucks, and the transport network, ie automated trains to take the ore to the ports.”
Similarly, the South Australian Chamber of Mines and Energy said that delay the expansion of its Olympic Dam mine was not a death knell for the state’s mining sector as the mining industry had diversified dramatically over the past decade, reports the Herald Sun. South Australia currently has 20 major mines in production – and more to come – according to the Chamber.
“South Australia has a lot on the go with several new mining regions, exciting oil and gas developments, and a multitude of small and mid-tier miners who collectively could bring just as much, if not more, benefit to the state than the expansion of Olympic Dam,” said Chief executive Jason Kuchel .