Tuesday 21st June, 2016. Sydney, Australia. For the first time in three years, the mining industry is showing signs of confidence, with a more upbeat outlook projected for the next 12 months. However, leaders warn that this could be hampered if certain Government regulations are not changed, according to the latest Mining Business Outlook Report, released today by Newport Consulting.
According to the report which features an exclusive interview with Gina Rinehart, the pendulum is starting to swing towards a revival, with 43 per cent of mining leaders optimistic about their prospects for the year ahead; up significantly from 2014, when confidence hit an all time low. The report confirms the gap is closing between leaders who are not optimistic, which has dramatically fallen from 93 per cent to 55 per cent this year, and leaders who are more upbeat and confident, which has sharply increased from below 10 per cent to 43 per cent.
The report found a number of indicators pointing towards an industry revival, including increases in Capex, with 27 per cent of companies either planning to moderately or significantly increase Capex in the next 12 months. Of those leaders, 31 per cent plan to increase spend by up to 15 per cent.
Leaders also displayed signs of confidence around price stabilisation, with 1 in 2 leaders expecting prices to remain the same for the next 12 months. Further, companies reducing staff have decreased significantly from 80 to 44 per cent for the year ahead. And there is a sharp increase in the number of companies not making any changes to their hiring plans, while 8 percent of leaders said they will be hiring.
However, nearly one quarter of leaders interviewed clearly warned the Government that it needs to urgently address certain regulations and red tape; particularly the project approval process. Only then can the industry shift up a gear and return to a level of international competitiveness as a sector.
David Hand, Managing Director, Newport Consulting says, “This is the first time in three years that the industry is clearly showing signs of a revival – not just a flicker of life but a distinct positive shift in sentiment and outlook. Companies are spending again, have more confidence in stabilisation of prices, and have prioritised growth strategies. It’s a fine line, however as at the same time, the industry wants to see Government take a proactive stance in reducing red tape; especially surrounding mining and project approval processes, which are seen to hamper growth and Australia’s ability to return to a more competitive position globally.”
This year’s report features an exclusive interview with Gina Rinehart, Chairman of Hancock Prospecting Pty Ltd and Roy Hill Holdings Pty Ltd. Mrs. Rinehart says of the report’s findings: “The Australian mining industry has to act during this drastic commodity prices decline, to ensure that it continues to be internationally competitive. We also need to significantly and urgently cut the Government-imposed regulations, approvals, permits, licenses and compliance cost burdens that are placed on Australia’s resource industry. Yet little is happening.” She continues, “Without this, we will continue to see declines in exploration and investment, instead of growth, and suffer the consequences that reduced exploration and investment brings, including the negative effect on our standards of living. The time to act is now before further opportunities are lost.”
Leaders are challenged currently by commodity pricing and global economic conditions (28 per cent), profitability and cash flow (25 per cent), productivity (21 per cent), staff retention (9 per cent) and raising capital (7 per cent). The opportunities for the next 12 months are in international growth markets, market consolidation, productivity and innovation, cost control, management, and a stronger customer focus.
The report, conducted annually since 2010 by operational management consultancy Newport Consulting, canvasses the views of Australia’s mining leaders. It draws on in-depth interviews held between February and May 2016, with 50 mining leaders. The report serves as an independent pulse-check of Australia’s mining industry.
Media inquiries: Please contact Manning & Co (02 9555 5233, firstname.lastname@example.org). Newport Consulting (www.newportconsulting.com.au) is an operational management consulting company that helps organisations improve business performance through operational excellence.