One of Australia’s key business advisory and productivity agencies to the mining sector, the Resources and Engineering Skills Alliance (RESA) has suggested that Australian mining has lost its cost competiveness in the past decade due to its declining cost position at existing operations combined with capital costs for new projects rising faster than elsewhere.
Phil de Courcey, RESA’s Chief Executive Officer said “ranked against competing producers in the thermal coal, coking coal, copper and nickel markets, more than half of Australia’s mines have costs above global averages.In copper and nickel, Australia’s production is now in the most expensive 25% of mines globally, and our iron ore projects are 30% more expensive than the global average based on the capital spend to build a tonne of new capacity.”
De Courcey continued “Our skills gaps and labour costs have been key drivers of our deteriorating competitiveness, given that labour is the primary driver of minerals project cost structures.Within this environment, it will be critical to generate serious contributions and data as to the debate needed to resolve these confronting issues as the mining industry is the least progressive and least productive industry in Australia. It is an industry marked by high capital costs, low commodity prices and a high Australian dollar. It has employees with some of the highest wages in the nation but with a less than desirable skill set among many of our employees.So many of these factors contribute to our poor productivity performance and thus have made the Australian mining industry the weakest industry in terms of productivity falling on average 8.1% over the past three years.”
De Courcey said it was not too late however to turn the productivity boat around and have it contribute significantly to expected continued growth in Australia’s mining sector long after the current boom in commodity prices and resources investment had peaked. “Mineral exploration expenditure on copper, uranium and iron ore dominate South Australia’s appeal as a major investment destination, accounting for $146m or 34% 0of national copper exploration spend and $33m or almost a quarter at 23% of the national uranium exploration spend. South Australia is also emerging as a major destination for iron ore exploration, attracting the largest share of expenditure for this commodity outside iron ore giant, Western Australia. In the energy sector, we have the opportunity to enhance our productivity profile in when and how we deliver on the new shale oil and gas discoveries in the State’s far northeast.”
The main challenges to Australia’s mining productivity were geographically remote locations, engaging regional communities, the on-going need to up skill, attracting more women into the mining workforce, the unknown impacts of global commodity prices, mine development cycles, an ageing mining workforce, attracting & retaining new workers, and a high turnover in technical areas. The solutions lay in high school students being encouraged to be receptive to mining careers, regional families recognising mining’s job and lifestyle options, companies valuing the benefits of upskilling, increasing female employment, planning ahead, and attracting and retaining new workers according to de Courcey.
“What we need to avoid is the current situation of mining companies competing with themselves for available labour, particularly because of the current pool of large resources projects being constructed. There needs to be a coordinated approach to the challenges they face.”
“There also needs to be investment in ‘training the trainers’ so that we build the capability of the training sector to professionally develop trainers to deliver skills and knowledge to the level required by industry.”