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Mining investments are paying off in 2018

Posted on September 24th, 2018 in General, Infrastructure, Mining

After a year of slow growth, activity in Australia’s mining sector is set to accelerate in all areas in 2018.

A report by analysts BIS Oxford Economics forecasts 5.5 percent growth for the sector in the 2017-18 financial year, compared to 2.5 percent last year. Australia will also become the world leader in liquefied natural gas (LNG) exports by 2022.

As strong returns power productivity and a new investment cycle, the next few years are likely to be even bigger.

Firms are cashing in

Years of investment are now paying off with a surge in production, exploration and maintenance, especially in oil, gas and iron ore.

The Mining in Australia 2017 to 2032 report predicts that exploration will rise 8.7 percent this financial year, and almost 40 percent overall by 2022.

Maintenance is set to benefit even more, rising by 60 percent after these activities often suffered under tight budgets in recent years.

Among the major companies, Rio Tinto made a $6 billion profit in 2016 after losing more than $1 billion the previous year. BHP Billiton’s steady approach to improvement delivered $4 billion in half-year profits, while Fortescue Metals Group posted half-year profits of nearly $1.6 billion. Share prices for iron ore have rebounded after hitting a low last June and are predicted to triple in 2018.

Double-digit investment growth

Beyond oil and gas, investment in coal, copper, gold, iron ore and other commodities is expected to grow at double digits this year and next, aided by global economic growth and rising commodity prices.

However, investment will take a blow following the completion of $200 billion of LNG projects during this time. The closure of major projects such as Ichthys, Prelude and Wheatstone will cut off another $20 billion in investment.

Wary of another downturn, many mine companies are now hesitant to increase spending when commodity prices rise, instead focusing on strategies to boost productivity and sustain their momentum that don’t require high levels of capital.

More collaboration and innovation

Mining companies need to foster a culture that’s productive and consistent regardless of market conditions, learning from their experiences and encouraging risk-taking without punishing failed experiments.

This is leading to increased collaboration as mines at different stages of the life cycle work together to spread the risk and share their knowledge and expertise for mutual gain, rather than having to make the same costly mistakes.

Investing in technology

While firms may be scaling back their investments, digital technology is a proven asset to productivity that’s playing an increasingly prominent role in mines of all sizes.

As technologies such as driverless trucks and trains, drones and IoT-powered wearables enter the mainstream and prices become more competitive, smaller mines will start to reap the benefits that BHP, Rio and other leaders are already enjoying, such as reduced costs, greater efficiency and improved safety.

Talk to industry leaders at NCEC

Keep on top of the challenges and opportunities in quarrying, construction and demolition by attending the National Construction Equipment Convention (NCEC).

Australia’s newest civil construction and infrastructure event will take place between 15th and 17th November 2018 at Sydney Showground, Sydney Olympic Park.

Get all the details here

 Sources

BIS Oxford Economics. Mining in Australia 2017 – 2032. https://www2.bis.com.au/reports/mining_aus_r.html

Australian Mining. How the mining industry can continue to improve productivity. https://www.australianmining.com.au/features/mining-industry-can-continue-improve-productivity/