Home > Mining boom continues as industry shifts phase

Mining boom continues as industry shifts phase

Editorial
article image

As the mining industry shifts from a construction phase into an era of production the resources sector will remain a strong driver of the Australian economy.

According to a new report released by BIS Shrapnel, despite a fall in mining commodities and investment over the past year which has seen 1000's of jobs cut and production scaled back, the industry will continue to be a positive force on Australia's economy over the next five years.

The report, entitled Mining in Australia 2013 to 2028, states mining investment, production, contractor services, and employment will all follow every different paths over the next five years.


It outlined that the ramp-up phase, which saw frenetic activity in the contractor construction industry to support the boom, has finished and is expected to decline by 20 per cent over the next five years.

However it went on to state that mining production and extraction is set to grow by 41 per cent over the same period, in turn driving increases in mining activity, maintenance, and export.

"With respect to the mining boom, it’s probably fair to say that this is not the beginning of the end, but the end of the beginning" Adrian Hart, Senior Manager of BIS Shrapnel’s Infrastructure and Mining Unit said.

Hart previously forecast the end of the mining construction boom in 2015.

"Over the next five years, the strong boost from mining production, led by LNG and iron ore, will more than offset the economic negatives from falling mining investment which will flow through to construction and manufacturing. Consequently, BIS Shrapnel is forecasting mining activity as a share of GDP to rise from 18.7 per cent to 19.8 per cent; Australia becomes a more mining-focused economy from here."


Despite this predicted growth mining employment is not predicted to grow in line with development, as miners focus on productivity and efficiency that was lost amongst the race to be the biggest during the boom.

In an interview with Schneider Electric,their solutions vice president for mining, minerals and metals Diego Areces told Australian Mining "in the past miners focused simply on being the biggest of the lot, but now this has changed; they are focusing on being the best, the most efficient, the most optimised".


Hart added that miners will continue to be squeezed by lower commodity prices and a high Australian dollar over the next few years".

"As such, they are going to extraordinary lengths to cut back on the high costs / low productivity culture which characterised the construction phase of the boom. We expect that mining operations employment will rise only 11 per cent over the next five years,mainly in oil and gas and iron ore, whereas mining construction employment will slump 40 per cent. Given the strong increases in production expected, this translates to a 60 per cent labour productivity surge over the next five years."

This focus on efficiency is expected to create both challenges and opportunities for the METS sector.

The METS sector is estimated to be worth over $90 billion dollars and directly employs more people than the mining sector; with the last count coming in at 386,000 people.


"The METS sector represents the mining jobs of the future," METS advocate and former Queensland Premier Peter Beattie said at a recent industry event.
"This sector will create the dynamic, high tech, highly innovative jobs that are needed to engage those young people and ensure continued employment growth for generations to come."

However Hart added that those who operateto the margins set by the boom are likely to be hurt more than others.

"High cost / high service contractors to the mining sector are currently facing the brunt of the adjustment. There is still a lot of work, but it is either being redirected in-house or to lower-cost suppliers. While this is not expected to be a permanent shift,contractors need to navigate region by region, and sector by sector, to identify opportunities opening up in operations, maintenance and facilities management to offset an aggregate decline in construction and development work."

 

Newsletter sign-up

The latest products and news delivered to your inbox