Australian Government

Australian Government Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences

An economic survey of companies in the Australian mining technology services and equipment sector, 2006-07 to 2008-09

Leanna Tedesco and Chloe Haseltine

ABARE–BRS research report 10.07

July 2010 © Commonwealth of Australia 2010

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire docu- ment may not be reproduced by any process without the written permission of the Executive Director, ABARE–BRS.

The Australian Government acting through Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, the Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law.

ISSN 1447-8358

ISBN 978-1-921448-73-7

Tedesco, L and Haseltine, C 2010, An economic survey of companies in the Australian mining technology services and equipment sector, 2006-07 to 2008-09, ABARE–BRS research report 10.07, Canberra, July.

Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences

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ABARE–BRS project 3383 Acknowledgments

This report uses data collected in an ABARE (now ABARE–BRS) survey of Australian mining technology services and equipment (MTSE) companies. The survey was voluntary and depended on the cooperation of companies to provide confidential information on their businesses. The survey would not have been possible without their full cooperation and assistance. The authors would also like to thank the MTSE and minerals companies that participated in confidential discussions with ABARE–BRS, providing more detailed information on the sector and supplier/customer relationship.

Throughout the project, members of the funding bodies provided significant input and feedback on various aspects of the project, which the authors greatly appreciate. In particular, the authors would like to thank Ben Jarvis, Chris Stamford, David Murtagh and Susan Yeomans (previously employed) from the Australian Government Department of Resources, Energy and Tourism for coordinating the project on behalf of the project proponents. Further, the authors appreciate the valuable contributions of several ABARE–BRS colleagues, including Eden O’Mara, Lindsay Hogan, Alan Copeland and Jane Melanie.

The project was funded by a range of government departments and industry organisations. The three main financial contributors (in decreasing order) were the Australian Government Department of Resources, Energy and Tourism (co-ordinating body); Queensland Department of Employment, Economic Development and Innovation; and Western Australian Department of State Development. Other organisations that made equivalent financial contributions were the Australian Government Department of Innovation, Industry, Science and Research; South Australian Department of Trade and Economic Development; Australian Trade Commission (Austrade); and Austmine. In-kind support was provided by the Commonwealth Scientific and Industrial Research Organisation (CSIRO). Foreword

Australia’s mining technology services and equipment (MTSE) sector is at the forefront of global innovation in the development of solutions for both the Australian and international mining and minerals processing industries. The application of this leading edge technology is primarily focused on making a mine work at the site and related mineral processing activities. This in turn benefits the minerals industry through improved mining practices, reduced costs and increased productivity.

Developing alongside the Australian minerals industry, the MTSE sector has been able to develop a range of technology goods and services that are suitable for Australia’s demanding conditions, which contribute to the sustainable development of Australia’s mineral resources and the overall Australian economy.

Extending this Australian experience, MTSE companies have been able to apply this knowledge to other challenging mining conditions around the world. Over the years, Australian MTSE goods and services have found their way into mining operations in various regions internationally, and as a result the sector has seen export earnings increase significantly.

This study, the third in its series, used a survey based approach to gather up-to-date quantifiable information on the sector’s relative contribution to innovation, the economy and export performance. In addition, ABARE (now ABARE–BRS) consulted with a selection of MTSE companies and minerals industry customers in Australia to gather more specific information on the supplier/customer relationship. Together, this information will be used by Australian and state governments and industry to guide future policy and decision-making, and to raise the profile of the sector in the general community.

This study was undertaken by ABARE–BRS for the Australian Government Department of Resources, Energy and Tourism (coordinating body); Australian Government Department of Innovation, Industry, Science and Research; Queensland Department of Employment, Economic Development and Innovation; Western Australian Department of State Development; South Australian Department of Trade and Economic Development; Australian Trade Commission (Austrade); Austmine; and the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

Phillip Glyde Executive Director July 2010 Contents

Acknowledgments...... 3

Foreword...... 4

Summary...... 9 Key results...... 9 Comparison of ABARE–BRS estimates...... 12

1 Introduction...... 5

2 Methodology...... 9 Scope of the MTSE sector...... 9 Questionnaire...... 10 Requirements of a government survey...... 11 Survey participants...... 11 Conducting the survey...... 13 Reporting the results...... 14 Reliability of sector estimates...... 15 Data quality...... 16

3 Australian profile: survey results...... 17 The Australian industry...... 17 International experience...... 19 Skilled labour force...... 24 Innovation activities...... 26 Operating a technology business...... 31

4 MTSE sector estimates...... 34 Australian profile...... 34 State profiles...... 42 Industry category profiles...... 51 Comparison of ABARE–BRS estimates...... 58

5 Supplier and customer perspectives...... 59 Australian MTSE company perspective...... 59 Australian minerals industry perspective...... 63

Appendices...... 67 A Strengths and weaknesses of Australian MTSE companies...... 68 B Strengths and weaknesses of overseas MTSE companies...... 71 C ‘Other’ responses, by question...... 73 D ABARE-BRS questionaire for Australia’s MTSE sector...... 74 E Country listing by region...... 84

References...... 89 Boxes box 1 Snapshot of the Australian MTSE sector...... 10 box 2 key features of a successful Australian MTSE company...... 12 box 3 Non-ABARE-BRS sector estimates...... 7 box 4 Sector acronyms...... 8 box 5 Example of the use of relative standard errors...... 16

Figures a Mining inputs and the MTSE sector...... 6 b Survey results: share of head office location 2008-09...... 21 c Survey results: share of companies with overseas office 2008-09...... 24 d Survey results: share of labour force by Australian/overseas office location 2008-09...... 24 e Survey results: share of companies undertaking collaborative research and development 2008-09 ...... 26 f Australian profile: estimates of share of export and Australian revenue relative to global slaes revenue 2006-07 to 2008-09...... 36 g Australian profile: estimates of share of global sales revenue by state/territory office location 2008-09...... 37 h Australian profile: estimates of share of global sales revenue by mineral resource 2008-09...... 39 i Australian profile: estimates of share of export revenue relative to Australian revenue 2006-07 to 2008-09...... 39 j Australian profile: estimates of share of export revenue by export region 2008-09...... 40 k Australian profile: estimates of share of research and development expenditure by type of activities 2008-09...... 41 l State profiles: estimates of share of Australian sales revenue a 2006-07 to 2008-09...... 42 m State profiles: estimates of share of export sales revenue a 2006-07 to 2008-09...... 43 n State profiles: estimates of share of global sales revenue a 2006-07 to 2008-09...... 45 o State profiles: estimates of share of global sales revenue by industry category a 2008-09...... 47 p State profiles: estimates of share of size of labour force (full-time equivalent basis)a 2008-09.....49 q State profiles: estimates of share of research and development expenditure a 2008-09...... 51 r State profiles: estimates of share of research and development expenditure by type of activities a 2008-09...... 51 s Industry category profiles: estimates of share of Australian sales revenue 2006-07 to 2008-09..53 t industry category profiles: estimates of share of export sales revenue 2006-07 to 2008-09...... 54 u Industry category profiles: estimates of share of global sales revenue 2006-07 to 2008-09...... 55 v Industry category profiles: estimates of share of size of labour force (full-time equivalent basis) 2008-09...... 55 w Industry category profiles: estimates of share of research and development expenditure 2008-09 ...... 57 x Industry category profiles: estimates of share of research and development expenditure by type of activities 2008-09...... 57

Tables a Comparison of MTSE sector estimates, Australia...... 11 1 Survey statistics for Australia...... 12 2 Survey statistics by state/territory...... 12 3 Survey results: time taken to complete questionaire...... 13 4 Survey results: share of industry categories 2008-09...... 18 5 Survey results: share of state/territory office location 2008-09...... 18 6 Survey results: share of mineral resources 2008-09...... 18 7 Survey results: gross sales revenue of Australian MTSE production a 2006-07 to 2008-09...... 19 8 Survey results number of months of the year the business was operational 2006-07 to 2008-09 ...... 20 9 Survey results gross export sales revenue of Australian MTSE production 2006-07 to 2008-09..21 10 Survey results: share of export countries and regions 2008-09...... 22

11 Survey results: number of months of the year the export business was operational a 2006-07 to 2008-09...... 22

12 Survey results: share of state/territory head office location a 2008-09...... 22

13 Survey results: share of overseas head and other office locations a 2008-09...... 23 14 Survey results: size of labour force 2008-09...... 25 15 Survey results: share of highest qualifications completed 2008-09...... 25 16 Survey results: importance of occupations required to deal with current job shortages 2008-0926 17 Survey results: research and development expenditure 2008-09...... 27 18 Survey results: share of collaborative research and development projects with Australian organisations a 2008-09...... 27 19 Survey results: share of collaborative research and development projects with overseas organisation a 2008-09...... 28 20 Survey results: patents owned by MTSE companies at 30 June 2009...... 28 21 Survey results: importance of factors that affect competitive performance in Australian market 2008-09...... 28 22 Survey results: importance of factors that affect competitive performance in overseas markets 2008-09...... 29 23 Survery results: importance of issues that affect integration of products/services into Australian supply chains 2008-09...... 30 24 Survey results: importance of issues that affect integration of products/services into overseas supply chains 2008-09...... 30 25 Survey results: importance of challenges that affect commercialisation and integration of innovation 2008-09...... 32

26 Australian profile: estimates for global sales revenue as share of GDP a 2006-07 to 2008-09....34 27 Australian profile: estimates for sales revenue of Australian MTSE production 2006-07 to 2008- 09...... 36 28 Australian profile: estimates for global sales revenue by state/territory office location and by mineral resource 2008-09...... 38 29 Australian profile: estimates for export sales revenue by export region...... 40 30 Australian profile: estimate for size of labour force (full-time equivalent basis) 2008-09...... 41 31 Australian profile: estimates for research and development expenditure 2008-09...... 41

32 State profiles: estimates for Australian sales revenue a...... 43

33 State profiles: estimates for export sales revenue a 2006-07 to 2008-09...... 44

34 State profiles: estimates for global sales revenue a b 2006-07 to 2008-09...... 45

35 State profiles: estimates for global sales revenue as share of GSP a 2006-07 to 2008-09...... 46

36 State profiles: estimates for global sales revenue by industry category a 2008-09...... 47 37 State profiles: estimates for global sales revenue by mineral resource a 2008-09...... 48

38 State profiles: estimates for export sales revenue by export region a 2008-09...... 49

39 State profiles: estimates for size of labour force (full-time equivalent basis) a 2008-09...... 50

40 State profiles: estimates for research and development expenditure a 2008-09...... 50 41 Industry category profiles: estimates for Australian sales revenue 2006-07 to 2008-09...... 52 42 Industry category profiles: estimates for export sales revenue 2006-07 to 2008-09...... 53

43 Industry category profiles: estimates for global sales revenue a 2006-07 to 2008-09...... 54 44 Industry category profiles: estimates for size of labour force (full-time equivalent basis) 2008-09 ...... 56 45 Industry category profiles: estimates for research and development expenditure 2008-09...... 56 46 Comparison of MTSE sector estimates, Australia...... 58

47 Survey results: strengths of Australian MTSE companies a...... 68

48 Survey results: weaknesses of Australian MTSE companies a...... 70

49 Survey results: strengths of overseas MTSE companies a...... 71

50 Survey results: weaknesses of overseas MTSE companies a...... 72 Summary

Over the past decade, the Australian mining technology services and equipment (MTSE) sector has grown significantly in both Australian and export markets. The sector has increased in size and depth of knowledge to maintain a dominant presence in the global market for the supply and development of technology goods and services for the minerals industry. As the technology progresses, the applications also extend. Accordingly, several companies are now able to supply industries beyond mining, which in turn yields greater revenue streams and breadth of experience.

In this study, the MTSE sector is defined in general terms to comprise establishments that supply goods and services that embody specialist technology, innovation, intellectual property or knowledge specific to the minerals industry. This technology is defined to include the introduction or implementation of a new or significantly improved good, service or operational process.

The technologies that belong to the MTSE sector are specialised products/services or processes that are sold to the mining industry. They can either remain in their original form or can be integrated into existing mining services, pieces of equipment or processes. For some companies in the sector, mainly small to medium sized enterprises, these technologies represent the majority of their business. For the remaining companies, these technologies represent only a proportion of their business.

The minerals industry includes activities that are focused on making a mine work at the site and related mineral processing operations, including exploration, mine development, extraction, processing (on or off-site), maintenance, closure and remediation. The minerals industry covers both non-energy and energy minerals. Non-energy minerals include bauxite/alumina/ aluminium, base metals (copper, lead and zinc), gold, iron ore, mineral sands, nickel, industrial minerals (excluding coal), rare earths and other metals. Energy minerals include coal, uranium and thorium, but specifically exclude oil and conventional gas, geothermal, underground coal gasification and coal seam gas activities. These are covered in a forthcoming study.

The MTSE sector is mainly characterised by small to medium sized companies employing 50 people or less.

In this report, we only consider technologies that are specific to the MTSE sector and not activities beyond these technologies. Key results  In 2008-09, global sales revenue for the Australian MTSE sector was estimated at $8.7 billion, or 0.7 per cent of gross domestic product. This revenue can be divided into Australian and export sales revenue. For the same financial year, Australian sales revenue was estimated at $6.2 billion, while export sales revenue was $2.5 billion.  The total number of employees in the Australian MTSE sector in 2008-09 was estimated at 31 300 people (on a full-time equivalent basis).  Total research and development expenditure in the Australian MTSE sector in 2008-09 was estimated at $985 million. box 1 Snapshot of the Australian MTSE sector

The main characteristics of the MTSE sector for the 2008-09 financial year were:

 The sector was characterised by small to medium-sized companies employing 50 people or less.

 The Australian states where MTSE companies were most active included Western Australia, Queensland and New South Wales.

 Queensland and Western Australia employed the largest number of people. Companies manufacturing equipment and machinery were the largest employers of the sector.

 All industry categories made a significant contribution to the sector, but equipment and machinery manufacturers earned the largest share of revenue.

 The coal industry was a major customer for the sector.

 Main export destinations included Oceania, Africa, North America and Europe. On an individual country basis, Indonesia was significant.

 Companies that had a presence overseas owned offices mainly in North America, and Latin America and the Caribbean. On an individual country basis, Chile was significant.

 Research and development was largely centred on in-house activities, with companies located in New South Wales and Queensland spending the largest amount. Research and development activities were also significant for all industry categories, except contract services.

 The sector was most in need of engineers (including metallurgists), and tradespersons and related workers to fill vacancies.

 In 2008-09, global sales revenue as a share of gross state product ranged from a low of 0.4 per cent in Victoria to a high of 1.1 per cent in both Queensland and Western Australia. In New South Wales and South Australia, this share corresponded to 0.6 and 0.7 per cent of gross state product, respectively.

Australia is a major exporter of mineral resources to the world market. In 2008-09, Australia’s mineral resources exports (excluding petroleum) were valued at $139 billion, increasing from $91 billion in 2006-07. This is equivalent to an average annual growth rate of 24 per cent (ABARE 2010). Over this same time period, the MTSE sector also experienced significant growth, with global sales revenue and export sales revenue growing (on average) at 20 and 25 per cent, respectively, per year (table A).

Between 2004 and 2008, the global minerals industry experienced boom times and, as a result, companies in the Australian MTSE sector also experienced substantial growth. However, in the second half of 2008 when the global financial crisis began, even though sales revenue for the MTSE sector dropped, the sector was reasonably insulated from a severe downturn and still managed to maintain a relatively high level of growth.

However, MTSE export activity was still vulnerable to fluctuations in the exchange rate. In 2006-07, when the Australian dollar against the US dollar (US$/A$) was 78 cents (ABARE 2010), there was significant growth in exports in the sector. However, one year later in 2007-08, when the Australian dollar rose to US 90 cents, export growth was more subdued. In 2008-09, a a Comparison of MTSE sector estimates, Australia global export Size of Research and sales revenue sales revenue labour force a expenditure $m %pa $m %pa no. of persons $m

First ABARE study b 1995-96 1 240 467 2000-01 3 120 20 611 6 17 300 382 2001-02 f 3 740 713 2005-06 f 5 600 13 e 1 900 25 e

Second ABARE study c 2003-04 4 750 1 110 16 800 339 2004-05 f 4 430 –7 1 240 12

Third ABARE–BRS study d 2006-07 6 100 1 590 2007-08 7 430 2 120 2008-09 8 710 20 2 490 25 31 300 985 a On a full-time equivalent basis. b Tedesco et al. 2002. c Tedesco et al. 2005. d Current ABARE–BRS study. %pa = average annual percentage growth rate. e From 2000-01 to 2005-06. f ABARE forecast. Note: Estimates may not be directly comparable across the three studies. proportion of MTSE companies also lost some export contracts, most likely as a result of the global financial crisis.

In 2006-07, export sales revenue accounted for 26 per cent of global sales revenue. This share increased by 3 per cent to 29 per cent in 2007-08, and remained at this level in 2008-09. These figures suggest that the share of exports in the sector is growing, but at a slow pace because of strong growth in domestic use.

The growth in state based sales for the sector was either driven by growth in sales to the Australian minerals industry or export sales to overseas destinations. Over the three-year period from 2006-07 to 2008-09, growth in the MTSE sector for each state was led by growth in export sales for Queensland and South Australia, and growth in Australian sales for Western Australia. For New South Wales and Victoria, Australian and export sales contributed equally to growth.

Similarly for industry categories, the growth in sales for the sector was either driven by growth in sales to the Australian minerals industry or export sales to overseas destinations. Over the three- year period from 2006-07 to 2008-09, growth in the MTSE sector for all industry categories, except equipment and machinery manufacturers, was driven by export sales growth. For equipment and machinery manufacturers, growth was led by Australian sales growth.

Even though a large proportion of MTSE companies exported, the majority of customers for the sector were located within Australia. Most companies obtained a good financial return from their Australian sales, but only a small amount of revenue was generated from exports. For the sector to see significant growth, companies need to explore further export opportunities. New export markets that could be targeted include India and China.

Company sales to the Australian minerals industry were largely concentrated in New South Wales, Western Australia and Queensland, most likely driven by the significant investment in technology products by the coal industry in the Hunter Valley and Bowen Basin, and by iron ore and gold producers in Western Australia. Companies with larger export sales were mainly located in Queensland and New South Wales. Comparison of ABARE–BRS estimates

Table A provides a comparison of sector estimates between our three studies of the sector: the studies undertaken in 2002 (Tedesco et al. 2002) and 2005 (Tedesco et al. 2005), and the current ABARE–BRS study. Revenue estimates for the current ABARE–BRS study maintain similar average annual growth rates to those obtained in the 2002 study. Increases in the size of the labour force and research and development expenditure are expected given the extended sector definition adopted for this current study and changes in the sector which has seen the number of companies grow substantially.

The target population of the current study is an extension to the sector definition used in our previous two studies, and now additionally covers such areas as heavy machinery and equipment. Therefore, caution must be taken when making comparisons between the three studies, as noted differences in the results may be because of a difference in sector definitions, rather than changes in the sector over time.

box 2 key features of a successful Australian MTSE company

A MTSE company needs to:

 have a technology solution that solves a minerals industry problem

 understand the mining business and language

 maintain good working relationships with clients at all levels of the mining business, ranging from the corporate head office to the mine site

 be customer focused

 be recognised by its customers as supplier of first choice

 employ skilled and experienced people

 collaborate and network with others linked to the sector to progress innovation

 have a dynamic web presence that includes a good informative website outlining company capabilities and product lines, which potential Australian and overseas customers can use to identify companies. 1 Introduction

Australia’s mining technology services and equipment (MTSE) sector is recognised as a leading supplier of world class innovation to the global minerals industry. The sector consists of businesses that supply a range of technology products and services that offer diverse solutions for mining and mineral processing operations.

The MTSE sector’s largest customer is the Australian minerals industry. However, over the years export earnings for the sector have also increased significantly. Within Australia, a large proportion of the sector’s technology has been developed for a challenging mining environment, where mines are located in remote areas with harsh conditions. This experience has strengthened the sector’s capability and placed it in a leading position in the world market.

This is the third major review of the mining technology services and equipment sector. Previous ABARE studies on the sector were undertaken in 2002 (Tedesco et al. 2002) and 2005 (Tedesco et al. 2005). These studies were used to support the Mining Technology Services Action Agenda (MTSAA) process, and adopted a more condensed definition of the sector. The target population of this current study is an extension to the mining technology services (MTS) sector definition used in the previous two studies, and now covers such areas as heavy machinery and equipment. This extended definition defines the mining technology services and equipment (MTSE) sector.

In this study, the MTSE sector is defined in general terms to comprise establishments that supply goods and services that embody specialist technology, innovation, intellectual property or knowledge specific to the minerals industry. Chapter 2 provides a detailed outline of the industry categories that identify the MTSE sector.

The sector’s specialties are wide ranging and cover such capabilities as innovative software design; a variety of technical consultancies and contract services; technical equipment and machinery; remote, machine control and automated systems; drilling technology and down hole instruments; communications systems for surface and underground mining operations; metallurgical equipment; satellite and aerial imagery and ground surveying; environmental and laboratory services; an extensive network undertaking world class research; and a diversity of other innovative solutions. Mining inputs and the MTSE sector

Inputs into mining can be classified as either technology or non-technology inputs. Technology inputs include the introduction or implementation of a new or significantly improved good, service or operational process. These technology inputs make the goods, services or processes ‘smarter’. Non- technology inputs represent other activities used by a mine site that do not encompass a technology focus (figure a).

5 a Mining inputs and the MTSE sector

The technologies that belong to the MTSE sector are specialised products/services or processes that are sold to the minerals industry. They can either remain in their original form or can be integrated into existing mining services, pieces of equipment or processes. For some companies in the sector, mainly small to medium sized enterprises, these technologies represent the majority of their business. For the remaining companies, these technologies represent only a proportion of their business.

In this report, we only consider technologies that are specific to the MTSE sector and not activities beyond these technologies.

Refer to box 3 for a summary of currently available non-ABARE–BRS sector estimates. Please note that ABARE–BRS is unable to verify the accuracy of these estimates and the estimation methods used to derive them. Related industry statistics

The Australian Bureau of Statistics (ABS) does not recognise, or publish data corresponding to, the MTSE sector. However, it does produce a number of official statistics that can be used to provide an indication of the size of the sector, even though all of the official statistics provided cover companies within and beyond the MTSE sector.

The ABS estimates that in 2006-07 Australian mining establishments (including petroleum) used approximately $4.1 billion of contract, subcontract and commission work (ABS 2008), which includes other mining inputs outside the mining technology services and equipment sector.

In 2008-09, new capital expenditure by Australian mining establishments (including petroleum) was estimated at $38 billion, of which almost $10 billion was spent on equipment, plant and machinery, including motor vehicles (ABS 2009a). Australian mining establishments (including petroleum) employed 167 000 workers in 2008-09, of which 14 000 were employed in the oil and gas sector (ABARE 2010).

Business expenditure on research and development (BERD) for Australian mining establishments (including petroleum) was estimated at just over $3.2 billion, $4.3 billion for the manufacturing sector, and $2.2 billion for professional, scientific and technical services (ABS 2009b). These last two industry categories include businesses that belong to the MTSE sector. The only other industry category that had BERD greater than $1 billion was financial and insurance services ($1.4 billion). The ABARE–BRS estimate for research and development expenditure in the MTSE sector lies just below $1 billion.

6 Economic linkages between industries in 2005-06, the latest year for which data are available, are indicated in ABS (2009c)—this information is based on input–output tables for the Australian economy using a standard industry classification.

The Construction and Mining Equipment Industry Group (CMEIG) estimated that the total market for construction and mining equipment was $3.2 billion in 2009, decreasing by 27 per cent from the previous year (MNP 2010). Queensland accounted for 30 per cent of sales, followed by New South Wales (23 per cent), Victoria (18 per cent) and Western Australia (16 per cent). This included equipment such as hydraulic excavators, wheel loaders, dozers, rigid dump trucks, skid steer loaders and backhoe loaders.

The CSIRO, through the Minerals Down Under Flagship program, is aiming to more than double the size of the MTSE sector to $10 billion per year by 2015 (CSIRO 2009). The ABARE–BRS estimates produced in this report demonstrate that the MTSE sector is on track to achieve this target.

box 3 Non-ABARE-BRS sector estimates

 Austrade (2008) estimated that in 2007-08 the mining equipment, technology and services (MTS) sector generated $12 billion in annual sales, with $2.5 billion in export sales. The definition adopted included capital equipment, contract mining, exploration, mining consumables, professional services, software and advanced technologies, and equipment supply.

 Invest Brisbane (2008) commissioned a study that estimated that the Queensland mining technology and services (MTS) sector generated $1.1 billion in sales revenue since 2006, accounting for a 26 per cent share of the Australian MTS sector. The definition adopted included technology applications; equipment design and provision; engineering, construction, and maintenance expertise; contract mining; and consulting services.

 HighGrade (2010) estimated that in 2008-09 the mining technology and services (MTS) sector generated $27.5 billion in annual sales and employed 82 725 people. These estimates were mainly derived using publicly available information, sourced from company financial reports and/or ASX releases. In some situations, information was obtained from other significant private companies that were not publicly listed. The definition adopted included all mining inputs, such as construction, contract mining and drilling services; construction and mining equipment manufacturers and suppliers; engineering services; consulting services; and software and technology applications. Over 75 per cent of the $27.5 billion in annual sales was generated by 20 per cent of the companies surveyed. The main focus of these large companies was construction and contract mining services, encompassing only a small technology component. Since these estimates are mainly based on brief public documents, it is unclear whether these estimates also count revenue from sales to industries other than the minerals industry.

7 Project objective

The information in this report will be used by governments and industry for the following purposes:  to inform governments, industry and the general community about the importance of the sector to the economy of Australia and individual states  to guide the future policy direction of governments, especially in relation to initiatives to facilitate sector growth, innovation and competitiveness  to inform industry decision-making about allocation of resources, including capital for research and education, marketing and efforts to penetrate domestic and international supply chains  to market the expertise and capabilities of the sector domestically and internationally  to raise the profile of the sector in the general community.

Funding for the project was provided by the Australian Government Department of Resources, Energy and Tourism (coordinating body); Australian Government Department of Innovation, Industry, Science and Research; Queensland Department of Employment, Economic Development and Innovation; Western Australian Department of State Development; South Australian Department of Trade and Economic Development; Australian Trade Commission (Austrade); and Austmine. In-kind support was provided by the Commonwealth Scientific and Industrial Research Organisation (CSIRO). These agencies and organisations are collectively known as the project proponent. box 4 Sector acronyms

Currently, there is a range of comparable acronyms used by different entities to represent various components of mining inputs. These include:

 MTSE – Mining technology services and equipment – current ABARE–BRS study which measures technology inputs. This is an extended definition (outlined in chapter 2) from previous ABARE studies, and now covers such areas as heavy machinery and equipment.

 MTS – Mining technology services – used by ABARE (Tedesco et al 2002 and Tedesco et al 2005) to measure technology inputs with a narrower definition to the current ABARE–BRS study. This study does not cover technology in heavy machinery and equipment.

 MTS – Mining technology and services – used by Austmine to measure mining inputs. This includes, for example, such areas as contract and consulting services, technology applications, and equipment.

 MTS – Mining equipment, technology and services – used by Austrade to measure mining inputs. This includes, for example, such areas as capital equipment, contract mining, exploration, mining consumables, professional services, software and advanced technologies, and equipment supply.

 METS – Mining equipment, technology and services – used by Trade Queensland to measure mining inputs. This includes, for example, such areas as contract and construction services, security, medical and catering services.

The scope of each of these sectors is not compatible, and over time changes should be made to make better use of more representative acronyms to alleviate confusion in the underlying definitions.

8 2 Methodology

To obtain updated economic information on Australia’s MTSE sector, ABARE–BRS has conducted a survey of relevant MTSE companies operating in Australia. This follows earlier surveys of the sector undertaken in 2002 (Tedesco et al. 2002) and 2005 (Tedesco et al. 2005). This third survey provides updated data on the MTSE sector that will be used by governments, industry and the general community.

In this chapter a detailed definition of the MTSE sector is provided and the survey method is discussed. This includes a list of exclusions to the sector definition, plus a discussion related to the questionnaire, survey participants, conduct of the survey, presentation of results and reliability of estimates for the sector. Scope of the MTSE sector

The definition of the MTSE sector differs from the two previous ABARE surveys. A revised definition of the MTSE sector, as agreed by the project proponents in July 2009, is adopted in this third ABARE–BRS survey.

In this study, the mining technology services and equipment (MTSE) sector is defined in general terms to comprise establishments that supply goods and services which embody specialist technology, innovation, intellectual property or knowledge specific to the minerals industry. This technology is defined to include the introduction or implementation of a new or significantly improved good, service or operational process.

The MTSE sector can be categorised as follows:

 Technology applications for exploration, mine development, mining, minerals processing, minerals handling transport and mining maintenance technologies. These applications include remote sensing, airborne and ground geophysical, geochemical and other exploration technologies, software for exploration, mine planning, geological, data base, mining and processing applications, remote control systems for mining, protection systems, extraction and processing technologies, communication systems, and information and recording systems.

 Equipment and machinery manufacture and supply including scientific, electronic, electric equipment manufacturers, as well as heavy plant, machinery and equipment (for example, drilling, sampling, mining materials handling, mineral processing, hydro and pyrometallurgical equipment).

 Consulting services including surveying services, geological, mining and geotechnical engineering, scientific research services, laboratory and testing services, chemical analysis services, environmental management (remediation), project management, construction

9 services, primary metallurgical and mineral preparation services, site preparation services, logistics management services and training and knowledge transfer. Includes services provided under either the fee for service, contract, or engineering, procurement and construction management (EPCM) business models.

 Contract services including contract mining, EPC (turnkey contracts), and specialist support on-site and off-site service contractors.

For the purpose of this study, the minerals industry includes activities that are focused on making a mine work at the site and related mineral processing operations, including exploration, mine development, extraction, processing (on or off-site), maintenance, closure and remediation. The minerals industry covers both non-energy and energy minerals. Non-energy minerals include bauxite/alumina/aluminium, base metals (copper, lead and zinc), gold, iron ore, mineral sands, nickel, industrial minerals (excluding coal), rare earths and other metals. Energy minerals include coal, uranium and thorium, but specifically exclude oil and conventional gas, geothermal, underground coal gasification and coal seam gas activities. These are covered in a forthcoming study. Exclusions from the MTSE sector definition

The following is a list of mining services that are excluded from this survey of the MTSE sector:  university departments with publicly funded research and teaching as the main focus of daily business  finance, legal and management companies servicing the corporate side of the minerals industry  catering and related services  transportation and infrastructure  industry associations and professional institutes  wholesale trade companies and distributors  magazines and other publications  commercially available goods and services which are not specific to the minerals industry. Questionnaire

The ABARE–BRS questionnaire of Australia’s MTSE sector used in this study is provided in appendix D. The questionnaire was designed to enable MTSE companies to provide information on key economic indicators such as production, employment and exports, as well as collect a wide range of other information on the sector.

The questionnaire comprises 28 questions, with several parts to most questions, in six main sections. Question 1 requires respondents to confirm that their company produced MTSE goods and services in Australia in 2008-09, the main year for which information is obtained. Question 27 asks companies whether they also supply technology products to the energy sector, with this information being used in a future ABARE–BRS study on the energy technology services and equipment (ETSE) sector. Question 28 requests an estimate of the time taken to complete the questionnaire.

10 The remaining questions require either quantitative or qualitative information. While quantitative information mainly relates to 2008-09, information for some variables is required for an additional two years, 2006-07 and 2007-08. A large number of qualitative questions require responses based on a scale of importance, with 1 for ‘not important (or not applicable)’, 2 for ‘moderately important’, and 3 for ‘very important’. Question 3 allows respondents to provide a brief description of their MTSE goods and services by state/territory location, while question 9 provides this detail by export destination (for exporting companies only). Question 26 allows respondents to provide brief comments on their perception of the relative strengths and weaknesses of Australian MTSE companies compared with overseas based MTSE companies.

The six main sections of the questionnaire and accompanying questions are:  The Australian industry—questions 2 to 6  International experience—questions 7 to 13  Skilled labour force—questions 14 to 17  Innovation activities—questions 18 to 22  Operating a technology business—questions 23 to 26  Other issues—questions 27 to 28.

The questionnaire was formulated with extensive consultation from all of the project proponents. The questionnaire also benefited from comments received during the pilot testing phase of the survey. Requirements of a government survey

Statistical surveys conducted by, or on behalf of, Australian Government departments are required to obtain clearance by the Australian Government Statistical Clearing House, a division of the Australian Bureau of Statistics (ABS), if they satisfy specific criteria.

For this current MTSE study, less than 50 per cent of the funding was received from Australian government departments, with the remaining funding obtained from other project proponents. As a result, clearance by the Australian Government Statistical Clearing House was not required to conduct this survey. Survey participants

During the first two survey exercises in 2002 (Tedesco et al. 2002) and 2005 (Tedesco et al. 2005), a list of companies considered part of the mining technology services (MTS) sector was created by ABARE. Since 2005, the scope of the mining technology services and equipment (MTSE) sector has changed and the size of the sector has increased. To account for this, ABARE–BRS added other relevant company databases obtained from the project proponents to its current company database. ABARE–BRS then undertook an extensive exercise to update

11 relevant contact details for each company by establishing contact during the survey process. In aggregate, 1529 companies were originally considered part of the survey population (table 1).

During the survey process, ABARE–BRS established that there was a significant number of companies that were on the company database that could not be considered part of the MTSE sector. These companies were subsequently removed.

1 Survey statistics for Australia surveys responses from adjusted completed response Average sent a non-MTSE survey surveys from rate time to companies b population MTSE complete companies survey no. no. no. no. % min. 1 529 507 1 022 156 15 44

a Total number of surveys sent to likely MTSE companies. b Companies from ‘a’ that were subsequently excluded as not part of the MTSE sector.

2 Survey statistics by state/territory response se population sample rate no. no. % State/territory New South Wales (including the ACT) 203 39 19 Northern Territory 3 0 0 Queensland 307 39 13 South Australia 80 16 20 Tasmania 5 2 40 Victoria 105 23 22 Western Australia 319 37 12 Total 1022 156 15

Inclusion of a company (representing either all or some part of its output) in the final survey population was based on the company’s response to question 1 in the survey and any subsequent discussion between ABARE–BRS and the company (see the discussion on conducting the survey below). Following this process, 507 companies were excluded from the MTSE sector, giving a final survey population of 1022 companies.

The final survey population of the MTSE sector comprises private companies and public research organisations across Australia. The public research organisations include several divisions in CSIRO, Cooperative Research Centres (CRCs) and a small number of other major mining focused public research facilities. Research undertaken in the departmental university environment was not covered by the MTSE survey.

12 The total number of completed surveys received was 156 out of the total population of 1022, representing a response rate of 15 per cent (table 1). For response rate statistics on a state/ territory basis, refer to table 2. The average time taken to complete the survey was 44 minutes. More than 70 per cent of respondents took 45 minutes or less to complete the survey (table 3).

To obtain a representative response rate of the whole MTSE sector, ABARE–BRS randomly stratified according to size of business (small, medium, large, extra large), industry category (refer to sector definition in Chapter 2), and state/territory location of the company’s head office. The size of business is indicated by employment in four categories—small (10 people or less), medium (between 10 and 50 people),large (between 50 and 300 people), and extra large (more than 300 people).

The response rate outlined above is representative of this three-way stratification, and therefore the sample obtained represents a reflective cross-section of the whole MTSE population, yielding a robust set of results on the sector. At the end of this chapter, there is a discussion on measures used to assess the reliability of sector estimates.

3 Survey results: time taken to complete questionaire

% 0 minutes 0 0 to 15 minutes 13.9 15 to 30 minutes 41.1 30 to 45 minutes 18.5 45 to 60 minutes 15.2 More than 60 minutes 11.2 Total 100 Conducting the survey

The surveys were mainly distributed by email to companies on 14 August 2009. In a small number of cases, an email address was not appropriate and the survey was distributed either by fax or post. Survey participants were provided with background on the project objective and the role of the ABARE–BRS survey, and were also informed that the survey was voluntary.

Extensive follow-up contact was made to ensure that the response rate was maximised and representative of the whole MTSE sector. This follow-up involved both telephone and email contact with survey participants, and the re-sending of a significant number of surveys. The closing date for completed questionnaires included in the survey results was 24 December 2009.

A number of respondents were also contacted by ABARE–BRS to provide clarification of specific information provided in their completed questionnaires. Similarly, a number of respondents contacted ABARE–BRS to clarify the interpretation of certain questions (including the scope of the MTSE sector) or to provide other information relevant to the survey.

A relatively broad set of criteria was used to judge whether a particular company (or part of that company’s production) was included or excluded from the MTSE sector.

 If the share of the technology component in the product was judged to be significant (in value terms), the product was included in the MTSE sector definition.

13  If the share of the technology component in the product was judged not to be significant (in value terms), the product was excluded from the MTSE sector definition.

Although these criteria are general in nature, they proved to be a useful working approach to the issue of categorising products. Reporting the results

Survey participants were informed that the survey results would not be published or released in a form that would identify individuals or their businesses. For simplicity, any value information (such as sales revenue) is expressed in nominal terms. Survey results

The responses to questions 1 and 28 have already been presented in tables 1 and 3. The remaining survey results are discussed in chapter 3, including the quantitative questions (questions 2, 4 to 8, 10 to 16, 18 to 22, 27), qualitative questions (questions 17, 23 to 25), and questions requiring brief descriptions and comments (questions 3, 9, 26).

The responses to most of the qualitative questions are based on the scale of importance from 1 to 3. Aggregated survey results are provided for each scale, usually in the form of the percentage distribution of responses across the three scales. In addition, the average of all responses has been provided to indicate the importance of a particular category to the respondents.

Questions 23 to 25 had an ‘other’ category available to respondents to specify an alternative not otherwise available. A summarised list of these ‘other’ responses, by question, is provided in appendix C. Sector results

The survey results for the quantitative questions (questions 2, 4 to 8, 14, 18) are used to derive MTSE sector estimates. These questions cover production, exports, employment, and research and development expenditure.

Estimates are reported in chapter 4 for:  the MTSE sector for Australia  the MTSE sector, by state/territory  the MTSE sector, by industry category.

The state/territory location is indicated by the location of the company’s head office, and the industry category is indicated by one of the following four categories: technology applications, equipment and machinery manufacture and supply, consulting services, and contract services. The reliability of these estimates is discussed in the next section.

14 To protect the confidentiality of survey responses, estimates are only provided for questions (or categories of questions) that have three or more survey responses. If less than three responses were received, estimates are not reported. Further, data have not been supplied if it was deemed that confidentiality of respondents would be breached. Reliability of sector estimates

The reliability of sector estimates is dependent on how representative the collected information is of the whole MTSE sector. Since a stratified random sampling procedure was adopted according to size of business, industry category and state/territory location, the estimates should be fairly reflective of the behaviour of the MTSE population. Nevertheless, sampling errors have been calculated for each sector estimate. Sampling errors

The data collected from survey respondents are weighted according to the size of business, industry category and state/territory location in order to calculate population (industry/ sector) estimates. Estimates derived from these MTSE businesses are likely to be different from those that would have been obtained if information had been collected from a census of all businesses in the MTSE sector. Any such differences are called sampling errors.

The size of the sampling errors is influenced by the number of survey responses, the variability of MTSE businesses in the population and, most importantly, the design of the survey and the estimation procedures used. The more businesses that respond to the survey, the lower the sampling error is likely to be. If the population is broken down into particular groupings, such as industry category or state/territory location, this could cause an increase in the sampling error. This means that state estimates are likely to have greater sampling errors than national estimates. If there is a large diversity in responses to a particular question, this also contributes to an increased sampling error. A stratified random sample by size of business, industry category, and state/territory location has been taken to try to minimise these sampling errors.

To provide a guide as to the reliability of the sector estimates, sampling errors have been calculated for each estimate. These estimated errors, expressed as percentages of the sector estimates and termed ‘relative standard errors (RSE)’ are provided in parentheses next to each sector estimate in chapter 4. An example of the use of relative standard errors is presented in box 5. Comparing estimates

When comparing estimates between different segments of the sector, it is important to recognise that the differences are subject to sampling error. As a rough rule of thumb, a conservative estimate (an overestimate) of the standard error of the difference can be constructed by adding the squares of the estimated standard errors of the component estimates and then taking the square root of the result. An example is given below.

Suppose the estimates of gross sales revenue are $100 000 for small businesses and $125 000 for large businesses—a difference of $25 000—and the relative standard error is given as 6 per cent for each estimate. The standard error of the difference can be estimated as:

15 [(0.06 x $100 000)2 + (0.06 x $125 000)2] = $9605

The relative standard error of the difference is calculated as:

($9605 / $25 000) x 100 = 38 per cent.

Similar calculations can be made when comparing estimates of change from year to year. However, it should be noted that there are changes in the population of the MTSE sector from one year to the next. If these population changes are substantial, differences in estimates, such as gross sales revenue, might be a result of the changes in population rather than changes in company sales revenue between years.

box 5 Example of the use of relative standard errors

To obtain the standard error from the relative standard error, multiply the relative standard error by the survey (sector) estimate and divide by 100. For example, if gross sales revenue is estimated to be $100 000 with a relative standard error of 6 per cent, the standard error for this estimate is $6000.

There is roughly a two in three chance (that is, 67 per cent) that the ‘census value’ (the value that would have been obtained if all MTSE businesses in the target population had responded) is within one standard error of the survey estimate.

There is roughly a 19 in 20 chance (that is, 95 per cent) that the census value is within two standard errors of the survey estimate.

Thus, in the above example, there is an approximately two in three chance that the census value lies between $94 000 and $106 000, and an approximately 19 in 20 chance that the census value lies between $88 000 and $112 000.

Data quality

ABARE–BRS’s survey system is designed to produce data of a quality suitable for research and analysis at the unit level. This involves a set of quality controls, with procedures being tailored to the specific requirements of individual surveys. The key to the success of the system is employing experienced survey officers and statisticians to guide the design and operation of the data collection and estimation process.

With voluntary surveys, the first critical control point is maximising the response rate of the selected survey sample. Having staff with appropriate interpersonal skills is essential. Nevertheless, low response rates can be unavoidable in some surveys. Problems of data quality arising from this source are reduced by the use of procedures to guide the selection of replacement businesses, and the use of statistical modelling in the estimation process.

Data quality is also enhanced by checks against available external data sources and by internal consistency checks. The first of these checks takes place at the time of collection. After the collection of the survey information, further automated and manual checks against the full set of collected data are made. Extreme observations are also identified and, if necessary, checked by further contact with the survey respondent.

16 3 Australian profile: survey results

The survey results for Australia’s MTSE sector are presented in this chapter in six sections:  The Australian industry  International experience  Skilled labour force  Innovation activities  Operating a technology business  Other issues. Scale of importance

As indicated in chapter 2, responses to several qualitative questions take the form of a scale ranging from ‘not important’ to ‘very important’ (see appendix D for the questionnaire and scale). The responses to most of the qualitative questions are based on the scale of importance from 1 to 3. Aggregated survey results are provided for each scale, usually in the form of the percentage distribution of responses across the three scales or by the average response. In most cases, the ranking is similar between the two approaches.

Questions 23 to 25 had an ‘other’ category available to respondents to specify an alternative not otherwise available. A summarised list of these ‘other’ responses, by question, is provided in appendix C.

Most respondents provided information for all questions. In general, the number of responses ranged between 121 and 156. Exceptions to this include question 13 (43 responses), questions 20 and 21 (60 responses), and question 24 (117 responses). Unless otherwise stated, the survey statistics presented in this chapter are for Australian produced MTSE goods and services in the 2008-09 financial year. The Australian industry Industry categories, state/territory location and type of mineral resource

In 2008-09, the Australian MTSE sector comprised a range of companies that supplied different technology goods and services to the market. The largest segment of the industry was made up of technical based consulting services (32.9 per cent), with the remainder consisting largely of equipment and machinery manufacture and supply companies (31.8 per cent), and companies with technology applications (24.4 per cent) (table 4).

17 4 Survey results: share of industry categories 2008-09

5 Survey results: share of state/territory office location 2008-09

6 Survey results: share of mineral resources 2008-09

These companies predominantly had offices located in three main states in Australia; namely Western Australia (31.1 per cent), Queensland (25.8 per cent) and New South Wales (21.1 per cent) (table 5).

Almost 80 per cent of business undertaken by MTSE companies in 2008-09 was with mine sites that mined coal (34 per cent), gold (16.6 per cent), iron ore (15.1 per cent) and base metals (copper,

18 lead, zinc) (14.1 per cent). The remaining 20 per cent of business was distributed across a range of commodities (table 6). Gross sales revenue

In 2006-07, around 64 per cent of respondent companies earned more than $1 million in grosssales revenue from MTSE products. In 2007-08, this percentage increased by around 5 per cent to 68.7 per cent, and in 2008-09 there was a further 2 per cent increase to 70.7 per cent. Notably, there was an increase in the percentage of companies with gross MTSE sales revenue of more than $10 million, from 21.8 per cent in 2006-07 to 24 per cent in 2008-09. The small percentage of companies with a zero value for gross sales revenue in a particular year indicates no production (table 7).

Around 98 per cent of companies in the MTSE sector were operational for the full 12 months of the year over the given three-year period. The remaining 2 per cent of businesses were either new companies entering the sector or companies exiting the sector (table 8). International experience Gross export sales revenue

By 2008-09, around 70 per cent of respondents exported MTSE goods and services from Australia, up from 61.8 per cent in 2006-07. Of these exporting businesses, 29 per cent of respondents

7 Survey results: gross sales revenue of Australian MTSE production a 2006-07 to 2008-09

2006-07 2007-08 2008-09

$0 2.7 2.0 0.7

$1 to $100 000 4.8 2.7 2.0

$100 001 to $500 000 15.6 16.3 16.0

$500 001 to $1 million 12.9 10.2 10.7

$1 000 001 to $2 million 14.3 11.6 12.7

$2 000 001 to $5 million 16.3 19.7 20.7

$5 000 001 to $10 million 11.6 15.0 13.3

More than $10 million 21.8 22.4 24.0

Total 100 100 100 a Can include some double counting if the primary good/service is an input into a secondary good/service.

19 8 Survey results number of months of the year the business was operational 2006-07 to 2008-09

2006-07 2007-08 2008-09

1 to 6 months 1.6 0.8 1.4

7 to 11 months 0.8 0.8 1.4

12 months 97.7 98.5 97.1

Total 100 100 100

earned more than $1 million in gross export sales revenue in 2006-07, increasing to 33.2 per cent in 2008-09. At the high end of the sector, the percentage of respondents with gross MTSE export sales of more than $10 million increased slightly from 8.4 per cent in 2006-07 to 9.8 per cent in 2008-09 (table 9).

There was a significant clustering of businesses with gross export sales revenue between $100 000 and $500 000. From 2006-07 to 2007-08, this percentage remained relatively unchanged at around 20 per cent, with a slight decrease to 17.4 per cent in 2008-09 (table 9).

In 2008-09, the most important export regions for the Australian MTSE sector were Africa (16.1 per cent), Oceania (14.7 per cent) and North America (14.5 per cent). Together they accounted for around 45 per cent of the share of the Australian export market. On an individual country basis, Indonesia accounted for a 15.4 per cent share of Australia’s export market, followed by China (5.2 per cent) (table 10). Chapter 4 provides detailed dollar estimates for the MTSE sector according to export destination. Appendix E provides a full listing of countries by region.

Around 93 per cent of exporting companies were exporting for the full 12 months of the year between 2006-07 and 2007-08, which decreased to 91.2 per cent in 2008-09. The remaining 7 per cent of businesses in 2006-07 and 2007-08, and 8.8 per cent in 2008-09 were either companies exporting for the first time or companies no longer selling to the export market (table 11).

20 9 Survey results gross export sales revenue of Australian MTSE production 2006-07 to 2008-09

2006-07 2007-08 2008-09

$0 38.2 33.8 31.1

$1 to $100 000 6.9 6.2 10.6

$100 001 to $500 000 20.6 20.0 17.4

$500 001 to $1 million 5.3 10.0 7.6

$1 000 001 to $2 million 9.9 6.2 9.8

$2 000 001 to $5 million 6.1 8.5 9.1

$5 000 001 to $10 million 4.6 4.6 4.5

Total 100 100 100 Office locations

In 2008-09, almost 99 per cent of respondents had an Australian based head office (figure b). Predominantly, these head offices were located in Queensland (27.3 per cent), New South Wales (25.3 per cent) and Western Australia (22.7 per cent). Jointly these three states accounted for more than 75 per cent of head office locations of MTSE companies (table 12). b Survey results: share of head office location 2008-09

21 10 Survey results: share of export countries and regions 2008-09

Individual countries

China 5.2

Indonesia 15.4

India 3.7

Brazil 2.2

Chile 2.8

Russian Federation 1.1

Regions a

Oceania b 14.7

East and South-East Asia 8.2

Other Asia 4.6

Africa 16.1

North America 14.5

Latin America and the Caribbean 4.0

Europe 7.5

Total 100 a Excluding previous individual countries. b Excluding Australia.

11 Survey results: number of months of the year the export business was operational a 2006-07 to 2008-09

2006-07 2007-08 2008-09

1 to 6 months 6 4.7 5.5

7 to 11 months 1.2 2.3 3.3

12 months 92.9 93 91.2

Total 100 100 100 a Data for exporting businesses only.

12 Survey results: share of state/territory head office location a 2008-09

New South Wales b 25.3

Northern Territory 0.0

Queensland 27.3

South Australia 9.7

22 Tasmania 0.6

Victoria 14.3

Western Australia 22.7

Total 100 a Data for businesses with an Australian head office. b Including the ACT.

13 Survey results: share of overseas head and other office locations a 2008-09

head office other offices

China ns 6.2

Indonesia ns 6.2

India ns ns

Brazil ns ns

Chile ns 18.0

Russian Federation ns ns

Regions a

Oceania b ns 8.1

East and South-East Asia ns 6.2

Other Asia ns ns

Africa ns 6.8

North America ns 19.3

Latin America and the Caribbean ns 14.9

Europe ns 6.8

a Excluding previous individual countries. b Excluding Australia. ns Not supplied – insufficient sample.

Almost 27 per cent of Australian MTSE companies had offices in overseas locations in 2008-09 (figure c). These offices were mainly located in North America (19.3 per cent), and Latin America and the Caribbean (14.9 per cent). In particular, Chile exhibited a large concentration of overseas offices (18 per cent), while Indonesia and China both had a significant number of offices (6.2 per cent) (table 13).

In 2008-09, Australian offices employed a larger share of people (95 per cent) compared with overseas based offices (5 per cent). Overseas offices were often smaller in size and generally only employed a small number of staff, including expatriates and locals (figure d).

23 Skilled labour force Size of labour force

The MTSE sector is mainly characterised by a relatively large share of small companies. In 2008- 09, 40.9 per cent of respondents employed 10 people or less, while 34.4 per cent employed between 10 and 50 people (on a full-time equivalent basis) (table 14).

Full-time workers were employed by 100 per cent of respondents. Companies employing part- time workers (88.1 per cent) typically employed less than 10 part-time workers (75.2 per cent) (table 14). c Survey results: share of companies with overseas office 2008-09

d Survey results: share of labour force by Australian/overseas office location 2008-09

24 14 Survey results: size of labour force 2008-09

full time part time total a

0 people 0 11.9 b 0

1 to 10 people 44.4 75.2 40.9

11 to 50 people 32.4 8.9 34.4

51 to 100 people 9.3 0.0 11.0

101 to 300 people 7.9 2.0 6.5

Over 300 people 6.0 2.0 7.1

Total 100 100 100 a On a full time equivalent basis. For example, 2 people employed half time (that is, 0.5 years each) is equivalent to 1 person year. b Respondents specifically indicated zero people employed on a part-time basis.

15 Survey results: share of highest qualifications completed 2008-09

University or other tertiary (PhD level only) 7.6

University or other tertiary

(other than PhD level) 41.7

Trade apprenticeship, technical, vocational 33.7

No formal skills 17.1

Total 100

Highest education level

In 2008-09, almost 50 per cent of companies employed workers with university or other tertiary level qualifications, of which 7.6 per cent were at the PhD level. Trade apprenticeships, technical or vocational training were also significant accounting for 33.7 per cent of qualifications completed (table 15). Job shortages

In 2008-09, respondents indicated that their company was most in need of engineers (including metallurgists) (50.0 per cent, with an average response of 2.2), tradespersons and related workers (33.3 per cent, 1.9), and managers and administrators (18.8 per cent, 1.8) to help deal with job shortages (table 16).

25 16 Survey results: importance of occupations required to deal with current job shortages 2008-09

not moderately very average important important important response

% % % no.

Computer science specialists 57.8 23.4 18.8 1.6

Engineers (including metallurgists) 28.6 21.4 50.0 2.2

Geologists and other earth scientists 66.9 7.8 25.3 1.6

Other professionals 57.8 26.6 15.6 1.6

Tradespersons and related workers 44.4 22.2 33.3 1.9

Managers and administrators 39.6 41.6 18.8 1.8

Clerical, sales and service workers 57.1 35.1 7.8 1.5

Production, transport, labourers

and related workers 70.1 16.2 13.6 1.4

Other 100.0 0.0 0.0 1.0

e Survey results: share of companies undertaking collaborative research and development 2008-09

Innovation activities Research and development

Consistent with an industry characterised by a large proportion of small companies, 24.5 per cent of respondents did not invest in research and development (in-house and external). In 2008-09, the majority of research and development expenditure was related to in-house activities (73.7 per cent), with a smaller share of companies investing in external research and development (33.6 per cent). Generally, companies spent up to $500 000 on both in-house (50.3 per cent) and external (21.9 per cent) expenditure (table 17).

26 17 Survey results: research and development expenditure 2008-09

in-house external total

$0 26.3 66.4 24.5

$1 to $100 000 20.4 12.4 15.2

$100 001 to $500 000 29.9 9.5 31.0

$500 001 to $1 million 8.0 5.1 7.9

$1 million to $10 million 13.1 5.8 18.7

Total 100 100 100

Collaborative research and development projects were only undertaken by 39 per cent of companies (figure e). These collaborative activities mainly occurred with exploration/ mining companies and universities located in Australia (66.4 per cent and 14.5 per cent, respectively) and overseas (44.1 per cent and 18.9 per cent, respectively). Other research organisations (7.9 per cent) were also important for Australian collaborations, while other companies (17.1 per cent) were also important for overseas collaborations (tables 18 and 19). If a MTSE company collaborated (Australian or overseas), then they were usually only involved in one or two research projects. Only a few companies collaborated on multiple research projects.

18 Survey results: share of collaborative research and development projects with Australian organisations a 2008-09

Exploration/mining companies 66.4

CSIRO 2.0

Universities 14.5

Cooperative Research Centres (CRCs) 3.9

Other research organisations 7.9

Other companies 5.3

Total 100 a Data only for businesses who have collaborated on research and development projects.

27 19 Survey results: share of collaborative research and development projects with overseas organisation a 2008-09

Exploration/mining companies 44.1

Universities 18.9

Other research organisations 7.2

Other companies 17.1

Other b 12.6

Total 100 a Data only for businesses who have collaborated on research and development projects. b ‘Other’ category mainly reflects government related work.

20 Survey results: patents owned by MTSE companies at 30 June 2009

registrable a non-registrable b

0 66.9 59.4

1 to 10 25.2 27.5

11 to 20 2.9 6.5

More than 20 5.0 6.5

Total 100 100 a Registrable patents include patents and trade marks. b Non-registrable patents include trade secrets and confidentiality agreements. Intellectual property

Patents are a mechanism used by companies to protect their intellectual property. The different types of patents include registrable (such as patents and trade marks) and non-registrable (such as trade secrets and confidentiality agreements). At 30 June 2009, nearly one-third of respondents owned registrable patents, while around 40 per cent owned non-registrable patents (table 20).

21 Survey results: importance of factors that affect competitive performance in Australian market 2008-09

not import moderately very average ant important important response

% % % no.

Access to skilled labour 19.9 21.9 58.3 2.4

Access to education and training opportunities 39.1 37.1 23.8 1.9

Allocating resources (labour and finance) to

research and development activities 32.5 33.1 34.4 2.0

28 Securing the protection of intellectual property

of the business 40.4 21.2 38.4 2.0

Access to finance for business development 38.4 30.5 31.1 1.9

Growing the company through diversification 39.1 27.8 33.1 1.9

Adopting flexible business practices 29.1 36.4 34.4 2.1

Access to, and familiarity with, specific

segments of the Australian/overseas markets 21.2 31.8 47.0 2.3

Access to good transport infrastructure for

efficient delivery 53.0 23.8 23.2 1.7

Employing appropriate promotion and

marketing strategies 18.5 42.4 39.1 2.2

Recognition by customers as supplier of

first choice 9.9 17.2 72.8 2.6

Other 97.4 0.7 2.0 1.1

22 Survey results: importance of factors that affect competitive performance in overseas markets 2008-09

% % % no.

Access to skilled labour 29.8 24.8 45.5 2.2

Access to education and training opportunities 52.1 27.3 20.7 1.7

Allocating resources (labour and finance) to

research and development activities 50.4 24.8 24.8 1.7

Securing the protection of intellectual property

of the business 36.4 18.2 45.5 2.1

Growing the company through diversification 47.9 25.6 26.4 1.8

Adopting flexible business practices 36.4 37.2 26.4 1.9

Access to, and familiarity with, specific

segments of the Australian/overseas markets 22.3 24.8 52.9 2.3

Access to good transport infrastructure for

efficient delivery 56.2 20.7 23.1 1.7

Employing appropriate promotion and

29 marketing strategies 22.3 33.1 44.6 2.2

first choice 16.5 14.9 68.6 2.5

Other 95.9 0.0 4.1 1.1

23 Survery results: importance of issues that affect integration of products/services into Australian supply chains 2008-09

% % % no.

Building and developing new customer relationships 10.2 23.1 66.7 2.6

Development of long-term customer relationships 6.1 16.3 77.6 2.7

Ability to respond rapidly to the changing needs of

customers 11.6 19.7 68.7 2.6

Ability to efficiently develop and deliver new goods

and services to market 20.4 29.9 49.7 2.3

Ability to remain ahead of the competition 9.5 20.4 70.1 2.6

Use of good information technology infrastructure 18.4 39.5 42.2 2.2

Aligned company organisational and supply strategy 37.4 41.5 21.1 1.8

Existence of a good strategic partnership with

suppliers, distributors, and customers 20.4 32.7 46.9 2.3

Using outsourcing as a business option 53.7 29.9 16.3 1.6

first choice 10.2 15.0 74.8 2.7

Other 98.0 0.7 1.4 1.0

24 Survey results: importance of issues that affect integration of products/services into overseas supply chains 2008-09

% % % no.

30 Building and developing new customer relationships 15.4 17.1 67.5 2.5

Development of long-term customer relationships 12.0 14.5 73.5 2.6

Ability to respond rapidly to the changing needs of customers 19.7 26.5 53.8 2.3

Ability to efficiently develop and deliver new goods and services to market 25.0 33.6 41.4 2.2

Ability to remain ahead of the competition 13.7 23.1 63.2 2.5

Use of good information technology infrastructure 27.4 30.8 41.9 2.2

Aligned company organisational and supply strategy 42.7 41.0 16.2 1.7

Existence of a good strategic partnership with

suppliers, distributors, and customers 23.9 29.9 46.2 2.2

Using outsourcing as a business option 64.1 22.2 13.7 1.5

first choice 16.2 13.7 70.1 2.5

Other 95.7 1.7 2.6 1.1

Operating a technology business Competitive performance

For 2008-09, it was found that the same key factors affected the competitive performance of MTSE companies working in both the Australian and overseas markets. Respondents indicated that it was very important for a company to be recognised by customers as a supplier of first choice, to maintain a competitive advantage in both the Australian (72.8 per cent, with an average response of 2.6) and overseas markets (68.6 per cent, 2.5). Access to skilled labour (Australia: 58.3 per cent, 2.4; overseas: 45.5 per cent, 2.2) was also important in enhancing competitive performance (tables 21 and 22).

Companies found that they needed to have access to, and be familiar with, specific segments of the Australian/overseas markets in order to be competitive (Australia: 47 per cent, 2.3; overseas: 52.9 per cent, 2.3), as well as employ appropriate promotion and marketing strategies (Australia: 39.1 per cent, 2.2; overseas: 44.6 per cent, 2.2) (tables 21 and 22).

Integration into supply chains

Respondents indicated that the same set of key factors affected the integration of MTSE goods and services into both Australian and overseas supply chains in 2008-09. These factors were primarily related to MTSE companies being customer focused and continually maintaining good working relationships with clients.

For MTSE companies to integrate effectively, it was very important for them to develop long- term customer relationships (Australia: 77.6 per cent, with an average response of 2.7; overseas:

31 73.5 per cent, 2.6). It was also important to be recognised by customers as a supplier of first choice (Australia: 74.8 per cent, 2.7; overseas: 70.1 per cent, 2.5) (tables 23 and 24).

MTSE companies needed to ensure that they remained ahead of the competition (Australia: 70.1 per cent, 2.6; overseas: 63.2 per cent, 2.5), responded rapidly to the changing needs of customers (Australia: 68.7 per cent, 2.6; overseas: 53.8 per cent, 2.3), and built and developed new customer relationships (Australia: 66.7 per cent, 2.6; overseas: 67.5 per cent, 2.5) on an ongoing basis (tables 23 and 24). Commercialisation and integration

In 2008-09, in order to commercialise and integrate innovations, MTSE companies needed to address issues mainly related to employing quality technical staff and customer relationships. Respondents indicated that it was very important to employ good quality people and project management skills (68.7 per cent, with an average response of 2.6), as well as retain (60 per cent, 2.4) and attract (59.3 per cent, 2.4) suitably qualified technical employees. It was also important for companies to build a new or expanded customer base (63.3 per cent, 2.6) and to educate the market about the company’s technology (54 per cent, 2.4) (table 25).

25 Survey results: importance of challenges that affect commercialisation and integration of innovation 2008-09

% % % no.

Attracting investment capital (pre-seed, seed, venture) 72.0 13.3 14.7 1.4

Attracting investors who understand the technical

and scientific nature of the technology 67.3 17.3 15.3 1.5

Managing intellectual property, including patent protection 44.7 20.7 34.7 1.9

Establishing effective partnerships with other firms 27.3 40.7 32.0 2.1

Building a new or expanded customer base 6.7 30.0 63.3 2.6

Obtaining representative domestic market research 45.3 38.0 16.7 1.7

Obtaining representative international market research 40.7 36.7 22.7 1.8

Educating the market about the company’s technology 16.7 29.3 54.0 2.4

Establishing a domestic market presence 26.7 30.7 42.7 2.2

Establishing an international market presence 25.3 22.7 52.0 2.3

Adapting from a highly technical or academic focus to a business and market-oriented approach 56.0 25.3 18.7 1.6

Managing the long lead times required to ensure all

technical problems are resolved before release of the technology to market 42.0 25.3 32.7 1.9

32 Employing good quality people and project management skills 8.7 22.7 68.7 2.6

Attracting suitably qualified technical employees 19.3 21.3 59.3 2.4

Retaining suitably qualified technical employees 16.7 23.3 60.0 2.4

Employing appropriate promotion and marketing strategies 22.7 32.7 44.7 2.2

Other 98.7 0.0 1.3 1.0

Australian versus overseas MTSE companies

During the survey process, respondents were asked to provide their company’s views on the strengths and weaknesses of Australian MTSE companies. A large number of companies believed that the principal strengths of the Australian sector included being innovative and technically advanced, having a skilled and experienced workforce, and being flexible with the ability to customise products and services. In terms of weaknesses in the Australian sector, companies felt that there were large distances and costs involved with doing business overseas, high operating and manufacturing costs, as well as a shortage of skilled labour and high labour costs. Refer to Appendix A for a complete listing of the strengths and weaknesses of Australian MTSE companies.

Similarly, to compare the performance of Australian MTSE companies with overseas MTSE companies, respondents were asked to provide their company’s views on the strengths and weaknesses of overseas MTSE companies. A number of companies felt that the main strengths of the overseas sector included access to large markets with large client bases, low cost of operations, as well as large scale companies that can easily provide customer service through a global network. In terms of weaknesses in the overseas sector, companies thought that overseas MTSE companies were inflexible, with poor communication skills. They also felt that overseas MTSE companies were not as advanced as the Australian sector in the innovation and research and development undertaken. Refer to Appendix B for a complete listing of the strengths and weaknesses of overseas MTSE companies.

33 4 MTSE sector estimates

In chapter 3, the original information from survey respondents was presented. In this chapter, a weighted analysis (according to size of business, industry category and state/territory location) has been undertaken to calculate estimates for the Australian MTSE sector based on the survey responses for specific questions. For a more detailed explanation of this approach refer to chapter 2.

Estimates for the mining technology services and equipment (MTSE) sector are presented in three separate sections:  Australian profile  State profiles  Industry category profiles.

Each section provides aggregate survey results for production, exports, employment, and research and development expenditure in Australia’s MTSE sector. The relative standard error (RSE), a statistical measure of accuracy, is calculated for each MTSE sector estimate (see chapter

2 for an explanation of this measure).

Throughout this chapter, there are small differences between the total MTSE sector estimates in table 27 and the sum of the parts of the other estimates discussed. This is caused by the estimation technique used in the analysis.

It should also be noted that in this chapter average annual growth rates for value data are expressed in nominal terms. Between 2006-07 and 2008-09, Australia’s annual inflation rate averaged 3.1 per cent (ABARE 2009). Average annual growth rates in real terms may be approximated by subtracting the average inflation rate from the corresponding average nominal growth rate.

Global sales revenue is defined as the total of Australian and export sales revenue. Unless otherwise stated, the estimates presented in this chapter are for Australian produced MTSE goods and services in the 2008-09 financial year. Australian profile

The following analysis is representative of the Australian mining technology services and equipment sector. Production

Global sales revenue, incorporating Australian and export sales revenue, increased substantially from $6.1 billion in 2006-07 to $8.7 billion in 2008-09, equating to 0.7 per cent of gross domestic product (GDP) (table 26). This is equivalent to an average annual growth rate of almost 20 per cent. Australian sales revenue also experienced a large average annual growth rate during this period, of around 17 per cent (table 27). Australian sales revenue accounted for more than 70 per cent of global sales revenue earned by MTSE companies (figure f ).

26 Australian profile: estimates for global sales revenue as share of GDP a 2006-07 to 2008-09

34 2006-07 2007-08 2008-09

Global revenue 0.6 0.6 0.7 a ABS (2009d), using current price measures for GDP ($m).

35 f Australian profile: estimates of share of export and Australian revenue relative to global slaes revenue 2006-07 to 2008-09

In this report, state/territory numbers have been calculated for two distinct quantities that are defined differently. In this section, global sales revenue by state/territory office location was analysed for 2008-09. For this case, the office location reflected where the production occurred. In the next section (state profiles), global sales revenue by state/territory head office location was analysed for the three-year period from 2006-07 to 2008-09. For this case, the office location did not necessarily reflect where the production occurred, but instead revenue was assigned to the location of a company’s head office. Please note that these two quantities are two different measurements and are therefore not comparable.

In 2008-09, production of MTSE goods and services was mainly located in Queensland (32 per cent), Western Australia (31 per cent) and New South Wales (23 per cent) (figure g), which means MTSE companies produced most of their MTSE goods and services in company offices located in these states. Production also occurred in other company offices in the remaining states and territories, but at much lower levels (table 28).

27 Australian profile: estimates for sales revenue of Australian MTSE production 2006-07 to 2008-09

average annual growth rates

2006-07 to 2007-08 to 2006-07 to 2006-07 2007-08 2008-09 2007-08 2008-09 2008-09

$m $m $m % % %

Global revenue a 6 100 (11) 7 430 (10) 8 710 (10) 21.8 17.2 19.5

Export revenue 1 590 (23) 2 120 (19) 2 490 (21) 33.3 17.5 25.1

Australian revenue 4 510 (10) 5 310 (10) 6 220 (11) 17.7 17.1 17.4 a Global revenue is the total of Australian and export revenue. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

36 g Australian profile: estimates of share of global sales revenue by state/territory office location 2008-09

Users of MTSE goods and services included mine sites that mainly mined for coal (39 per cent), iron ore (16 per cent), base metals (copper, lead, zinc) (15 per cent) and gold (13 per cent) (figure h). Collectively, these mineral resources accounted for more than 80 per cent of business for Australian MTSE companies in 2008-09 (table 28). Exports

Export sales revenue increased substantially from $1.6 billion in 2006-07 to $2.5 billion in 2008-09, equivalent to an average annual growth rate of 25 per cent (table 27). This revenue accounted for almost 30 per cent of global sales revenue earned by MTSE companies (figure f ).

37 28 Australian profile: estimates for global sales revenue by state/territory office location and by mineral resource 2008-09

By state/territory office location

New South Wales a 2 010 (22)

Northern Territory 90 (34)

Queensland 2 810 (18)

South Australia 400 (25)

Tasmania 50 (51)

Victoria 685 (35)

Western Australia 2 660 (15)

By mineral resource

Bauxite/alumina/aluminium 255 (21)

Base metals (copper, lead, zinc) 1 250 (22)

Coal 3 250 (21)

Gold 1 110 (20)

Iron ore 1 280 (22)

Mineral sands 460 (69)

Nickel 371 (27)

Uranium 131 (22)

Industrial minerals (excluding coal) 65 (37)

Rare earths 40 (57)

Other metals 65 (36) a Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

38 h Australian profile: estimates of share of global sales revenue by mineral resource 2008-09

i Australian profile: estimates of share of export revenue relative to Australian revenue 2006-07 to 2008-09

In 2008-09, more than 60 per cent of the revenue earned from exported MTSE goods and services was from four main regions (figure j). These included Oceania ($600 million), Africa ($378 million), North America ($327 million) and Europe ($225 million). On an individual country basis, Indonesia accounted for more than 8 per cent of export sales and earned revenue of $206 million. The revenue earned from India ($150 million) was almost equivalent to revenue earned from China ($134 million), both accounting for 6 per cent and 5 per cent, respectively, of export revenue overall. These figures for India and China may suggest further growth potential in export sales to these countries (table 29). Appendix E provides a full listing of countries by region.

39 j Australian profile: estimates of share of export revenue by export region 2008-09

a Excluding previous individual countries. b Excluding Australia.

29 Australian profile: estimates for export sales revenue by export region

China 134 (16)

Indonesia 206 (20)

India 150 (60)

Brazil 47 (40)

Chile 105 (43)

Russian Federation 23 (26)

Regions a

Oceania b 600 (74)

East and South-East Asia 125 (32)

Other Asia 70 (41)

Africa 378 (25)

North America 327 (13)

Latin America and the Caribbean 98 (23)

Europe 225 (38) a Excluding previous individual countries. b Excluding Australia Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

40 30 Australian profile: estimate for size of labour force (full-time equivalent basis) 2008-09

Person years

Total employment 31 300 (6)

Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

31 Australian profile: estimates for research and development expenditure 2008-09

In-house expenditure 787 (12)

External expenditure 196 (34)

Total expenditure 985 (11)

Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. Employment

In 2008-09, there were 31 300 people employed on a full-time equivalent basis in the Australian MTSE sector (table 30). Research and development expenditure

The Australian MTSE sector spent $985 million on research and development in 2008-09, equivalent to 11 per cent of global sales revenue (table 31). Eighty per cent of this expenditure was related to in-house activities ($787 million), while the remaining 20 per cent of funds were invested in externally funded research and development activities ($196 million) (figure k). k Australian profile: estimates of share of research and development expenditure by type of activities 2008-09

41 State profiles

The following analysis provides statistics on a state basis for the mining technology services and equipment sector. MTSE production has been allocated to each state according to the location of a company’s head office. No estimates have been provided for the Northern Territory and Tasmania because of a lack of survey responses from these locations. All percentage figures quoted do not include these two locations. Production and exports Australian revenue

In 2008-09, almost 80 per cent of Australian sales revenue consisted of revenue generated from company head office locations in New South Wales ($1.8 billion), Western Australia ($1.6 billion) and Queensland ($1.5 billion) (figure l). Again, this is consistent with where Australian minerals operations are most active. To a lesser degree, Victoria ($834 million) and South Australia ($480 million) also had active MTSE companies (table 32).

l State profiles: estimates of share of Australian sales revenue a 2006-07 to 2008-09

a By state/territory head office location.

Between 2006-07 and 2008-09, the sector’s growth was mainly generated from companies located in New South Wales (27 per cent) and Victoria (23 per cent). South Australia (16 per cent) and Western Australia (15 per cent), and to a lesser extent Queensland (10 per cent), also displayed significant average annual growth over this period.

Growth of the MTSE sector between 2006-07 and 2007-08 was significant for Victoria (42 per cent), Western Australia (32 per cent) and South Australia (31 per cent), as companies in these states captured opportunities generated by a booming Australian minerals market. Queensland had less significant growth of 9 per cent, while growth in New South Wales declined by 2 per cent. However, for the period between 2007-08 and 2008-09 growth fell substantially, but in general remained positive for Victoria (6 per cent) and South Australia (3 per cent), while for Western Australia it remained unchanged. New South Wales and Queensland continued their upward trend, with New South Wales displaying a substantial increase of 65 per cent and Queensland growing by 11 per cent over this period (table 32).

42 32 State profiles: estimates for Australian sales revenue a

2006-07 2007-08 2006-07 to 2007- to 2008- to 2008- 2006-07 2007-08 2008-09 08 09 09

$m $m $m % % %

New South Wales b 1 100 (11) 1 080 (11) 1 780 (25) –1.8 64.8 27.2

Queensland 1 290 (15) 1 400 (11) 1 550 (6) 8.5 10.7 9.6

South Australia 354 (64) 464 (67) 480 (68) 31.1 3.4 16.4

Victoria 555 (40) 787 (38) 834 (38) 41.8 6.0 22.6

Western Australia 1 200 (20) 1 580 (19) 1 580 (21) 31.7 0.0 14.7 a By state/territory head office location. b Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. Export revenue

In 2008- 09, more than 70 per cent of expor t sales revenue consisted of revenue generated from company head of fice locations in Queensland ($1 billion) and New South Wales ($709 million) (figure m). Victoria ($329 million) and Western Australia ($272 million) also exhibited strong expor t revenue, while South Australia ($112 million) had the lowest expor t revenue in Australia (table 33). m State profiles: estimates of share of export sales revenue a 2006-07 to 2008-09

a By state/territory head o ce location.

Although South Australia had the lowest export revenue, it had the largest average annual growth in export revenue of almost 50 per cent between 2006-07 and 2008-09. New South Wales (35 per cent), Victoria (29 per cent) and Queensland (23 per cent) all displayed significant growth over this three-year period. Western Australia (5 per cent) showed the smallest average annual growth, reflecting a 10 per cent decline in export sales revenue between 2007-08 and 2008-09.

43 Between 2006-07 and 2007-08, growth in the MTSE sector was significant for all states. However, between 2007-08 and 2008-09 each of the states exhibited different behaviour. New South Wales (44 per cent) and Victoria (31 per cent) strengthened their export position with average annual growth rates rising. South Australia (29 per cent) still displayed significant growth, but not at the high rate seen in the previous financial year. Growth in Queensland (8 per cent) slowed substantially from the high rate seen in the previous financial year when MTSE companies were experiencing great success securing new export business. Western Australia (-10 per cent) was the only state to exhibit negative growth in this period (table 33).

33 State profiles: estimates for export sales revenue a 2006-07 to 2008-09

2006-07 2007-08 2006-07 to 2007- to 2008- to 2008- 2006-07 2007-08 2008-09 08 09 09

$m $m $m % % %

New South Wales b 392 (73) 494 (70) 709 (67) 26.0 43.5 34.5

Queensland 703 (29) 985 (18) 1 065 (13) 40.1 8.1 23.1

South Australia 52 (101) 87 (101) 112 (107) 67.3 28.7 46.8

Victoria 197 (29) 251 (24) 329 (28) 27.4 31.1 29.2

Western Australia 249 (31) 302 (29) 272 (22) 21.3 –9.9 4.5 a By state/territory head office location. b Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

During the two-year period between 2007-08 and 2008-09, companies in Western Australia mainly turned their attention to the Australian market where demand for technology products remained consistent from the previous year, and therefore did not export as many MTSE products and services during this period (tables 32 and 33). Global revenue

In 2008-09, almost 80 per cent of global sales revenue (total of Australian and export sales revenue) consisted of revenue generated from company head office locations in Queensland ($2.6 billion), New South Wales ($2.5 billion) and Western Australia ($1.8 billion) (figure n). This is consistent with where Australian minerals operations are most active. To a lesser degree, Victoria ($1.1 billion) and South Australia ($591 million) also had active MTSE companies (table 34).

44 n State profiles: estimates of share of global sales revenue a 2006-07 to 2008-09

a By state/territory head o ce location.

34 State profiles: estimates for global sales revenue a b 2006-07 to 2008-09

2006-07 2007-08 2006-07 to 2007- to 2008- to 2008- 2006-07 2007-08 2008-09 08 09 09

$m $m $m % % %

New South Wales c 1 500 (21) 1 580 (23) 2 490 (26) 5.3 57.6 28.8

Queensland 1 990 (18) 2 380 (11) 2 610 (5) 19.6 9.7 14.5

South Australia 406 (69) 551 (73) 591 (75) 35.7 7.3 20.7

Victoria 753 (38) 1 040 (33) 1 160 (34) 38.1 11.5 24.1

Western Australia 1 450 (21) 1 880 (18) 1 850 (18) 29.7 -1.6 13.0 a By state/territory head office location. b Global revenue is the total of Australian and export revenue. c Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

In 2008-09, global sales revenue as a share of gross state product (GSP) ranged from a low of 0.4 per cent in Victoria to a high of 1.1 per cent in both Queensland and Western Australia. In New South Wales and South Australia this share corresponded to 0.6 per cent and 0.7 per cent of GSP, respectively (table 35).

Between 2006-07 and 2008-09, the sector’s growth was mainly generated from companies located in New South Wales, with an average annual growth of almost 30 per cent. Victoria (24 per cent) and South Australia (21 per cent), and to a lesser extent Queensland (15 per cent) and Western Australia (13 per cent), also displayed significant average annual growth over this period (table 34).

45 Growth of the MTSE sector between 2006-07 and 2007-08 was significant for most states. However, for the period between 2007-08 and 2008-09 growth fell substantially but in general remained positive, except for Western Australia which saw a 2 per cent decline in global revenue. New South Wales defied this trend to display a substantial increase of almost 60 per cent between 2007-08 and 2008-09, after a low growth rate of 5 per cent between 2006-07 and 2007-08 (table 34).

35 State profiles: estimates for global sales revenue as share of GSP a 2006-07 to 2008-09

2006-07 2007-08 2008-09

New South Wales b 0.4 0.4 0.6

Queensland 1.0 1.1 1.1

South Australia 0.6 0.7 0.7

Victoria 0.3 0.4 0.4

Western Australia 1.0 1.2 1.1 a ABS (2009d), using current price measures for GSP ($m). b Including the ACT.

For the three-year period between 2006-07 and 2008-09, when comparing the average annual growth rates for Australian revenue (table 32), export revenue (table 33) and global revenue (table 34), growth in global revenue was influenced more by growth in either export or Australian sales. For instance, Queensland had consistent growth in Australian revenue (10 per cent) over the three-year period, but had stronger growth in export revenue (23 per cent). This also occurred in South Australia where growth in Australian revenue (16 per cent) was less than growth in export revenue (47 per cent). For both New South Wales and Victoria, growth in Australian and export revenue were similar. Western Australia displayed the opposite result where growth in Australian revenue (15 per cent) was greater than for export revenue (5 per cent), most likely fuelled by the state’s mining boom. Industry category

In 2008-09, over 70 per cent of global sales revenue for the industry category technology applications was earned in New South Wales ($841 million) and Queensland ($651 million) (table 36). These two states also earned over 60 per cent of global sales revenue for the industry category equipment and machinery, equating to $802 million in New South Wales and $1.1 billion in Queensland (figure o).

Almost 65 per cent was earned by companies located in New South Wales ($666 million) and Western Australia ($537 million) in the industry category consulting services. For contract services, 67 per cent was earned in Western Australia ($580 million) and Queensland ($425 million). South Australia and Victoria also produced goods and services in each of these industry categories, but had smaller shares. Mineral resource

In 2008-09, MTSE companies that were located in New South Wales ($1.8 billion) and Queensland ($1 billion) sold the largest amount of MTSE goods and services to coal mine sites (table 37).For MTSE businesses located in Western Australia, the main users of their goods and services were

46 o State profiles: estimates of share of global sales revenue by industry category a 2008- 09

a By state/territory head office location.

36 State profiles: estimates for global sales revenue by industry category a 2008-09

New South South Western Wales b Queensland Australia Victoria Australia

$m $m $m $m $m

Technology applications 841 (19) 651 (30) 23 (36) 353 (39) 260 (34)

Equipment and machinery 802 (50) 1170 (24) 216 (73) 550 (45) 436 (31)

Consulting services 666 (58) 358 (23) 73 (37) 219 (36) 537 (31)

Contract services 172 (48) 425 (18) 278 (104) 40 (44) 580 (41) a By state/territory head office location. b Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. mine sites that mined for gold ($566 million). Similarly for MTSE businesses located in Victoria, iron ore producers were the main customers demanding $400 million of MTSE goods and services. The main customers for South Australian MTSE companies were base metals producers, purchasing $191 million of MTSE goods and services. Export region

In 2008-09, MTSE companies that were located in New South Wales exported the largest amount of MTSE goods and services to Oceania, equating to $495 million (table 38). Similarly, the main export markets for MTSE companies located in Queensland were Africa ($232

47 million) and North America ($216 million). For Victorian MTSE companies, Europe ($108 million) was the main export market, whilst East and South-East Asia ($54 million) and Africa ($47 million) were the main export markets for MTSE companies located in Western Australia. The main export destination for South Australian MTSE companies cannot be reported because of limitations in the data.

37 State profiles: estimates for global sales revenue by mineral resource a 2008-09

$m $m $m $m $m

Bauxite/alumina/aluminiu m ns ns 42 (26) ns ns 103 (40) 51 (49)

Base metals (copper,

lead, zinc) 157 (21) 340 (23) 191 (69) 131 (27) 427 (54)

Coal 1800 (38) 1060 (5) 34 (67) 225 (57) 124 (30)

Gold 166 (21) 134 (24) 120 (94) 128 (45) 566 (31)

Iron ore 231 (21) 331 (16) 100 (68) 400 (66) 218 (14)

Mineral sands ns ns ns ns 11 (81) 16 (38) ns ns

Nickel 31 (18) 123 (58) 48 (94) 50 (21) 120 (41)

Uranium 14 (27) 20 (52) 45 (52) 17 (45) 35 (25)

Industrial minerals

(excluding coal) ns ns ns ns ns ns ns ns 18 (45)

Rare earths ns ns ns ns ns ns ns ns 13 (37)

Other metals ns ns 27 (80) 7 (64) ns ns ns ns a By state/territory head office location. b Including the ACT. ns Not supplied. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

48 38 State profiles: estimates for export sales revenue by export region a 2008-09

$m $m $m $m $m

China 11 (24) 94 (26) ns ns ns ns 4 (32)

Indonesia 78 (22) 59 (47) ns ns ns ns 39 (60)

India 3 (28) 131 (70) ns ns ns ns ns ns

Brazil ns ns 42 (37) ns ns ns ns ns ns

Chile 3 (30) 87 (46) ns ns ns ns 9 (51)

Russian Federation ns ns 12 (18) ns ns ns ns ns ns

Regions c

Oceania d 495 (90) 62 (68) 14 (70) 6 (66) 23 (35)

East and Southeast Asia 14 (26) 20 (28) ns ns ns ns 54 (45)

Other Asia 3 (49) 15 (31) ns ns ns ns 13 (49)

Africa 16 (33) 232 (41) 21 (107) 61 (37) 47 (26)

North America 33 (44) 216 (19) 14 (118) 34 (34) 31 (47)

Latin America and

the Caribbean 8 (24) 52 (26) ns ns ns ns ns ns

Europe 38 (90) 42 (39) 8 (119) 108 (64) 29 (51) a By state/territory head office location. b Including the ACT. c Excluding previous individual countries. d Excluding Australia. ns Not supplied. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. p State profiles: estimates of share of size of labour force (full-time equivalent basis)a 2008-09

49 Employment

In 2008-09, MTSE companies that had head offices located in Queensland employed 9450 people (on a full-time equivalent basis), equivalent to 30 per cent of the Australian MTSE sector (figure p). Queensland employed the largest share of people in the sector, followed by 24 per cent in Western Australia (7580 people) and 18 per cent in New South Wales (5470 people). Victoria (5040 people) and South Australia (3730 people) employed less people in the sector than the other states (table 39).

39 State profiles: estimates for size of labour force (full-time equivalent basis) a 2008- 09

person years

New South Wales b 5 470 (6)

Queensland 9 450 (5)

South Australia 3 730 (49)

Victoria 5 040 (4)

Western Australia 7 580 (9) a By state/territory head office location. b Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. Research and development expenditure

MTSE companies headquartered in New South Wales spent a total of $543 million on research and development in 2008-09, equivalent to a 55 per cent share of the sector (table 40). This substantial research and development expenditure was driven by a few large companies/ research organisations. Companies in Queensland spent $190 million (19 per cent) on research and development, followed by $135 million (14 per cent) in Victoria and $100 million (10 per cent) in Western Australia. MTSE companies with head offices in South Australia spent only $18 million (2 per cent) on research and development, which was the smallest share of all the states (figure q).

For all states, except Victoria, in-house activities constituted the largest share spent on research and development (figure r). In Victoria, MTSE companies spent a larger share on externally funded research and development activities, which was mainly driven by a few large companies/organisations.

40 State profiles: estimates for research and development expenditure a 2008-09

$m $m $m

New South Wales b 512 (16) 31 (23) 543 (15)

Queensland 151 (27) 40 (29) 190 (24)

South Australia 13 (37) 5 (25) 18 (40)

Victoria 38 (23) 95 (63) 135 (45)

Western Australia 74 (19) 24 (48) 100 (22) a By state/territory head office location. b Including the ACT. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided.

50 They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. q State profiles: estimates of share of research and development expenditure a 2008-09

a By state/territory head office location. r State profiles: estimates of share of research and development expenditure by type of activities a 2008-09

a By state/territory head office location. Industry category profiles

The following analysis provides statistics by industry category for the mining technology services and equipment sector. The four industry categories used to classify the MTSE sector were defined in chapter 2. They are:  technology applications  equipment and machinery manufacture and supply (known in this section as ‘equipment and machinery’)  consulting services

51  contract services.

For analysis purposes, a single industry category has been allocated to each company. This industry category represents the largest share of a given company’s business. Production and exports Australian revenue

In 2008-09, almost 40 per cent of Australian sales revenue was generated from MTSE companies producing equipment and machinery, equivalent to a value of $2.3 billion (figure s). This is not surprising given that this industry category covers larger forms of technology equipment, which have a greater dollar value. Contract services also tend to be represented by larger MTSE companies with a larger revenue stream. This industry category generated Australian revenue of $1.5 billion, which accounted for 24 per cent of the sector. Technology applications ($1.4 billion) represented a 22 per cent share, while consulting services ($1 billion) accounted for the remaining 16 per cent (table 41).

Between 2006-07 and 2008-09, the sector’s growth was mainly driven by companies producing equipment and machinery, and consulting services, with average annual growth rates of 25 per cent and 18 per cent, respectively. Over the same time period, contract services (14 per cent) and technology applications (11 per cent) also displayed good growth.

Growth of the MTSE sector between 2006-07 and 2007-08 was significant for all industry categories, except technology applications which only exhibited 3 per cent growth. However, between 2007-08 and 2008-09, average annual growth for technology applications increased significantly to 20 per cent. Equipment and machinery (28 per cent) exhibited the largest growth in the sector, while contract and consulting services both had steady growth of around 8 to 9 per cent (table 41).

41 Industry category profiles: estimates for Australian sales revenue 2006-07 to 2008- 09

2006-07 2007-08 2006-07 to 2007- to 2008- to 2008- 2006-07 2007-08 2008-09 08 09 09

$m $m $m % % %

Technology

applications 1 140 (16) 1 170 (20) 1 400 (15) 2.6 19.7 10.8

Equipment and

machinery 1 480 (18) 1 820 (20) 2 320 (26) 23.0 27.5 25.2

Consulting services 714 (10) 925 (10) 1 000 (8) 29.6 8.1 18.3

Contract services 1 170 (9) 1 400 (7) 1 520 (7) 19.7 8.6 14.0

52 s Industry category profiles: estimates of share of Australian sales revenue 2006-07 to 2008-09

Export revenue

In 2008-09, more than 90 per cent of export sales revenue consisted of revenue generated from three industry categories: equipment and machinery ($953 million), consulting services ($702 million) and technology applications ($597 million) (figure t). For this year, contract services generated less revenue from export sales and more revenue from Australian sales. Export revenue for this category totalled $235 million, equivalent to a 9 per cent share (table 42).

For the three-year period between 2006-07 and 2008-09, all industry categories experienced considerable average annual growth, ranging from 13 per cent for equipment and machinery to 42 per cent for technology applications. In all cases, except for consulting services, this growth was driven by significant growth between 2006-07 and 2007-08. In comparison, growth in consulting services was largely driven by growth of 33 per cent between 2007-08 and 2008-09 (table 42).

42 Industry category profiles: estimates for export sales revenue 2006-07 to 2008-09

2006-07 2007-08 2006-07 to 2007- to 2008- to 2008- 2006-07 2007-08 2008-09 08 09 09

$m $m $m % % %

Technology

applications 295 (16) 486 (21) 597 (22) 64.7 22.8 42.3

Equipment and

machinery 750 (29) 900 (27) 953 (22) 20.0 5.9 12.7

Consulting services 437 (70) 530 (70) 702 (73) 21.3 32.5 26.7

Contract services 138 (46) 204 (48) 235 (36) 47.8 15.2 30.5

Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate

53 provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. t industry category profiles: estimates of share of export sales revenue 2006-07 to 2008- 09

Global revenue

The industry category equipment and machinery had the largest share of global sales revenue (total of Australian and export sales revenue) in 2008-09, equivalent to almost 40 per cent, with a dollar value of $3.3 billion (figure u). The remaining three industry categories each had approximately a 20 per cent share of the sector, with revenue totalling $5.5 billion. Between 2006-07 and 2008-09, growth in the sector was broadly even across all four industry categories (table 43).

43 Industry category profiles: estimates for global sales revenue a 2006-07 to 2008-09

2006-07 2007-08 2006-07 to 2007- to 2008- to 2008- 2006-07 2007-08 2008-09 08 09 09

$m $m $m % % %

Technology

applications 1 440 (13) 1 660 (12) 2 000 (9) 15.3 20.5 17.9

Equipment and

machinery 2 230 (18) 2 720 (17) 3 270 (16) 22.0 20.2 21.1

Consulting services 1 150 (28) 1 450 (26) 1 700 (30) 26.1 17.2 21.6

Contract services 1 300 (8) 1 610 (7) 1 750 (6) 23.8 8.7 16.0

a Global revenue is the total of Australian and export revenue. Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs.

54 Growth of the MTSE sector between 2006-07 and 2007-08 was significant for all industry categories. However, between 2007-08 and 2008-09, growth was again relatively consistent at 20 per cent for all industry categories, except for contract services which displayed lower steady average annual growth of around 9 per cent (table 43). u Industry category profiles: estimates of share of global sales revenue 2006-07 to 2008- 09

For the three-year period between 2006-07 and 2008-09, when comparing the average annual growth rates for Australian revenue (table 41), export revenue (table 42) and global revenue (table 43), it was apparent that growth in global revenue was influenced more by growth in either export or Australian sales. In particular, for all industry categories, except equipment and machinery, export markets were a more important driver of growth than the Australian market and this led to significant growth in global revenue. For equipment and machinery, the Australian market was a more important driver of growth than export markets. These statistics support the view that for the Australian MTSE sector to grow, companies need to explore export opportunities. v Industry category profiles: estimates of share of size of labour force (full-time equivalent basis) 2008-09

Employment

In 2008-09, MTSE companies that produced equipment and machinery employed 10 300 people on a full- time equivalent basis, equivalent to 33 per cent of the Australian MTSE sector (figure v). This industry category employed the largest share of people in the sector, followed

55 by 25 per cent in consulting services (7720 people), 23 per cent in technology applications (7340 people) and 19 per cent in contract services (6060 people) (table 44).

44 Industry category profiles: estimates for size of labour force (full-time equivalent basis) 2008-09

person years

Technology applications 7 340 (5)

Equipment and machinery 10 300 (4)

Consulting services 7 720 (5)

Contract services 6 060 (7)

Note: Figures in parentheses are relative standard errors (RSEs) expressed as a percentage of the estimate provided. They provide a guide to the reliability of survey estimates. Refer to chapter 2 for an explanation on interpreting RSEs. Research and development expenditure

MTSE companies in the industry category of technology applications spent a total of $530 million on research and development in 2008-09, equivalent to a 54 per cent share of the sector (figure w). This substantial research and development expenditure was driven by a few large companies/research organisations. Companies in equipment and machinery (24 per cent) spent $240 million on research and development, followed by $200 million for consulting services (20 per cent). MTSE companies that produced contract services (2 per cent) spent only $16 million on research and development, which was the smallest share of all the industry categories. This is not surprising given their opportunity to innovate is more limited compared with the other industry categories (table 45).

45 Industry category profiles: estimates for research and development expenditure 2008-09

$m $m $m

Technology applications 406 (10) 120 (55) 530 (14)

Equipment and machinery 190 (42) 50 (29) 240 (33)

Consulting services 180 (10) 22 (32) 200 (11)

Contract services 13 (24) 3 (51) 16 (27)

For all industry categories, in-house activities constituted the largest share spent on research and development (figure x). This was most significant for consulting services, with in-house activities accounting for 90 per cent of research and development expenditure. The remaining industry categories had in excess of 75 per cent of funding allocated to in-house activities.

56 w Industry category profiles: estimates of share of research and development expenditure 2008-09

x Industry category profiles: estimates of share of research and development expenditure by type of activities 2008-09

57 Comparison of ABARE–BRS estimates

Table 46 provides a comparison of sector estimates between our three studies of the sector: the studies undertaken in 2002 (Tedesco et al. 2002) and 2005 (Tedesco et al. 2005), and the current ABARE–BRS study. Revenue estimates for the current ABARE–BRS study maintain similar average annual growth rates to those obtained in the 2002 study. Increases in the size of the labour force and research and development expenditure are expected given the extended sector definition adopted for this current study and changes in the sector which has seen the number of companies grow substantially.

The target population of the current study is an extension to the sector definition used in our previous two studies, and now additionally covers such areas as heavy machinery and equipment. Therefore, caution must be taken when making comparisons between the three studies, as noted differences in the results may be because of a difference in sector definitions, rather than changes in the sector over time.

46 Comparison of MTSE sector estimates, Australia

research and global sales export sales size of labour development revenue revenue force a expenditure

$m %pa $m %pa no. of persons $m

First ABARE study b

1995-96 1 240 467

2000-01 3 120 20 611 6 17 300 382

2001-02 f 3 740 713

2005-06 f 5 600 13 e 1 900 25 e

Second ABARE study c

2003-04 4 750 1 110 16 800 339

2004-05 f 4 430 –7 1 240 12

Third ABARE–BRS study d

2006-07 6 100 1 590

2007-08 7 430 2 120

2008-09 8 710 20 2 490 25 31 300 985

a On a full-time equivalent basis. b Tedesco et al. 2002. c Tedesco et al. 2005. d Current ABARE–BRS study. %pa = average annual percentage growth rate. e From 2000-01 to 2005-06. f ABARE forecast. Note: Estimates may not be directly comparable across the three studies.

58 5 Supplier and customer perspectives

To complement the survey based information presented in the previous chapters, we consulted with a selection of MTSE companies and minerals industry customers across Australia to gather more specific information on the supplier/customer relationship and technical capability of the Australian MTSE sector.

All the companies involved in this process supplied more specific information on their business operations and the MTSE sector in general. This additional information identified various areas of improvement which could support future growth and development in the sector. Most companies requested they not be identified and their responses have been masked to protect their confidentiality.

Based on these discussions, ABARE–BRS has gathered a large amount of detailed information on the MTSE sector from the two different sides of the commercial relationship between MTSE companies and their Australian customers. This chapter summarises the main points that were raised as part of these discussions. These comments represent the views of the MTSE and minerals companies that were consulted, and do not necessarily reflect ABARE–BRS’s views.

For the remainder of this chapter, the term ‘products’ refers to both ‘products and services’. Australian MTSE company perspective

The discussion that follows represents information obtained from consultations with a range of MTSE companies from across Australia. The aim is to gain a better understanding of how companies in the sector innovate, develop their innovations into commercialised products, and their strategy for selling technology to Australian and overseas minerals operations.

The areas of interest are related to:  constraints faced by companies that delay or prevent further innovation  achieving company success through competitive advantage  the level of collaboration on research and development and the dynamics of networking in the sector  marketing and understanding the product development to sales path  creating an overseas market presence  use of government support for company growth and development.

59 Constraints on innovation

For most MTSE companies, the main constraint on innovation is lacking the funds to develop and commercialise innovative ideas. As a rule of thumb, companies assume that the cost of commercialising a product is approximately twice the cost of developing a product.

MTSE companies employ different approaches to raise capital for growth and development. In the past, obtaining funds from venture capitalists has proven to be challenging and unattainable for a number of MTSE companies. Companies are now trying to attract investors that are not solely from the venture capital market. These alternative investor sources include:  private equity from ‘sophisticated investors’ who are high net worth individuals with an interest in the sector  collaborating with minerals companies that share a common interest in developing a new piece of technology, and who are willing to contribute funds to the project provided they obtain a beneficial return for their business within a reasonable timeframe  obtaining funds from minerals companies via a competitive tender process, which involves companies developing a solution for an existing problem and competing for a fixed sum of money from the minerals business. This option is usually by invitation only, with only a select number of companies being able to tender for the funds. These companies typically have an established relationship with the minerals business or have a reputation for producing related world class technology products.

There are several other factors perceived to constrain innovation in the MTSE sector, including strict laws associated with intellectual property. A shortage of skilled labour in Australia is being addressed by some MTSE companies finding it easier to go offshore to recruit talented people to fill local vacancies.

Another important challenge for MTSE companies is losing focus during the progress of innovation. When a new product is being developed, it is possible to get delayed by the process, losing sight of the vision for the product. Companies need to develop and maintain good strategic business plans to overcome this constraint on innovation.

Furthermore, customer demand can also constrain innovation. Companies spend considerable time building customer relationships, servicing products, growing business opportunities, and researching new markets. The amount of time and capital remaining to enhance their current innovation and develop new technology products is limited.

A large number of companies want to diversify their customer base by supplying to other industries, such as the Australian energy sector. However, companies have experienced a range of barriers trying to enter the market, including a large number of competitors already existing in the market, and energy companies with proven supplier relationships.

60 Competitive advantage

MTSE companies exhibit different forms of competitive advantage, including producing leading edge technology that has been successfully demonstrated in operating mine sites, being known as a reliable supplier that provides quality and consistent customer service, and consequently being chosen as supplier of first choice.

A competitive advantage can also be gained from the complexity and sophistication inherent in the technology product. Companies are still achieving business success, even though their company does not own intellectual property. Their success is related to producing high quality, technically advanced products, which places them ahead of the competition. This is particularly the case when the technology product is not unique and the level of competition for business is high.

Even if a company has a competitive advantage, it can take between 10 and 15 years to create a successful MTSE company. To develop and grow a successful business, there may be periods of time when negative cash flows occur. However, if the business has a competitive advantage, then with time and effort the business can eventually succeed. Collaboration and networking

Most companies in the MTSE sector have undertaken collaboration at some level with other companies or organisations linked to the sector. The majority of this collaboration effort has involved progressing innovation in the sector. A large number of companies have tried successfully to form links with other MTSE companies, universities, public sector research organisations and minerals companies through initiatives that include Cooperative Research Centres (CRCs) and industry focused groups such as the Australian Coal Association Research Program (ACARP) and the Australian Minerals Industry Research Association International (AMIRA International). A smaller number of companies have experienced less successful examples of collaboration, where the main areas of difficulty involved ownership of intellectual property and the creation of a new company that eventually became a competitor for business.

However, it seems that collaboration and networking are necessary in order to progress innovation in the sector. By doing so, businesses may be able to develop technology solutions by sharing the financial and risk burden that is inherent in research and development activities, with others that share a common interest. These technology solutions may then be integrated into current innovations or may help to develop new product lines for businesses in the sector. Marketing and product development

A new technology product can be developed in several ways, including through a company’s independent research and development, or through collaboration (as discussed previously). Once this new product is developed, a MTSE company needs to convince a mine site to purchase the product.

61 There are various ways to sell new MTSE products. This includes having an established relationship with a minerals business, creating a new relationship with a minerals business, word of mouth, developing a market presence by advertising in industry journals, or attending conferences, trade shows and exhibitions.

Creating new relationships within a minerals business is a large investment of time and effort, as these relationships need to be spread across the organisation from senior management to the mine site level, and they need to be constantly maintained. The MTSE companies that are having more success with building successful relationships are generally larger in size. The smaller MTSE companies usually have resource constraints and are not able to dedicate the significant amount of time necessary to make this important role a success. For these smaller companies, more targeted selling may be more appropriate and less time consuming. Some companies have had success in this area, especially when the technology product is specialised and the company only needs to convince one level of management in a minerals business of its credentials.

Another medium being used more by companies is the internet. The internet can be used to easily advertise and inform potential customers, from within Australia and around the world, about a company’s business and capabilities. A larger proportion of new customer business is being generated by customers becoming aware of companies through an internet search of specialised technology products. Therefore, it is important for all MTSE companies to have a good informative website representing their product line. Overseas market presence

To achieve significant growth in the sector, MTSE companies need to export their technology products. Every company approaches exports in a different way, but most companies at some time enlist assistance from Austrade. Austrade plays an important role in providing assistance to businesses to open new export markets. This usually involves the provision of detailed market intelligence and information on new markets. Austrade also assists with arranging appointments with government officials or industry members in overseas countries, establishing relationships with potential customers, increasing knowledge on the minerals industry and organising trade missions to potential new export markets. Even with all this help, MTSE companies still need to allocate time to undertake background research on potential markets that are best suited to their technology product.

There are various ways that companies can establish a market presence in overseas countries. Many companies have found success by approaching mine sites that employ Australian expatriates, where there is no language barrier, and who may already be familiar with their business. Another approach is through technology transfer. A successful and reliable MTSE product may already be in a minerals company’s Australian operations, and the company can then also transfer this technology to their overseas operations.

There are examples of larger MTSE businesses that have chosen to open offices in overseas countries where they currently have large volumes of orders for their products or where they believe there is future market potential. Other companies rely on mergers and acquisitions in the countries where they are seeking to establish a market presence, capitalising on existing business relationships. Smaller companies tend to use agencies or distributors who are familiar with the local language and culture and who are located in the destination countries.

62 Government support

There is an array of government initiatives available to support MTSE companies. MTSE companies would like all available and applicable government resources to be more widely advertised.

Most MTSE companies have at some point accessed larger government programs to help with product development, growth and export opportunities. The main types of government initiatives used are:  research and development tax concession  funding for research and development  apprenticeship programs and related programs to recruit skilled staff  export market development grants  commercial grants.

Many companies apply for the research and development tax concession but, according to the companies consulted, for the majority of businesses this initiative is not very profitable. Companies that have accessed the remaining initiatives have made good use of their availability. Australian minerals industry perspective

The discussion that follows represents the Australian minerals industry’s perspective of the MTSE sector. The aim is to gain an understanding of how the minerals industry purchases and adopts new technology products and services for their Australian and overseas minerals operations.

The areas of interest are related to:  entry point for MTSE products into a minerals business  marketing of MTSE products and how the minerals industry is informed about new available technologies  the source of MTSE suppliers and whether Australian MTSE products are preferred to overseas equivalents  the level of collaboration on research and development.

In general, the Australian minerals industry supports the Australian MTSE sector. It believes that in several fields the Australian MTSE sector has a competitive advantage over its overseas equivalents, and that there are many companies in the Australian MTSE sector that are at the forefront of technology and innovation globally.

63 To help improve the supplier/customer relationship, the minerals industry lists five factors it considers essential for doing business: 1. Understanding the way business operates 2. Understanding the language used by the industry 3. Being able to engage at the General Manager level 4. Having a technology solution that solves a minerals industry problem 5. Constantly pitching these technology solutions to various levels of management.

The next section discusses the best approach to sell a technology solution to a minerals business, as expressed by minerals companies during the consultation process. Minerals business entry point

One of the major hurdles in getting a MTSE product into a mine site is to find the most appropriate contact in the minerals business. Minerals companies suggested there are a number of ways MTSE companies could try to get their products into a mine site. It is largely dependent on the type and cost of the MTSE product and whether a major step change is required, but in most cases it is best to contact managers at all levels of the business.

For a product that does not require a large change and is relatively inexpensive, a mine manager or relevant engineer is often the most appropriate mine site contact. These are the people who understand the need for, and use of the MTSE product, and usually have authority to make purchases up to a maximum set value. Using this approach, it generally takes between 6 and 12 months to convince the mine site they need the technology. In total, it can take up to two years for a minerals operation to finalise the deal.

If the product is very expensive and requires a large change to the way the mine operates, it is necessary to convince both senior management at the corporate head office and mine managers and engineers at the mine site that the MTSE product will satisfy their needs and is financially viable.

Most technology products are purchased directly from MTSE companies, through an established relationship with the company, based on a recommendation, internet search or knowledge of suppliers to the industry. Only a small proportion of MTSE products are purchased through a distribution network of wholesale trade companies. Purchasing directly from an MTSE company allows a relationship to develop between supplier and customer, and provides the minerals industry with highly valued ongoing customer, maintenance and support services.

A minerals company will roll out a new MTSE product to all of its sites if it has been approved by corporate head office and if the technology product can be adapted to suit different mine site environments. This scenario does not happen very often, but if it does happen it can be a lucrative arrangement for an MTSE company. Computer software is an example of a technology product that can be purchased by a minerals business and applied to various mine sites around the world. The Australian MTSE sector has experienced a lot of success selling high quality software around the world, and is considered to have a competitive advantage in this area.

64 Marketing MTSE products

When minerals companies are looking for a solution to a problem or simply a newer, faster, more efficient product, they turn to several sources. The first of these is usually the internet where a quick search can produce a wide array of options. For MTSE companies it is important to have a good website with key words and phrases about the nature of the product.

The minerals industry uses journals, such as Longwall International, and regular newsletters published by various bodies such as Cooperative Research Centres (CRCs), ACARP and AMIRA International, to keep abreast of technology movements in the sector. These are a valued source of information and can provide details on the availability of new products, specifications, applications and testing arrangements. Other methods that are used for gathering information include attending conferences and exhibitions, word of mouth and networking at various industry functions.

The minerals industry is only interested in technology products that have been or are close to being commercialised. They are open to being approached directly by MTSE suppliers who have a viable product to sell, and are also interested in undertaking relevant collaborative research and development work, especially if it may be financially beneficial to their business.

Some minerals companies suggested that it would be convenient to have one central location that would enable them to search for Australian MTSE expertise. This could take the form of an internet website related to the sector or a database that emails regular newsletters to subscribers. These options could list categories of MTSE expertise and descriptions of new or enhanced technologies. Sourcing MTSE suppliers

The minerals industry’s primary aim is to buy optimal products for its mine site operations. In Australia, the mining industry prefers to buy Australian made MTSE goods, mainly because the products are generally competitive and it is easier to deal with local companies for ongoing product support, quality control and product education. However, not all Australian MTSE products are competitive with overseas alternatives. In these cases, the minerals industry will choose overseas products before Australian products.

In general, minerals companies prefer to buy local MTSE products for their operations, whether they are in Australia or overseas. They cite better support services locally as the main reason for this choice. Given that mines operate continuously, often in remote areas with harsh conditions, MTSE products need to be reliable and withstand these conditions. If the product fails, minerals operations may be interrupted or stopped completely, and this can lead to a negative cash flow problem. This means that minerals companies need to be sure when they purchase a new piece of technology that their operations will continue to run efficiently, and that, if the need arises, it is not a difficult and timely exercise to get someone to the mine site to fix any potential problems.

Australian MTSE products compete strongly with overseas alternatives. Generally, minerals companies look for the best product available that has been tried and tested. A minerals company is more easily convinced to buy and implement a technology product into its operations if the MTSE business can show them successful examples of other mine sites implementing this technology.

65 Collaboration

The minerals industry in Australia is supportive of technology and innovation, and is of the view that the Australian MTSE sector has advanced significantly over the past decade. As a result, minerals companies are willing to collaborate with MTSE companies or participate in large joint ventures with research centres, provided they are worthwhile investments. They need to see an initial business plan that leads to sufficient output within a reasonable timeframe. In the past, this has not always been the case, and as a result the industry tends to be more cautious in how it chooses to invest a fixed research budget.

Larger minerals companies are more active in setting up and funding public research centres across Australia and overseas. These companies consider that, in general, it is more productive to undertake collaborative research with a group of experts from a range of universities, public research centres and MTSE companies, rather than with individual MTSE companies.

66 Appendices

67 A Strengths and weaknesses of Australian MTSE companies

The survey provided respondents with the opportunity to provide their company’s views on the strengths and weaknesses of Australian MTSE companies. This appendix summarises the comments obtained.

47 Survey results: strengths of Australian MTSE companies a

frequency

Innovative and technically advanced 40

Skilled and experienced workforce 18

Flexible and ability to customise 18

Delivers quality products 13

Mature Australian minerals industry which is highly respected 8

Local support, knowledge and domestic alliances 8

Good business, financial and managerial skills 7

Close to markets and customers 7

‘Get the job done’ approach 6

World leaders 5

High level of customer service 4

Lower prices than overseas MTSE companies 4

Knowledge of Australian conditions and market 4

Listens to customer needs 3

Easy access to quality raw materials and markets 3

Focused 3

Hardworking, efficient, honest and reliable 3

Fast response times 3

Simple, robust and effective designs 3

Responsive to customer needs 2

Good education of graduates 2

Good reputation 2

Good network in Australia through Austmine and the Mining and Energy Services Council of Australia (MESCA) 2

Relatively low manufacturing cost 2

Australia has a strong regulatory regime that is ahead of other countries 2

Early adopters 2

Ethical and high standards 2

68 Good access to Australian research and university programs 2

Broad global presence and driven to expand 2 a Only comments with 2 or more responses have been provided.

69 48 Survey results: weaknesses of Australian MTSE companies a

Frequency

Large distances and costs involved with doing business overseas 21

High operating and manufacturing costs 15

Shortage of skilled labour and high labour costs 12

High prices of MTSE products/services 11

Lack of financial backing (venture capital, other) and working capital 10

Size of Australian MTSE sector is small with limited sales volume 9

Lack of marketing skills for technology products/services and not aggressive marketers 6

Language barriers for doing business in overseas markets 5

Volatility and strength of Australian dollar 5

Lack of overseas experience and market penetration 4

Experience applicable only to Australian mining conditions 4

Limited ability to undertake research and development (time and money) 3

Limited access to technology resources 3

Businesses do not think globally and poor understanding of international business cultures 3

Low level of influence on world market and lack of standing in the international business community 2

Lack of patience and confidence to expand business (domestic and international) 2

Lack of major and technically advanced suppliers 2

Logistics constraints and shipping delays 2

Lack of technical understanding and narrow experience 2

Poor government strategies for the sector and lack of government support in export markets for

small and medium enterprises (SMES) 2

A Only comments with 2 or more responses have been provided.

70 B Strengths and weaknesses of overseas MTSE companies

The survey provided respondents with the opportunity to provide their company’s views on the strengths and weaknesses of overseas MTSE companies. This appendix summarises the comments obtained.

49 Survey results: strengths of overseas MTSE companies a

frequency

Access to large markets with large client bases 21

Low cost of operations (labour, material, supply chain) 13

Large-scale companies that easily provide customer service through a global network 12

In-depth knowledge of and access to local markets (language, culture, existing relationships) 11

Access to a large skilled workforce 10

Low prices of MTSE products/services 10

Good options available for attracting investors 8

Good innovation and technical developments 8

Established companies with years of experience and proven products/services 7

Large investment and good capability in product development and marketing 6

Economies of scale 5

Large budgets, financial strength and access to large resources 5

Experienced workforce across a number of countries and different mining conditions 4

Flexible, competitive and professional 4

Good global connections, international management skills and understanding of international

business cultures 3

Good followers of ideas and willing to take a risk 3

Will cut prices to win sales, and to keep Australian companies out of the local market 3

High quality production 3

Access to capital 3

Good government support 3

Access to good technology resources and a good relationship with a range of technically

advanced suppliers 3

Good research and development incentives and cheaper research and development costs 2

Large overseas MTSE sector 2 a Only comments with 2 or more responses have been provided.

71 50 Survey results: weaknesses of overseas MTSE companies a

frequency

Inflexible, with poor communication skills 22

Innovation and research and development not as advanced 13

Quality of MTSE products/services varies greatly 8

Far from Australian customers and lacks local knowledge, including harsh Australian conditions 8

Lack of technical skills, experience and understanding 7

Primarily focused on local market, with little international standing 6

Low commitment to customers, and unwilling to listen and adapt quickly to the needs of clients 5

Companies only want to supply large customers, and are not interested in small or niche markets 5

Not consistent industry specialists, and lack of knowledge in the field 4

Technology followers rather than leaders and copy Australian designs 4

Large companies that are resistant to change 4

Slow response times, less responsive and poor delivery times 4

Offers only standardised solutions, with no customisation of products/services 3

Minimal or no ongoing product service, and poorly managed 2

Poor understanding of legal issues 2

Set high prices, as they have a large market share 2

Less efficient and high cost of manufacture 2

No depth of experience in the minerals industry 2

Lack of capital and slow payers 2 a Only comments with 2 or more responses have been provided.

72 C ‘Other’ responses, by question

Questions 23 to 25 in the questionnaire provided survey respondents with the option of informing ABARE–BRS of relevant alternative information to that already specified. This was done under the ‘other’ response option for each of the questions. This appendix provides a list of the ‘other’ responses, by question.

Question 23—importance of possible factors that may affect competitive performance of innovations in Australian and overseas markets  Real market advice and knowledge from Austrade regarding selling into export markets. Also information on duties, taxes and free trade agreements (FTAs).  Industry acceptance of new technology, government red tape and barriers, occupational health and safety (OHS), regulations.  Certification of products (government monopoly).  A lower Australian exchange rate.

Question 24—importance of possible issues faced by companies integrating innovations into Australian and overseas supply chains  Lack of marketing expertise.  A lower Australian exchange rate.  The quality of agents used as overseas contacts.  Local presence.

Question 25—importance of possible challenges faced by companies commercialising and integrating innovations  Having cash flow for international markets.  Gaining a clear understanding of customer needs.

73 D ABARE-BRS questionaire for Australia’s MTSE sector

Survey participants were provided with some background information on the project objective, scope of the ABARE–BRS survey and a brief discussion related to a complementary survey that ABARE–BRS will undertake in 2010 on the Energy Technology Services and Equipment (ETSE) sector. Participants were also asked to provide some contact details (not included here).

Please note that questions 17, 23, 24 and 25 ask for a number based on the following scale: 1. Not important or not applicable 2. Moderately important 3. Very important The Australian industry

Q1 In 2008-09, did your company produce MTSE goods and services in Australia?

______Y/N _____

If you answered no to question 1, please go to question 27. Otherwise, go to question 2.

Q2 For 2008-09, please indicate the share of each of the following categories in relation to the market value of your company’s Australian production of MTSE goods and services (noting that the shares should sum to 100 per cent).

(a) Technology applications % ______

(b) Equipment and machinery manufacture and supply % ______

(c) Consulting services % ______

(d) Contract services % ______

(e) Other (please specify) % ______

Q3 For 2008-09, please provide a brief description of your company’s main revenue earning Australian produced MTSE goods and services by your company’s state/territory office location (noting that if there are multiple offices across Australia, please separate the description according to state/territory location). description

New South Wales (including the ACT) Northern Territory Queensland South Australia Tasmania Victoria Western Australia

74 Q4 For 2008-09, please indicate the share of your company’s Australian production of MTSE goods and services by your company’s state/territory office location (noting that the shares should sum to 100 per cent).

(a) New South Wales (including the ACT) % ______

(b) Northern Territory % ______

(c) Queensland % ______

(d) South Australia % ______

(e) Tasmania % ______

(f) Victoria % ______

(g) Western Australia % ______

Q5 For 2008-09, please indicate the share of each of the following types of mineral resources in relation to users of your company’s Australian production of MTSE goods and services (noting that the shares should sum to 100 per cent).

(a) Bauxite/alumina/aluminium % ______

(b) Base metals (copper, lead, zinc) % ______

(c) Coal % ______

(d) Gold % ______

(e) Iron ore % ______

(f) Mineral sands % ______

(g) Nickel % ______

(i) Industrial minerals (excluding coal) % ______

(j) Rare earths % ______

(k) Other metals % ______

(l) Other (please specify) % ______

Q6 What is the actual gross revenue from sales of your company’s Australian produced MTSE goods and services for the last three financial years? Please also indicate the number of months of the year the MTSE part of your business was operational. (If not operating in any year, record a 0 in both columns. If operating for the full year, record a 12 in the second column.)

No. of mths

A$million operating

(a) in 2006-07? ______

(b) in 2007-08? ______

(c) in 2008-09? ______

75 International experience

Q7 What is the actual gross revenue from your company’s export sales of MTSE goods and services from Australia for the last three financial years? Please also indicate the number of months of the year the MTSE part of your export business was operational. (If not operating in any year, record a 0 in both columns. If operating for the full year, record a12 in the second column.)

No. of mths

A$million operating

(a) in 2006-07? ______

(b) in 2007-08? ______

(c) in 2008-09? ______

For 2008-09, please indicate the share of each of the following individual countries and regions in relation to your company’s Australian export sales of MTSE goods and services(noting that the Q8 shares should sum to 100 per cent).

(a) China % ______

(b) Indonesia % ______

(c) India % ______

(d) Brazil % ______

(e) Chile % ______

(f) Russian Federation % ______

Regions (excluding previous individual countries)

(g) Oceania (excluding Australia) % ______

(h) East and South-East Asia % ______

(i) Other Asia % ______

(j) Africa % ______

(k) North America % ______

(l) Latin America and the Caribbean % ______

(m) Europe % ______

Q9 For 2008-09, please provide a brief description of your company’s main revenue earning Australian produced MTSE goods and services by export location.

76 description

(a) Individual countries

(a) China % ______

(b) Indonesia % ______

(c) India % ______

(d) Brazil % ______

(e) Chile % ______

(f) Russian Federation % ______

(b) Regions (excluding previous individual countries)

(g) Oceania (excluding Australia) % ______

(h) East and South-East Asia % ______

(i) Other Asia % ______

(j) Africa % ______

(k) North America % ______

(l) Latin America and the Caribbean % ______

(m) Europe % ______

Q10 In 2008-09, was your company’s head office located within Australia (AUS) or overseas (OVS)?

______AUS/OVS _____

If you answered AUS to question 10, please go to question 11. Otherwise, go to question 12.

Q11 For 2008-09, please indicate the Australian state/territory where you company’s head office was located.

______

Q12 In 2008-09, did your company have any offices located outside Australia?

______Y/N ____

If you answered yes to question 12, please go to question 13. Otherwise, go to question 14.

77 For 2008-09, please indicate the location and number of your company’s overseas (head and other) Q13 offices according to the following individual countries and regions.

Head office Other offices

(a) China no. ______

(b) Indonesia no. ______

(c) India no. ______

(d) Brazil no. ______

(e) Chile no. ______

(f) Russian Federation no. ______

Regions (excluding previous Individual countries

(g) Oceania (excluding Australia) no. ______

(h) East and South-East Asia no. ______

(i) Other Asia no. ______

(j) Africa no. ______

(k) North America no. ______

(l) Latin America and the Caribbean no. ______

(m) Europe no. ______Skilled labour force

Q14 In 2008-09, what was your company’s labour force relating to Australian production of MTSE goods and services (MTSE labour force)? Please note that total employment is on a full-time equivalent basis—for example, 2 people employed half-time (that is, 0.5 years each) are equivalent to 1 person year.

(a) Full-time employees no. persons ______

(b) Part-time employees no. persons ______

(c) Total employment no. of person years ______

Q15 For 2008-09, please indicate the share of your company’s labour force located in Australian and overseas offices in relation to your company’s production of MTSE goods and services (noting that the shares should sum to 100 per cent).

(a) Australian offices % ______

(b) Overseas offices % ______

Q16 For 2008-09, please indicate the share of your company’s MTSE labour force located in Australian offices according to the following highest qualifications completed (noting that the shares should sum to 100 per cent).

78 (a) University or other tertiary (PhD level only) % ______

(b) University or other tertiary (other than PhD level) % ______

(c) Trade apprenticeship, technical, vocational % ______

(d) No formal skills % ______

Using the scale provided at the beginning of the questionnaire, please indicate the importance of the following occupations required to deal with job shortages in your company’s Australian MTSE Q17 business operations during 2008-09.

(a) Computer science specialists ______

(b) Engineers (including metallurgists) ______

(c) Geologists and other earth scientists ______

(d) Other professionals ______

(e) Tradespersons and related workers ______

(f) Managers and administrators ______

(g) Clerical, sales and service workers ______

(h) Production, transport, labourers and related workers ______

(i) Other (please specify) ______Innovation activities

Q18 In 2008-09, what was your company’s research and development expenditure relating to MTSE goods and services in Australia?

(a) In-house expenditure A$million ______

(b) External expenditure A$million ______

(c) Total expenditure A$million ______

Q19 In 2008-09, did your company undertake any collaborative research and development projects related to MTSE goods and services with Australian and/or overseas organisations?

Y/N ______

If you answered yes to question 19, please go to question 20. Otherwise, go to question 22.

Q20 In 2008-09, how many collaborative research and development projects related to MTSE goods and services did your company undertake with other Australian based public and/or private organisations? (If there has been no collaboration, record as 0.)

(a) Exploration/mining companies no. ______

(b) CSIRO no. ______

(c) Universities no. ______

(d) Cooperative Research Centres (CRCs) no. ______

79 (e) Other research organisations no. ______

(f) Other companies no. ______

Q21 In 2008-09, how many collaborative research and development projects related to MTSE goods and services did your company undertake with other overseas based public and/or private organisations? (If there has been no collaboration, record as 0.)

(a) Exploration/mining companies no. ______

(b) Universities no. ______

(c) Other research organisations no. ______

(d) Other companies no. ______

(e) Other (please specify) no. ______

Q22 As at 30 June 2009, how many registrable and non-registrable patents for Australian MTSE products and services did your company own? (If your company does not own any patents, record as 0.)

(a) Registrable patents (such as patents and trade marks) no. ______

Non-registrable patents (such as trade secrets and confidentiality agreements) If exact number is unknown, please select from the following: 0, (b) 1-10, 11-20, >20.) no./range Operating a technology business

Q23 Using the scale provided at the beginning of the questionnaire, please indicate the importance of the following possible factors that may affect the competitive performance of your company’s innovations (new or improved products or processes) both in the Australian and overseas markets.

Australian Overseas

market markets

(a) Access to skilled labour ______

(b) Access to education and training opportunities ______

(c) Allocating resources (labour and finance) to research

and development activities ______

(d) Securing the protection of intellectual property of the

business ______

(e) Access to finance for business development ______

(f) Growing the company through diversification ______

(g) Adopting flexible business practices ______

(h) Access to, and familiarity with, specific segments of the

80 Australian/overseas markets ______

(i) Access to good transport infrastructure for efficient

delivery ______

(j) Employing appropriate promotion and marketing

strategies ______

(k) Recognition by customers as supplier of first choice ______

(l) Other (please specify) ______

Q24 Using the scale provided at the beginning of the questionnaire, please indicate the importance of the following possible issues faced by your company integrating your company’s innovations (new or improved products or processes) into Australian and overseas supply chains.

Australian Overseas

market markets

(a) Building and developing new customer relationships ______

(b) Development of long-term customer relationships ______

(c) Ability to respond rapidly to the changing needs of

customers ______

(d) Ability to efficiently develop and deliver new goods

and services to market ______

(e) Ability to remain ahead of the competition ______

(f) Use of good information technology infrastructure ______

(g) Access to finance for business development ______

(h) Aligned company organisational and supply strategy ______

(i) Existence of a good strategic partnership with suppliers,

distributors, and customers ______

(j) Using outsourcing as a business option ______

(k) Recognition by customers as supplier of first choice ______

(l) Other (please specify) ______

Q25 Using the scale provided at the beginning of the questionnaire, please indicate the importance of the following possible challenges faced by your company in the commercialisation and integration of your company’s innovations (new or improved products or processes).

(a) Attracting investment capital (pre-seed, seed, venture) ______

(b) Attracting investors who understand the technical and scientific

81 nature of the technology ______

(c) Managing intellectual property, including patent protection ______

(d) Establishing effective partnerships with other firms ______

(e) Building a new or expanded customer base ______

(f) Obtaining representative domestic market research ______

(g) Obtaining representative international market research ______

(h) Educating the market about the company’s technology ______

(i) Establishing a domestic market presence ______

(j) Establishing an international market presence ______

(k) Adapting from a highly technical or academic focus to a business

and market-oriented approach ______

(l) Managing the long lead times required to ensure all

technical problems are resolved before release of the technology to market ______

(m) Employing good quality people and project management skills ______

(n) Attracting suitably qualified technical employees ______

(o) Retaining suitably qualified technical employees ______

(p) Employing appropriate promotion and marketing strategies ______

(q) Other (please specify) ______

Q26 Please provide a brief description of your company’s perception of the relative strengths and weaknesses of Australian MTSE companies relative to overseas MTSE companies (including performance of products and services).

Australian MTSE companies Overseas MTSE companies

Strengths

Weaknesses Other issues

Q27 In 2008-09, did your company produce energy technology services and equipment (ETSE) goods and services in Australia (noting that the energy sector is defined to mainly cover oil and conventional gas, underground coal gasification, coal seam gas activities, geothermal and oil shale)?

Y/N ___------

If you answered yes to question 27, ABARE–BRS will be in contact regarding participating in the complementary survey of the ETSE sector.

Q28 Please provide an estimate of the time taken to complete this questionnaire (include time

82 spent reading instructions and preparing responses, but do not include any time spent reading additional background material).

minutes ___------

Please return the questionnaire to ABARE–BRS using the contact information provided.

Thank you for participating in this survey.

83 E Country listing by region

Appendix E provides a full listing of countries by region according to the classification used by the United Nations Statistics Division (United Nations 2009). These groupings were used to provide answers to questions 8, 9 and 13 in the questionnaire located in appendix D

(a) – (f) Individual countries

Brazil Chile China India Indonesia Russian Federation

(g) Oceania (excluding Australia) American Samoa Cook Islands Fiji French Polynesia Guam Kiribati Marshall Islands Micronesia (Federated States of ) Nauru New Caledonia New Zealand Niue Norfolk Island Northern Mariana Islands Palau Papua New Guinea Pitcairn Samoa Solomon Islands Tokelau Tonga Tuvalu Vanuatu Wallis and Futuna Islands

84 (h) East and South-East Asia

Brunei Darussalam Cambodia Democratic People’s Republic of Korea Hong Kong Special Administrative Region of China Japan Lao People’s Democratic Republic Macao Special Administrative Region of China Malaysia Mongolia Myanmar Philippines Republic of Korea Singapore Thailand Timor-Leste Viet Nam

(i) Other Asia

Afghanistan Armenia Azerbaijan Bahrain Bangladesh Bhutan Cyprus Georgia Iran (Islamic Republic of ) Iraq Israel Jordan Kazakhstan Kuwait Kyrgyzstan Lebanon Maldives Nepal Occupied Palestinian Territory Oman Pakistan Qatar Saudi Arabia Sri Lanka Syrian Arab Republic Tajikistan Turkey Turkmenistan United Arab Emirates Uzbekistan Yemen

85 (j) Africa Algeria Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Comoros Congo Cote d’Ivoire Democratic Republic of the Congo Djibouti Egypt Equatorial Guinea Eritrea Ethiopia Gabon Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Libyan Arab Jamahiriya Madagascar Malawi Mali Mauritania Mauritius Mayotte Morocco Mozambique Namibia Niger Nigeria Réunion Rwanda Saint Helena Sao Tome and Principe Senegal Seychelles Sierra Leone Somalia South Africa Sudan Swaziland Togo Tunisia Uganda United Republic of Tanzania Western Sahara Zambia Zimbabwe

86 (k) North America

Bermuda Canada Greenland Saint Pierre and Miquelon United States of America

(l) Latin America and the Caribbean

Anguilla Antigua and Barbuda Argentina Aruba Bahamas Barbados Belize Bolivia (Plurinational State of ) British Virgin Islands Cayman Islands Colombia Costa Rica Cuba Dominica Dominican Republic Ecuador El Salvador Falkland Islands (Malvinas) French Guiana Grenada Guadeloupe Guatemala Guyana Haiti Honduras Jamaica Martinique Mexico Montserrat Netherlands Antilles Nicaragua Panama Paraguay Peru Puerto Rico Saint Kitts and Nevis Saint Lucia Saint Martin (French part) Saint Vincent and the Grenadines Saint-Barthélemy Suriname Trinidad and Tobago Turks and Caicos Islands United States Virgin Islands Uruguay Venezuela (Bolivarian Republic of )

(m) Europe

Åland Islands Albania Andorra Austria Belarus Belgium Bosnia and Herzegovina Bulgaria Channel Islands

87 Croatia Czech Republic Denmark Estonia Faeroe Islands Finland France Germany Gibraltar Greece Guernsey Holy See Hungary Iceland Ireland Isle of Man Italy Jersey Latvia Liechtenstein Lithuania Luxembourg Malta Monaco Montenegro Netherlands Norway Poland Portugal Republic of Moldova Romania San Marino Serbia Slovakia Slovenia Spain Svalbard and Jan Mayen Islands Sweden Switzerland The former Yugoslav Republic of Macedonia Ukraine United Kingdom of Great Britain and Northern Ireland

88 89 References

ABARE 2009, Australian commodities, vol. 16, no. 4, December quarter, Canberra.

—— 2010, Australian commodities, vol. 17, no. 2, June quarter, Canberra.

ABS (Australian Bureau of Statistics) 2008, Mining Operations—Australia (2006-07), cat. no. 8415.0, Canberra.

—— 2009a, Private New Capital Expenditure and Expected Expenditure (September Quarter 2009), cat. no. 5625.0, Canberra.

—— 2009b, Research and Experimental Development, Businesses—Australia (2007-08), cat. no.

8104.0, Canberra.

—— 2009c, Australian National Accounts: Input-Output Tables—Electronic Publication (2005-06), cat. no. 5209.0.55.001, Canberra.

—— 2009d, Australian National Accounts, State Accounts, 2008-09 (Reissue), cat. no. 5220.0, Canberra.

Austrade 2008, www.austrade.gov.au/Mining-Equipment-Technology-Services- overview/default.aspx, New South Wales.

CSIRO 2009, www.csiro.au/org/Minerals-Down-Under-Overview.html, Western Australia.

HighGrade 2010, Exclusive survey: Australia’s leading mining service and technology companies, HighGrade—Drilling Deeper for the News, Western Australia, 9 February.

Invest Brisbane 2008, Brisbane mining technology and services, Invest Brisbane with the assistance of KPMG, Queensland.

MNP 2010, Equipment sales to recover from bleak 2009, MiningNewsPremium.net, Western Australia, 29 January.

Tedesco, L, Copeland, A and Hogan, L 2002, Mining Technology Services in Australia, ABARE Research Report 02.9, Canberra, June.

Tedesco, L and Curtotti, R 2005, Mining Technology Services: A Review of the Sector in Australia, ABARE eReport 05.5, Canberra, April.

United Nations 2009, Composition of macro geographical (continental) regions, geographical sub-regions, and selected economic and other groupings, Department of Economic and Social Affairs, Economic and Social Development, United Nations Statistics Division, http://unstats.un.org/unsd/methods/m49/m49regin.htm, revised 15 April 2009.

90 RESEARCH FUNDING ABARE–BRS relies on financial support from external organisations to complete its research program. As at the date of this publication, the following organisations had provided financial support for ABARE–BRS’s research program in 2009-10 and 2010- 11. We gratefully acknowledge this assistance.

AusAID Austmine Australian Fisheries Management Authority Australian Government Department of Climate Change Australian Government Department of the Environment, Water , Heritage and the Arts Australian Government Department of Innovation, Industry, Science and Research Australian Government Department of Resources, Energy and Tourism Australian Trade Commission (Austrade) CRC Plant Biosecurity CSIRO (Commonwealth Scientific and Industrial Research Organisation) Dairy Australia Department of Primary Industries, Victoria DN Harris and Associates European Commission Fisheries Research and Development Corporation Fisheries Resources Research Fund Forest and Wood Products Australia Grains Research and Development Corporation Grape and Wine Research and Development Corporation Horticulture Australia International Food Policy Research Institute Land and Water Australia Meat & Livestock Australia National Australia Bank OECD Queensland Department of Employment, Economic Development and Innovation Rural Industries Research and Development Corporation South Australian Department of Trade and Economic Development The Treasury Western Australian Department of State Development