Australian Mining A great mining nation adapts to new challenges and fresh opportunities by applying unmatched operational expertise and incorporating home grown innovation. A REPORT BY GBR FOR E&MJ A Supplement to E&MJ This report was researched and prepared by Global Business Reports (www.gbreports.com) for Engineering & Mining Journal. Editorial researched and written by Ramona Tarta, Thomas Willatt, Joseph Hincks, Camille Veillon and Patricia Matey. For further information, contact [email protected] Cover photo courtesy of Newmont - Underground heavy machinery workshop - Tanami SEPTEMBER 2011 AUSTRALIAN MINING A Vast Nation of Abundant Opportunities A brief introduction to Australia’s mining industry Conveyors at Newmont Boddington Gold Mine (photo courtesy of Newmont) Australia, the sixth largest country in the largest export sector. According to Michael of technology. Anne Nolan, former director world, stands out for vastness and the abun- Roarty , a member of Australia’s parliament, general of the Western Australia Department dance of its natural resources. Its territory in 2008-09, the resources sector accounted of State Development, underlines the region contains 28 billion mt of demonstrated iron for more than 80% of total commodity ex- is world-leading in terms of mining software ore resources. Australia is the world’s larg- ports, contributing A$160 million to export and design and sees this as a key route to est coal exporter, the world’s second largest earnings. From global industry-leading play- ensure wider economic benefit from com- producer of gold and nickel and the third ers like BHP Billiton and Rio Tinto to mid- modity exports. “We have become very good largest supplier of uranium. Copper, silver, tier miners and junior companies, the Aus- at the services that make a mining industry bauxite and zinc are also found in great tralian Securities Exchange (ASX) lists more work. If you feed the mining industry, and quantities in Australia’s rich geology. This than 600 mining companies. ensure a diverse portfolio of development, profusion of mineral resources has shaped The boom that Australia is currently ex- key synergies start to evolve,” she said. the history and the economy of the country. periencing is expected to continue for sev- As emerging mining hubs around the Yet it now seems that Australian min- eral years. Australia is enviously positioned world increase their competitive stakes, ing is reaching a turning point in its history. to capitalize on the ever-increasing demand these are challenging times for the Austra- While the country is benefiting from a mining from China and India. Mining and energy ex- lian mining sector, but the majority of par- boom that is tangible in most aspects of the ports are expected to rise by 16% to A$215 ticipants we interviewed for this report were economy, the industry has to fight new strug- billion in 2011-12 and Ric Battelino, deputy optimistic the conjunction of an incredibly gles in order to remain internationally com- governor of the Reserve Bank, forecasts an rich geology with a world-leading expertise petitive. As skilled labor has become scarce, estimated 6% GDP growth in mining invest- will allow the nation’s industry to overcome the remunerations in the mining sector have ments over the next three years. these specific issues and to remain at the soared, leading to a steep increase in project According to the Fraser Institute, Aus- forefront of the global mining scene. As costs. At the same time, the upheaval cre- tralia has now started recovering from the services companies invest substantially in ated by the attempt to introduce a Resource blow that the RSPT struck to the industry. R&D, innovation has become the corner- Super Profits Tax (RSPT) showed certain fra- Although Canada is still lauded as a model stone of the sector and earned the country a gility in the relationship between the mining in terms of mining investment, Australia reputation for technical excellence that will sector and the Australian federal government. is in the process of blotting out the regu- doubtlessly boost the industry in the years latory uncertainty. With mining companies to come. A Resource-based Economy representing about a third of all ASX-listed Australia is the 13th largest economy in the companies, building investor confidence is a Investment Risk Profile world as of 2009/10 and boasted an impres- priority. The ASX is internationally renowned The attraction of mining investment to any sive 17 years of consecutive GDP growth as a source of exploration-to-development nation ultimately comes down to its unique prior to the global economic crisis. Even dur- investment, a continuity appreciated by ex- investment risk profile. In some nations, ing the global financial crisis, Australia only ploration companies since they need steady that risk is obvious. Unstable governments, suffered a mere quarter of negative growth, funding in order to make significant discov- vague mining codes and disapproving com- before a commodity exports-driven recovery eries. munities are obvious factors. These consid- produced 1.2% growth in 2009, outper- From contractors and suppliers to min- erations do not, however, keep Australian forming all other OECD countries. ing consultancies, the network of services miners awake at night. The resources sector is the driving force available to mining houses based in Aus- It is this security that appeals to many of behind this recovery and is the country’s tralia is extensive and at the cutting edge Australia’s most successful resource devel- 2 E&MJ • SEPTEMBER 2011 www.e-mj.com AUSTRALIAN MINING www.e-mj.com E&MJ • SEPTEMBER 2011 3 AUSTRALIAN MINING managing director of Venus Metals Corp., a evolutions in geological thinking all the time company that is developing a series of multi- and new discoveries are being made every commodity pro-jects across the state. year. As long as there is access to land on a reasonable basis from all stake holders, then Elusive Discoveries there is good opportunity for continuing ex- However, as the cost of exploration has ploration success,” said Mike Rosenstreich, greatly increased, the risk associated with managing director of Bass Metals, a com- exploring a nation, where land untouched by pany that is undergoing intense exploration modern exploration techniques is increas- for a range of commodities in Tasmania. ingly rare, has become significant. Austra- Some miners believe the focus for ex- lia’s mining industry growth depends heavily ploration needs to be realigned with green upon exploration, and as Australia is now field in order to remain a relevant mining considered as a mature market, there is a jurisdiction. “Globally, the industry has been call within the industry for further state in- focusing back toward mature, brown-fields volvement to ensure that the enormous re- exploration. But if we want to be supply- Matthew Hogan, MD Venus Metals sources being developed and exported are ing metals to an expanding China and India opers. Matthew Hogan, managing director, replaced through new discovery. over the next 50 years, those incremental Venus Metals. transitioned from a career as Australia’s mining executives are under expansions are not going to get the job done. a stockbroker to identifying pro- jects for his no illusions as to the country’s strengths and There needs to be major new discoveries to own investment and development. His first weaknesses. “We typically have lower pro- replace the major ore bodies that, in this company, United Minerals Corp. was sold to spectivity compared to other places in the country, were mostly found between 20 and BHP Billiton for more than US$200 million world today, but we do have a higher degree 30 years ago,” said Will Robinson, CEO at and Hogan now continues to seek oppor- of certainty in terms of skilled labor, infra- Encounter Resources, a junior mining house tunities within Western Australia. “I like to structure and government and fiscal policy,” that has had exploration success across a stay here because it is a place I understand. said Dave Hatch, CEO of gold mining com- range of commodities. Australia is supportive of mineral investment pany Navigator Resources. Robinson is concerned the success of with appropriate regulatory controls. We op- Despite the long history of mining that a few headline commodities is obscuring erate in a democratic society, the rule of law the country boasts, it seems that many com- the serious declines in discoveries of other applies. Titles are assured and on this basis panies continue to see opportunities. “It’s a sectors of the Australian mining industry. long term capital can be attracted to wor- mature mining play, but that does not pre- “We are apparently going through one of thy developments,” said Hogan, who is now clude major mineral discoveries. There are the greatest mining booms of the past 100 4 E&MJ • SEPTEMBER 2011 www.e-mj.com AUSTRALIAN MINING years, but if you look at the copper, nickel dustry, but was celebrated in other interna- and gold production, it is either steady or tional jurisdictions competing for exploration on the decline, and if you look on a global investment. basis, Australia’s market share is declining,” Some contend that the root cause for the he said. However, Robinson sees plenty of taxation announcement was a political rouse exploration opportunities. “There are a num- aimed at scoring points with the dense voter ber of things that need to be done to turn centers of the east coast that have enjoyed that around. About 60%-70% of Australia less of the benefits of the mining boom. hasn’t seen effective modern exploration, “The government of the day thought that and so I don’t agree with people who say they could play a class war of the worker of that Australia is a mature exploration field.” New South Wales and Victoria against the highly paid miners of Western Australia and Taxing Times Queensland,” said Campbell Baird, CEO of The Australian mining industry’s latest ma- Focus Minerals, an emergent gold mining jor crisis, one that may turn out to have player in Western Australia.