All eyes have been on the Australian mining sector for some time now. The industry has faced a number of challenges over the years, but has fared relatively well in comparison to some of its global counterparts.
Results of the latest Resources and Energy Quarterly from the Department of Industry show that Australia has weathered the storm and remains a strong producer. In fact, it estimated that by 2017, the country could become the world’s largest exporter of coal. This is contrary to what many other industry experts had indicated, as they forecast that coal production would soon be in decline.
Predicting what the future has in store is only part of the issue. Looking at how current levels are activity are faring is one step towards determining whether these goals are likely to be met, both in the short and long term.
Mining developments in 2015
During the six months to April this year, a total of seven projects moved from the Final Investment Decision and progressed to the Committed Stage in Australia. The government’s Resources and Energy Major Projects April 2015 report showed that these projects were valued at a total of $2.2 billion.
The positive news doesn’t stop there, as over the same six-month period, 13 projects worth a total of $7.8 billion moved to the completed stage.
However, the government suggested that it is liquefied natural gas (LNG) rather than coal that is currently leading the charge. During the period in question, LNG comprised 88 per cent of the value of committed projects.
Many mining companies have been forced to cut costs wherever possible in order to stay in profit. This has become essential as a result of the downturn in commodity prices, which may have encouraged mining equipment repairs rather than investing in new technology.
A global context
Of course, Australia’s success is best measured against the backdrop of the global mining sector. PWC recently released its 12th annual report titled Mine 2015: The gloves are off, which showed the mixed conditions faced by the worldwide mining industry over recent months.
Net profits were down 9 per cent last year, the analysis showed, which was partly a result of a fall in capital expenditures. PWC likewise acknowledged the rising pressure on commodity prices, with iron ore bearing the brunt of the problems with a 50 per cent drop last year alone.
Nevertheless, there is expected to be greater divergence across these markets, particularly as the requirements of different shareholders will need to be met.