It’s been a tough 12 months for the mining industry in Australia. This week’s Diggers & Dealers conference in Kalgoorlie has provided some perspective.
Despite the mining slowdown, which has hurt the bottom line of mining companies across the board, conference chair Nick Giorgetta was determined to project a confident outlook.
“The construction boom within the resources industry that took place in the last decade was always going to slow down,” he told delegates in his opening speech on Monday.
“We know that the mining industry has always been a cyclical industry. We also know that commodity prices can vary dramatically, sometimes over a very short period of time.”
Giorgetta, who is chairman of gold and nickel miner Regis Resources, conceded the mining industry needed more help from governments, and criticised policymakers for being influenced by “extreme” environmental groups.
He also conceded the simultaneous slump in prices for iron ore, coal and LNG had caught much of the industry by surprise, but said mining had responded accordingly.
“Mining is a very resilient industry and has responded the way one would expect,” he explained, “and the way that any normal business would; by focusing on costs and maximising efficiencies to remain viable.”
Furthermore, Giorgetta added, challenging times can bring with them new opportunities. “In the last six months we have seen a revival in acquisition and M&A activities,” adding: “Importantly, in a sign of confidence in the industry, we are seeing companies being able to raise money through equity, something that was much more difficult to do 12 months ago.”
The conference’s keynote speaker, Gene Sperling, also suggested the doom and gloom in mining was being overstated.
The former White House economic advisor told the conference – which is said to have attracted around 1800 delegates this year – he believes China and India will still provide the world with strong mineral demand over the next decade.
“You’re having a slowdown, you’ve got the problems on the property side, but I am not one who buys into the hard lining in China,” he said, according to a Fairfax report.
“Everyone says the same thing – is China going to be slowing down demand for metals, they are transitioning from infrastructure-led to sustainable growth. I think that’s partially right. It’s obviously the case they are moving and being pressured by the world, and feel they are moving to more consumption-led growth.
“But everybody always throws in that they will be decreasing infrastructure investment. That part of the scenario is not quite as clear to me.”