Jan 26, 2018

Optimism on the rise among miners

Optimism on the rise among miners

The dark days of the mining sector downturn are well and truly past, according to the latest Newport Consulting Mining Business Outlook Report.

However it says mining leaders are now grappling with ongoing skills shortages and cost pressures.

The 2017-18 report showed the number of miners showing cautious optimism had jumped 55 per cent since 2015, with almost three-quarters of leaders showing renewed confidence in the sector’s growth.

Spending was also on the rise – with 42 per cent of mining leaders moderately increasing spending in 2017-2018, up 23 per cent from 2016.

The report showed companies were bullish on price forecasts, with more than half of mining leaders predicting an increase in pricing over the next 12 months, with the exception of thermal coal.

However Newport Consulting managing director David Hand said many companies were concerned that Australia would face a growing skills gap, particularly in the areas of technology and automation.

“We spoke to many companies of all sizes that voiced concern over a widening skills gap, giving way to a pressing need to upskill and re-train the workforce. Miners must be able to meet the new digital demands of Australia’s mining future,” he said.

Newport Consulting has compiled its Mining Business Outlook Report annually since 2010, with the latest report drawing on in-depth interviews held between August and December 2017 with more than 50 mining leaders.

Deals abound in resources sector

Meanwhile, the latest Mergermarket report shows growth in merger and acquisition activity in the Australian energy, mining and utilities sector.

It overtook transportation as the most targeted sector by value in 2017, with 77 deals totalling more than $37 billion in value – a 56.7 per cent increase on 2016.

Research analyst Ken Chan said Australia’s M&A activity overall reached $ 113b over 580 deals in 2017,  a record high in terms of deal volume since Mergermarket started tracking deal data in 2001.

His report predicted an uptick for inbound M&A activity in 2018  in Australia’s mid-tier mining industry, as cashed-up majors enjoy a period of high commodity prices and a projected lower Australian dollar.

“Overseas companies, particularly from countries such as China, are again expected to return to the mining sector after several years of stagnant activity,” he wrote.

Mergermarket has pointed to demand for tech metals as another trend for 2018.

Australia, and in particular Western Australia, was poised to lead the charge for deals in the tech metals sector, it said,

This comes as electric vehicles, stricter environmental emissions legislation, and household-use solar power batteries drive demand for commodities such as lithium, cobalt, boron, vanadium, copper and nickel.

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