The outlook for the mining sector has reached a new five-year low and confidence levels are likely to take years to recover, according to Newport Consulting’s new mining outlook.
Despite some optimism last year, the latest report found mining leaders troubled by falling demand and a tough regulatory environment.
An overwhelming 93% of leaders were not optimistic about their growth prospects for the next 12 months, up more than 50% on last year.
A further 82% were not confident of large-scale projects resuming in the next 12 months, predicting it would take at least 3-5 years for a recovery.
“Mining leaders are telling us they’ve done all they can to address their business performance, as demonstrated by large cost-cutting exercises and job retrenchments,” Newport managing director David Hand said.
“Leaders are demanding better business conditions for confidence to return.
“They’ve accepted the new lows hit by the sector and have embraced a government which will listen. However, they want action quickly: less red tape, more flexible industrial relations laws and better infrastructure.”
The report found local miners had lost their investment appeal, with 89% of leaders agreeing Australia was no longer the world’s best investment market.
Looking at their own performance, 81% said productivity improvements were on the agenda but their organisation was struggling to address it or implement the right initiatives.
Taking a broader look at the problem, 91% of mining leaders said the industry’s productivity was in decline.
While the study highlighted a focus on job retrenchments in the nation’s mining companies, 77% of leaders said they were also focused on retaining competent staff.
For other mining leaders, 14% said their employment focus would be on recruitment and 9% said they would prioritise retention and training.
The report’s dim outlook was backed up by economist Saul Eslake, who said the local industry was likely to see further weakness.
“I don’t expect any major new mining projects to commence in the next few years,” he said.
“There is wide consensus that commodity prices will continue to decline as more supply comes on stream globally, while the growth rate of demand for commodities slows.
“Economic growth will continue at a below-trend pace over the next 12 months, and unemployment will continue to rise.”
In terms of the regulatory environment, the survey showed miners had generally embraced the new federal government, but were looking for more action and delivery on promises.
A total 70% of mining leaders said they had expected big changes but were yet to see action, while 30% expected minor changes but were yet to see action.
In providing advice to Canberra, 48% of leaders wanted less regulations and faster approvals, while 34% called for less red tape and 11% wanted more IR flexibility and training.
A final 5% called for more understanding of the industry while 2% outlined the need for no additional taxes.
Newport’s survey is conducted annually and is based on in-depth interviews with 60 Australian mining executives from a range of public and private companies.
This article was kindly provided by www.pngindustrynews.net