Tuesday 30thJuly, 2013. Sydney, Australia. Despite miners displaying a negative outlook for their prospects in 2013-
14, every cloud has a silver lining, according to the latest Mining Business Outlook Report. The report suggests that
the industry’s future could be sustained if miners focus on extracting more value from their current assets, and if the
government provides a more supportive policy environment and greater commitment to national infrastructure.
On the one hand, the report confirms the sector’s apparent downturn. Close to half of the mining leaders interviewed
are ‘not optimistic’ about their prospects, an increase of 34 per cent compared with just 7 per cent of miners voicing
this outlook in 2010. Leaders are cutting jobs significantly to control costs, and are reducing CAPEX spend. The report
warns that if this hold on investment continues, Australia will be reinforcing its status as less attractive as an
investment destination.
Miners’ key drivers for not spending included the uncertain economic environment (32 per cent), difficulty in getting
development funding (30 per cent), and budget constraints (12 per cent). Volatile market conditions are the primary
reason for a downbeat view, followed by falling demand (19 per cent) and lower commodity prices (12 per cent).
While the report’s findings coincide with the general consensus that the investment phase of the mining boom has
ended for now, it also reveals hopeful trends within the industry, as miners become increasingly attuned to control
areas such as costs, productivity and operational efficiencies. The report also suggests that mining companies have a
renewed awareness of the need for innovation, which could reinvigorate Australia’s mining, manufacturing and
services sectors and be the catalyst for an industry-wide resurgence.
David Hand, Managing Director of Newport Consulting, says: “As miners have to postpone projects and future
investment because of a poor investment outlook, they have an opportunity to extract maximum value from existing
operations and assets through improved productivity. This is not a bad thing for the sector. If anything, a renewed
focus on operational efficiencies could deliver healthier profits and shareholder value in the current difficult economic
climate.”
The report revealed that, while productivity is on the agenda, an overwhelming 66 per cent of leaders reported a low
level of productivity. Only 3 per cent of mining leaders were confident about achieving high levels of productivity within
their operation. A further 8 per cent lacked the knowledge altogether on how to measure this indicator.
The report concludes with strong dissatisfaction among mining leaders with the government, particularly around union
strength, inflexible IR regulations and poor national infrastructure. Meanwhile, although miners show some
acceptance of meeting environmental regulations, they strongly feel that such requirements are adding costs to their
businesses, and delaying operational and development plans and investment as a result. They universally believe the
MRRT is bad policy for Australia, even though the tax has generated very little tax revenue so far.
The report, conducted annually since 2010 by operational management consultancy Newport Consulting, canvasses
the views of Australia’s mining leaders. It draws on in-depth interviews held between April and June 2013 with 60
mining executives from a broad range of private and publicly listed companies. This special election-year edition of the
report features John Morschel, Chairman ANZ; Roy Green, Dean UTS Business School; and Brendan Cannon,
Director, Firewall Logistics. The report serves as an independent pulse-check of Australia’s mining industry.
About Newport Consulting – (www.newportconsulting.com.au) Newport Consulting is an operational
management consulting company that helps organisations improve their business performance through operational
excellence. Newport was founded in early 2006 by David Hand and Karin Haberl. David is one of Australia’s leading
operational improvement experts. Newport Consulting has worked in a number of key industry sectors including the
resources sector, and has worked with some of Australia and New Zealand’s leading corporations.tr
Download Newport Mining Business Outlook report:
Newport_Mining_Business_Outlook_report_2013-14.pdf
David Hand, Managing Director of Newport Consulting,
