Australia’s mining industry delivered an unprecedented set of export figures during the December quarter – smashing quarterly performance benchmarks as it sent $13.4 billion worth of metals and coal abroad.

The record shattered the previous mark of $12.4 billion, set at the height of the mining construction boom in December 2013, and prompted The Australian to declare Australia’s mining sector to be entering a ‘new boom’ when reporting the figures on release at the beginning of February.

“We’ve got record export volumes through the port of Newcastle and our metals miners are generally doing better too. We’re back to the boom,” New South Wales Minerals Council Chief Executive Stephen Galilee told the paper’s Paul Garvey.

The export figures are impressive, and are backed up by the Office of the Chief Economist’s resources and energy exports forecast, which expects mineral exports to peak at a record $204 billion in 2016-17, inclusive of fuels and LNG.

The impact is also seen in the respective half-year and full-year reports of major Pilbara players BHP Billiton and Rio Tinto, each of which rode increased iron ore prices and record export numbers to significant financial turnarounds.

The nation’s major miners may be pumping out a lot of tonnes, but how does a production boom impact the other areas of the industry?

The matter of METS

The METS sector is far from booming at the moment but there are good signs on the horizon, according to METS Ignited Chief Executive Officer Ric Gros.

“Commodity prices have strengthened as we probably reached a more sustainable level, but we are a long way from a boom,” he told National Mining Chronicle.

The mining construction boom from the beginning of the 2000s to 2013, and the high commodity prices which came alongside, proved particularly prosperous for METS players as they capitalised on the immense opportunities available to them.

Mr Gros said when commodity prices dropped around the same time as the construction boom ended, the METS sector experienced a particularly difficult time, but there were signs of life to emerge from the current environment.

“We do see a recovery and some green shoots emerging,” he said.

“The supply-demand market pressure will determine the viability of new projects, but there is also an emerging technological drive that provides opportunities to leverage all the things the Internet of Things and digital technology can deliver, whether it is increased safety, optimisation tools or autonomous environments.

“These new, emerging technologies will provide opportunities for METS in operating environments, as well as new projects.”

Mr Gros said companies were also looking overseas to lessen the impact of cyclical demand for their offerings.

“While the production cycle has increased and the construction expansion cycle has shrunk, a significant number of METS companies take advantage of global opportunities through export,” he said.

Exploration slides again

While the Office of the Chief Economist’s Resources and Energy December Quarterly was highlighted by the aforementioned record export forecast, the news was mixed in exploration.
Mineral exploration’s decline slowed but spending continued to fall, with mineral exploration expenditure recording a 3.7 per cent hit during the September quarter.

Gold and copper spending was higher, but the report predicted things would continue on the downward trend moving forward.

“The generally subdued long-term outlook for growth in commodity prices makes substantive increases in exploration expenditure over the outlook period unlikely,” it said.

Association of Mining & Exploration Companies CEO Simon Bennison said the headline figure of 3.7 per cent contraction hid the real story at play in exploration.

Year-on-year, exploration spending increased 6.7 per cent to $249 million in Western Australia, 8.5 per cent to $32 million in New South Wales and 23 per cent to $7.9 million in Victoria over the September quarter.

This was in contrast with falls of 34 per cent to $22 million in the Northern Territory, 28 per cent to $55 million in Queensland, 18 per cent to $3.2 million in Tasmania and 5.5 per cent to $10 million in South Australia.

“The Resource and Energy Quarterly clearly shows that exploration is beginning to grow in certain parts of the country and certain commodity groups,” Mr Bennison said.

“The investment made in co-funded drilling schemes by governments has helped reduce the cost of drilling, and makes it easier for companies exploring remote Australia to decide to drill and discover the mines of tomorrow.

“Each new mine creates thousands of jobs and generates significant economic and social dividends for the nation and local communities.

“The mines of tomorrow have to be discovered to replace the existing producing mines.”

Mr Bennison implored governments to continue support for mineral exploration programs.

Australia is shipping tonnes at record rates as positive signs emerge in the supporting sectors domestically – it may not be an industry-wide boom, but it does seem to be cause for optimism moving forward.