Sixty per cent of mining equipment, technology and services (METS) players are concerned about the current state of the market, according to a recent Austmine survey.

Concern was consistently high across all states, but the highest percentage of “extremely concerned” companies came from Western Australia and Queensland.

The report surveyed 432 METS sector companies between April and June this year and found the sector was experiencing “significant challenges”.

With a focus on reducing costs on the exploration and production side of the industry, suppliers are rethinking their businesses.

The results are in stark contrast to those from a similar survey in 2013, which showed a very buoyant METS sector on the back of record commodity prices and a decade-long mining boom.

Seventy-nine per cent of companies reported a decrease in revenue, while 61 per cent reported a decrease in profitability, 59 per cent a decrease in customers and projects and 52 per cent a decrease in employees.

Despite the findings, Austmine CEO Christine Gibbs Stewart said she expected companies to “hold their own” over the next 12 months.

“While business will continue to be tough, companies have adjusted their cost structures, looked at their strategies and are focusing on adding value to their customers,” she said.

“Much of the difficult cost-cutting decisions have already been made and, as such, we would expect to see a rise in company profitability.

“Added to this, the continued depreciation of the Australian dollar means our products and services are more competitive offshore, which will result in increased export sales.

“This will be a significant revenue boost for the METS sector as 66 per cent of companies export.”

In terms of challenges faced, 46 per cent of companies surveyed listed the cost of doing business in Australia, second only to the industry downturn.

However, the report showed some companies were not blindsided by the downturn and had been preparing for it for some time.

Fifty-six per cent said they refocused on customer relationships over the past 12 months, while 44 per cent explored or moved into other industries.

About 33 per cent launched a new product or service, while 32 per cent increased collaboration with others in the supply chain and 32 per cent sought new markets.

Respondents cited oil and gas (68 per cent), infrastructure (41 per cent), renewable energy (30 per cent) and construction (27 per cent) as the biggest opportunities for METS players.

Ms Gibbs Stewart pointed to collaboration and strategic partnership as a key strategy for companies looking to enter the oil and gas space.

“This can be leveraging existing relationships with other METS who already work in oil and gas, or striking up new business relationships with companies who have networks in the oil and gas space,” she said.

“Using partnerships can help shorten the sales cycle, which in all of the resources sectors are fairly long.

“We think there is an urgent need to accelerate innovation in mining and only through close collaboration between researchers, METS and miners will this happen.

“Mining companies are certainly more open to collaborating with METS and recognise the importance of the relationship.”

Thirty-nine per cent of companies reported they collaborated with other organisations and 45 per cent of firms collaborated internationally.

Ms Gibbs Stewart said there were opportunities for METS players in the short to medium term in a number of commodities.

“There are some commodities that still offer opportunity in the short term, including zinc/lead, nickel and copper, which are facing diminishing grades and projects are increasingly going underground,” she said.

“Many Australian METS specialise in underground mining and offer some of the best solutions in mine planning, safety and communications.”

The global shift

Increased globalisation has allowed some METS players to look for work in other markets, so as not to rely on worried Australian operators.

According to the survey, 66 per cent of METS players are exporting their products or services overseas. This is an 11 per cent increase year-on-year from the 2013 survey.

Whilst METS players are reaching most corners of the globe, the focus is on Southeast Asia and the growing mining prospects in these nations. About 67 per cent of players surveyed reported doing business in Southeast Asia.

Indonesia is the number one Australian METS export market, followed closely by New Zealand, the US, Chile, Papua New Guinea and the Philippines.

Ms Gibbs Stewart said there were a number of catalysts for growth offshore.

“Recently concluded trade deals such as the Australia- China Free Trade Agreement and the Trans Pacific Partnership will allow increased access to many of these markets,” she said.

“Closer industry collaboration will also create opportunities up and down the value chain. This includes areas such as supply, technology exchange and new business models.”

Of the companies operating offshore, 52 per cent had offices or operations offshore, demonstrating their commitment to growing overseas business.

Almost half had offices in the US, while Canada, Chile, the UK and South Africa were also key locations for offices or operations.

According to the report, of the companies not exporting overseas, about 16 per cent planned to in the next one to two years.

However, the METS players also identified a number of things holding them back from exporting or expanding their current exporting business. These included lack?of internal resources (27 per cent), high domestic cost base (22 per

cent), lack of finance (20 per cent), difficulty accessing supply chains (18 per cent) and the inability to find suitable partners or distributors (16 per cent).

Respondents said expanding the Export Market Development Grants and more trade missions would help grow business overseas.

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