Mining see signs of revival, stifled by government regulations: report

A new report has found the mining industry is showing signs of revival for the first time in three years, however this could be hampered by government regulations.

Newport Consulting’s latest Mining Business Outlook Report projects a positive outlook for the next 12 months, with 43 per cent of mining leaders optimistic about their prospects for the year ahead, in contrast to the all time low confidence rate in 2014. It confirmed the gap between optimistic and pessimistic leaders is closing, dropping from 93 per cent to 55 per cent this year.

The report also identified an increase in capex, with 27 per cent of companies planning to increase theirs in the next 12 months, in some cases by up to 15 per cent. There is also a significant drop in companies reducing staff.

This comes despite NAB’s research indicating that the current downturn is set to continue, with more than 50,000 jobs to be lost in the resources sector.

Despite the positivity, 25 per cent of leaders interviewed indicated the government urgently needs to address certain regulations and red tape, particularly the project approval process. If it happens it could lead to the industry returning to a level of international competitiveness as a sector.

David Hand, managing director of Newport Consulting said is not just a “flicker of life” but a “distinct positive shift in sentiment and outlook”.

“Companies are spending again, have more confidence in stabilisation of prices, and have prioritised growth strategies,” he said.

“It’s a fine line, however as at the same time, the industry wants to see the government take a proactive stance in reducing red tape, especially surrounding mining and project approval processes, which are seen to hamper growth and Australia’s ability to return to a more competitive position globally.”

Featured in the report is an interview with Gina Rinehart, who said Australia’s mining industry had to act during the decline of commodity prices to ensure they remain competitive internationally.

“We also need to significantly and urgently cut the government-imposed regulations, approvals, permits, licenses and compliance cost burdens that are placed on Australia’s resource industry. Yet little is happening,” Rinehart said.

“Without this, we will continue to see declines in exploration and investment, instead of growth, and suffer the consequences that reduced exploration and investment brings, including the negative effect on our standards of living. The time to act is now before further opportunities are lost.”

The main challenges faced by mining leaders are commodity prices and global economic conditions, followed by profitability and cash flow. The main opportunities for the next 12 months are international growth markets, market consolidation, productivity, and innovation.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.