The resource sector-led Recovery
Warren Pearce, CEO, Association of Mining and Exploration Companies
I
t’s fair to say that this year has seen one of the biggest possible challenges thrown at our country, and our industry, as we’ve battled the COVID-19 pandemic. For all of us, 2020 has seen an extraordinary change in almost every aspect of daily life. Governments around Australia had to quickly put in place a wide range of restrictive measures to slow the progress of the virus and to protect the safety of all Australians, and although necessary for keeping people safe, these restrictions have had a profound and powerful impact across our society, our industry, and our economy.
Prior to 2020, the investment environment for the mineral exploration industry had been challenging for some time due to several highly-publicised issues and international shocks, such as US China trade tensions and Brexit. 18
BBMC Yearbook 2020
Each created considerable uncertainty around the global economy and trade relations. However, heading into 2020 optimism in the industry was improving driven by favourable commodity prices. In fact, 2019 ended with a quiet upswing underway in the Australian mining industry. Real GDP grew by 2.2%, with the mining industry directly accounting for 28% of that growth, and indirectly employing over 1 million people. The Fraser Institute’s 2019 Annual Mining Survey returned positive news for industry, when considering both policy and mineral potential, Australia retained its position as the second most attractive region in the world for investment, and investment in exploration was on the increase again, signalling a return of confidence in the industry as we turned the corner into 2020. However, the COVID-19 pandemic soon hit and its broader impact on our economy and financial markets was quickly realised, increasing economic pressures and constraints for our industry, and our country as a whole. COVID-19 essentially re-wrote the rule book for work in Australia, having an immense impact on all aspects of day to day life in our country. Government restrictions were put in place, and industry had to quickly adapt to new requirements and embed a new operational environment for over 250,000 employees. We had to ensure that our companies and our employees adhered to these new requirements in order to show governments and the community how seriously we took this responsibility. This
proved the ability of Australia’s mining industry to move quickly to implement new operational measures. Travel restrictions and hard border closures meant that many interstate employees had to relocate, while many others lost jobs. Companies refocused their recruiting on finding new locally based employees to replace them, and to ensure greater contingency in their workforce. Large portions of Australia suddenly became inaccessible as remote Indigenous communities were closed and large areas locked up to protect these vulnerable communities. Our industry was fortunate enough to be given special exemption from some travel restrictions, enabling mining operations to continue under strict new guidelines and to ensure the health and safety of our workforce and the broader community. However, while partially exempt from travel restrictions, we were not immune from all impacts of COVID-19. Anticipating the hard times ahead, many explorers ceased exploration programs to preserve their capital, as they attempted to buffer against a long and difficult period, not knowing when they might get back on ground. Initially, any remaining appetite for investment in mineral exploration was all but killed by COVID-19, meaning that companies were unable to attract private investment to continue exploration. Without the ability to access this critical source of funds, and with companies’ cash reserves depleting, the ability for many of these companies to survive the year was in question.
