THE BIG NEW BOOM

What post-pandemic crisis? The future is bright for Australia’s mining sector.

words: Ian Lloyd Neubauer

The outlook for mining in Australia has never looked brighter. That’s the gospel according to every analyst in the sector, which is experiencing conditions similar to the boom of 2010, and then some. Growth is being driven by unending demand for coal and iron ore plus a rejuvenation in strategic metals such as copper, nickel, zinc and lithium.

“We’re going through a period that’s been as good as we’ve seen in probably 20 or 30 years,” says Warren Pearce, CEO of the Association of Mining and Exploration Companies.

But it’s not going to be business-asusual in the new boom. Rising environmental, social and governance concerns mean mining companies are going to have to do and be seen to be doing a lot more to earn and maintain their social licence and attract the best people to fill jobs.

In this edition of AusBiz, we take a closer look at the multibillion-dollar opportunities and make or break challenges in what is gearing up to be the most exciting and transformative era in the history of mining.

Bread And Butter

In 2021, mining companies benefited from higher commodity prices and a weaker Australian dollar, which saw export earnings hit a record $310 billion. In 2022-23, the country’s mining and energy exports were estimated to smash that record again, reaching $464 billion, according to the Australian Government’s March 2023 Resources and Energy Quarterly report.

ABOVE AND BELOW: WORKERS AT GREENBUSHES, AUSTRALIA’S LARGEST LITHIUM MINE, IMAGE BY TALISON LITHIUM; ELECTRIC CARS ARE DRIVING DEMAND FOR LITHIUM.

Despite the headlines, coal continues to account for more than a quarter of these earnings as it remains a key source of global energy. “China, India and Russia make up 50 per cent of global electricity consumption – 70 per cent is from burning coal,” Jessica Amir, Australian market strategist at Danish investment bank Saxo, told the Investing News Network. “Global electricity generated from coal surged 9 per cent to a new record high in 2021.”

Australian iron ore exports are also looking strong, with production set to increase by 2 per cent this year on the back of new projects that began operations in 2021. Australia’s two largest miners, BHP and Rio Tinto, expect iron ore production to increase by nearly 17 per cent compared to 2021.

“There is a significant opportunity for Australian miners to build or expand processing and refining capacity,” EY’s global mining and metals leader Paul Mitchell told the Australasian Institute of Mining and Metallurgy Bulletin.

But the absolute dominance of these commodities will soon start to wane. “Historically, the Australian mining sector has been focused on iron ore and coal, whereas we are seeing a rejuvenation in the base metals such as copper, nickel and zinc, along with a rapidly expanding lithium sector,” says David Franklyn, executive director of Argonaut, a corporate advisory firm in Perth.