The Mining Industry

Why Mining?

The Australian mining industry is the world’s:

No. 1

producer of bauxite, alumina, ilmenite, rutile, zircon, synthetic rutile and tantalum

No. 2

producer of gold, iron ore, lead, zinc, uranium and diamonds

No. 3

producer of silver and nickel

No. 4

producer of black coal and manganese

No. 5

producer of aluminium, copper and brown coal

The mining industry’s major role in Australia’s economy is assured due to the increasing global demand for commodities.

Commodity prices will rise and fall, however the trend over time is for prices to increase.

Graph: Commodity Prices: 10-year moving average Y/Y % change Source: www.stifel.com

Why?

A McKinsey report forecasts that “Demand for energy, food, metals and water should rise inexorably as three billion new middle-class consumers emerge in the next two decades. The global car fleet for example, is expected almost to double, to 1.7 billion, by 2030.”

Graph: Global commodity demand trajectories Source: Rio Tinto analysis

China and India represent most of this population growth.

The new middle-class consumers of China and India and other developing nations will demand the same goods and services their counterparts in Australia and Europe and the US enjoy – refrigerators, cars, better housing, and better public transport.
Mining volumes will grow in order to meet the demand for the commodities that comprise these items.

Mining is Australia’s largest export industry

In Australia, mining is our largest export industry comprising around $150 billion or 52% of our exports.

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The mining industry is significantly larger than our automotive, defence and TCF manufacturing sectors.
The following puts into perspective the size of Australia’s largest mining companies compared to our automotive sector.

  • Ford Australia $2.8B
  • GMH $4.05B
  • Toyota Australia $8.9B
  • Fortescue $11B
  • RIO $55B
  • BHPB $68B
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The significance of the METS sector

The METS sector is one of five industry growth sectors recently highlighted under the Federal Governments “Industry Growth Centres” initiative. Commenting on this recognition of the strategic importance of METS to the Australian economy, Christine Gibbs Stewart, CEO of Austmine said: “The sector generates some $90 billion in gross annual revenue, employs approximately 386,000 people and represents some 3% of Australia’s Growth Value Add. The $15 billion of exports in the METS sector represents more than the combined total exports of beef, wheat and wine for the same period.”

What are they looking for?

Mining companies are always looking for innovative solutions that:

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The areas in which mining companies are looking for solutions are:

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Big data
Big data techniques will play an ever-increasing role as mining companies seek to manage the huge volumes of data from sensors on everything from mobile equipment to fixed processing plant to geotechnical and environmental monitoring devices.
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Energy efficiency
Crushing & grinding of rock consumes as much as 50% of the total energy used in mineral processing operations. It also accounts for 4% of the world’s total electrical energy consumption. As energy costs continue to rise, mining companies are actively searching for ways to increase energy efficiency.
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Cost reduction
Fuel savings, energy savings, supply chain savings are all big items of focus for mining companies.
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Exploration success rates
The discovery of new ore deposits has not kept pace with depletion, despite ongoing competitive exploration efforts. New technologies and techniques will be needed to reverse this trend.
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Mine automation
As mining operations become more difficult to access, and more hazardous to work in, automation will become more and more critical.
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Remote sensing and control
With the proliferation of cheap wireless networks and sensors, mines are adopting these to remotely monitor just about every aspect of their operations.
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Safety
Australian mining companies are world leaders in safety programs that have dramatically reduced lost time injuries and deaths over the last 30 years.
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Water and environment issues
Water scarcity in remote locations is one of the most significant issues in determining the economics of a mine. Technologies that reduce and recycle water are at the top of most mining companies shopping lists.
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Increased metallurgical recovery
Mining companies are actively searching for better methods to liberate minerals from ore .
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Utilities & power
Other
Mining contracts
Employee costs
Consumables
Fuel & lubes
Maintenance
Liners & grinding

Within these categories, their equipment requirements will be drawn from the following list, dependent on what types of mining operations and projects they have eg: underground mines, open pit mines, concentrators, smelters, exploration etc1:

1From Infomine’s Mine & Mill Equipment Costs Estimator’s Guide

Victorian companies have what it takes

ICN (Industry Capability Network) Victoria has identified a wide range of capabilities of Victorian companies that are currently focusing on traditional manufacturing clients, but could potentially supply resource projects, including:

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A springboard to global sales

Australian mining companies are global in nature. They had 868 projects globally in 2011.

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  • 30 projects: North Asia 3.5%
  • 48 projects: South & West Asia, Middle East 5.5%
  • 63 projects: Europe 7.3%
  • 74 projects: Pacific 8.5%
  • 92 projects: South America 10.6%
  • 100 projects: North America 11.5%
  • 126 projects: South East Asia 14.5%
  • 335 projects: Africa 38.6%
Source: Department of Foreign Affairs & Trade
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BHPB has operations in 26 countries

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Many METS companies have started out supplying products and services to a single Australian operation and then leveraged that relationship to secure orders from other operations owned by the same company. This pathway to global sales is likely to continue as more companies take a leaf out of the larger mining companies strategies regarding the standardisation of equipment procurement. In other words, once you have established a beach-head of one or more sales to a mining operation in Australia, this will significantly increase the opportunity to sell to their other operations globally.