Australian mining in need of productivity push

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 26 Mar 2013   Posted by admin


AUSTRALIAN miners are fending off hits from all sides, with plunging iron ore prices and concerns about declining productivity coming to the fore in recent weeks.
In late March, iron ore miners led a downward turn in the Australian sharemarket spurred by fears of declining steel production in China and a bleak outlook for iron ore prices from Goldman Sachs. The global investment bank predicted that iron ore prices would fall from US$139 per tonne in 2013 to US$80 per tonne by 2015; it also downgraded the London listings of global miners BHP Billiton and Rio Tinto, a move that had flow-on effects in Australia.
The Goldman Sachs forecast saw the S&P/ASX200 close at its lowest level since early February; at the time of print on 20 March, BHP Billiton had dropped 93 cents (2.69 per cent) to $33.62, while Rio Tinto dropped $1.18 (2.01 per cent) to $57.48.
On the back of falling prices, Resources and Engineering Skills Alliance (RESA) chief executive Phil de Courcey was also on the attack, warning that the productivity level of Australia’s mining industry would continue to decline unless skill levels and shortages were addressed.
Speaking at the South Australian
Resources and Infrastructure Conference in March, Mr de Courcey said Australia was lagging behind its global peers in terms of productivity, and was not reaping the full benefits of the mining boom following the global financial crisis.
Mr de Courcey said the lack of skills in the sector had caused productivity to decrease since 2002.
“This lack of required skills is alsodriving the current cost blowouts on many of Australia’s major resource undertakings in both mining and energy,” he said. “No better proof of this is there than ina review of mining’s labour productivity index which peaked between 1995 and into 2002 but has been in severe decline ever since while the index covering other market sectors excluding mining, remains on the ascendancy.
“Worse, if we compared gross values added per hour worked, mining’s productivity has collapsed from its euphoric highs of around 2001-2002 to now be below agriculture, forestry, fishing, manufacturing and an index measuring
productivity in a basket of 12 selected industries.”
Mr de Courcey also said that increasing wages had played a part in lowering productivity, but suggested the lag could be lifted through a number of options including automation, diversity strategies, improved career advisory services, workforce optimisation and simulation and demand-driven training.
Mr de Courcey used South Australia as an example of a developing mining state with “amazing potential” that was suffering from serious skills gaps in at least 16 resources-specific professions. He said that raising miners’ productivity would be a challenge, but it would bring a range of benefits to the sector.
“These[benefits] include attracting increased investment, speeding up construction schedules, locking down secure employment and wages, creating an active environment for applying technology and innovation and ensuring Australia continues to optimise its share of commodity price cycles,” he said.


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