Non-mining services exporters
“There are a lot of Australian companies with mining projects around the world. The mining companies lead the way for Australian service providers,” says Stephen Deady, director of Industry Economics & Taxation at the Minerals Council of Australia.
He believes the mining industry can provide a path for exporters in construction and engineering as well as law, accounting and financial services: “They are the associated industries that go with a major mining project.”
Trzebski agrees. “The mining industry is always pioneering. There are tremendous opportunities in education, project management, banking systems, infrastructure,” he says. This goes all the way down to safety training: “Many of the bigger mines are being operated by big international players and they have governance within the company to ensure safety.”
Barriers
One prominent challenge for the mining sector in general is the fluctuation in commodity prices and tight financial conditions, which may affect investment, says Deady. But the other key issue is location, as mines are generally situated in remote areas of developing countries that may be exposed to high security risks.
Another big one is political risk. “For the investor, issues around sovereign risk and predictability of public policy are critical in any major decision about investment,” says Deady, but adds that service providers might not have the same level of concern.
Trzebski admits that security could be a problem, also noting “the secure ones are more competitive”. He advises exporters to thoroughly research the destination market and find the right people via export organisations such as Austrade and Austmine.
“Research the market, go to the market. Before you commit resources, go there often so you can minimise the risk. Things can change with time,” he says.
Exporters can also attain coverage through institutions such as the Export Finance and Insurance Corporation (EFIC). “If it’s a risky country you have to think about whether you can afford to lose,” Trzebski says. “Finance is always a challenge, but EFIC are a very good partner for companies to take up some of the risk.”
The future
Global recession shouldn’t affect the MTS sector for too much longer, says Trzebski. “The crisis has not been caused by demand, it has been caused by financial traders so we believe the mining sector will recover first. Many projects are coming back into operation and there is focus on spending on those projects, so there’s an opportunity for the MTS sector.”
One issue the mining sector will keep an eye on will be the openness of the market. Deady nominates maintaining open markets as the most critical aspect of the current economic conditions.
“We’re in a downturn and things are difficult,” he says. “We have to make sure that governments don’t make it more difficult by increasing protectionist measures and closing off markets. It’s about keeping markets open for trade and investment.”
As for the future beyond the recession, Trzebski is upbeat. “It’s the age of mining technology. This is an opportunity to revise your technology or product and adapt it to new requirements. It’s about being more efficient, saving money,” he explains.
“There’s a boom coming but it will be different, it will be more about how you can mine smartly. The Australian MTS industry is world-leading and it has a great future in Australia and as a global industry. There are going to be more opportunities for the Australian MTS sector outside Australia than in Australia.”
Trade links
Austmine: www.austmine.com.au
Australasian Institute of Mining and Metallurgy: www.ausimm.com.au
Australian Mining: www.miningaustralia.com.au
Quadrem: www.quadrem.com
Minerals Council of Australia: www.minerals.org.au
