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Opportunities for British Companies in Australia's Mining Industry July 2013

Opportunities for British Companies in Australia's Mining Industry July 2013



Australia is one of the world’s largest mining resource producers, a key market for opportunities for UK mining and mining-related businesses. The Australian resources industry is in the midst of ...

Australia is one of the world’s largest mining resource producers, a key market for opportunities for UK mining and mining-related businesses. The Australian resources industry is in the midst of great expansion, a large and diversified industry approaching £100bn in size across energy, base metals, precious metals and their ores. A boom decade has brought much competition and winning business is a tough game.

However, in a rapidly capital-intensifying industry, the UK’s strengths in high-technology goods, in professional and other services, its strong cultural, institutional and existing business ties, and the competitive exchange rate for the British pound, bring real opportunities for British businesses.

Linda Miles, UKTI Australia’s mining lead and Ian Hamilton, the British High Commission’s Senior Economist in Australia will look at the broad economic backdrop, the current status of the mining boom and specific areas of UK opportunity.



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    Opportunities for British Companies in Australia's Mining Industry July 2013 Opportunities for British Companies in Australia's Mining Industry July 2013 Presentation Transcript

    • Opportunities for British Companies in Australia’s mining industry 3 July 2013
    • 2 Introduction Australia is one of the world’s largest mining and resource producers, a key market for opportunities for UK mining and mining-related businesses Presented by ─ Broad economic backdrop ─ Current status of the mining boom ─ Specific areas of UK opportunity Ian Hamilton Senior Economist British High Commission Canberra Linda Miles Trade Development Manager UK Trade & Investment British Consulate Perth
    • 4 Minerals and resources extracted in Australia ─ Iron Ore ─ Copper ─ Black Coal ─ Silver ─ Uranium ─ Diamond ─ Nickel ─ Opal ─ Gold ─ Zinc ─ Bauxite / Aluminium ─ Rare Earth Elements
    • 5 The Australian minerals sector ─ The resources sector has grown from 5% to 10% of the economy in the last decade. ─ World’s leading producer of bauxite, alumina, rutile and tantalum ─ 2nd largest producer of lead, ilmenite, zircon and lithium ─ 3rd largest producer of iron ore, uranium and zinc ─ 4th largest producer of black coal, gold, manganese and nickel ─ 5th largest producer of aluminium, brown coal, diamonds, silver and copper
    • 6 Geography 50000 45000 40000 Western Australia Queensland New South Wales South Australia Victoria Value A$m 35000 30000 25000 20000 15000 10000 5000 0
    • 7
    • 8
    • 9 Major Companies in Australian Mining
    • 11 The Economy • Economy has expanded 13% since the financial crisis • • • avoided recession and a banking crisis China’s growth, and demand for resources, a key factor Mining sector is the big beneficiary – Mining Boom • • • High commodity prices Surge of mining investment Economic growth slowing to 2.5% in 2013 • China slowing, growth questions • Commodity prices have fallen • A$ has been at record highs, now falling.
    • 13 Phases of the mining boom Phase 1: a spike in commodity prices delivering export revenue windfall (2006 – 2011) Phase 2: a surge of new investment in mining capacity has followed, set to peak this year (2010 – 2016) Phase 3: will see a significant uplift in output up to 2016, as new projects complete and the number and size of mining operations rises (2013 – 2020)
    • 14 So far… ─ Enormous capital expenditure - £185 billion in all projects (most in LNG) ─ Nearly £50 billion in minerals sector investment ─ Mainly coal and iron ore expansions ─ Plus related infrastructure, transportation processing.
    • 15 New mines & expansions – committed projects No. of projects Value $mil (AUD) Iron ore 12 26 204 Coal 17 14 360 Gold 9 3 548 Lead, Zinc, Silver 3 728 Copper 3 643 Uranium 1 98 Aluminium, Bauxite, Alumina 0 0 Nickel 0 0 Other commodities 6 3 268 TOTAL 51 48 849
    • 16 Rationalisation underway… ─ The investment phase winding down sharply, amid reassessment of project viability. ─ Many projects now at feasibility stage are shelved or scaled back ─ 50%+ of Australia’s mines have costs above global averages ─ Mining companies strong focus on containing costs
    • 17 “The next round of minerals investments in Australia will, almost without exception, be captured only if costs are decreased and productivity is improved” – Marius Klopper, CEO, BHP Billiton
    • 18 Latest market developments  Lower commodity prices, rising volumes, falling currency  Production capacity rising - Iron ore and LNG particularly  Coal and gold under most pressure:  Gold and thermal coal price falls  Production cuts at smaller higher cost operations.  Some marginal producers won’t survive  A$ falling – cushioning the impact of lower commodity prices
    • 19 Despite the challenges… • Australia remains a good place to do mining business. • US analysts Behre Dolbeare rank Australia No 1. • The world’s safest destination for mining investment due to: political, economic, tax and regulatory conditions. •UK enjoys rising exports of hi-tech equipment, services •Threats and opportunities…
    • 21 The nature of opportunity shifting ─ As the mining boom moves from phase 2 to 3 in 2013, the nature of opportunities is shifting ─ The focus on cost-control is critical for identifying opportunities ─ Hi-tech machinery, eg. Automated, remotecontrol equipment. ─ UK export potential is not limited to miningspecific goods
    • 22 UK Capabilities for the Australian Mining Sector ─ Exploration / Analysis ─ Recruitment Services ─ Engineering Services ─ Occupational Health and ─ Communications ─ Remote Control Technology ─ Decommissioning ─ Construction Equipment Safety
    • 23 UK Companies succeeding in Australia ─ BHP Billiton ─ BG Group ─ Rio Tinto ─ Murphy Group ─ Wood Group ─ Laing O’Rourke ─ Anglo American ─ JCB ─ Arup ─ Fenner Dunlop ─ Amec ─ Hays Recruitment ─ Kentz ─ Landrover
    • 24 The Procurement Process ─ Products are written into the design specification in the early stages at pre-FEED ─ Identify Mining Companies, Engineers and Contractors and build relationships with them ─ Local presence required – branch office/agent/distributor/partner ─ UKTI can assist with contact names, introductions, visit programmes, setting up
    • 25 Access to Projects: ICN Gateway www.gateway.icn.org.au; www.projectconnect.com.au ─ Industry Capability Network ─ Online service, lists project opportunities, industry suppliers, new business opportunities ─ Names of successful bidders published ─ Includes Mining Directory ─ Local presence required - Possibilities for partnerships/JV’s with UK companies.
    • 26 Listed on Project Connect: Roy Hill Iron Ore Project, Pilbara WA Project Manager: Parsons Brinckerhoff Project Owner: Roy Hill Holdings Pty Ltd Constructor: Samsung C&T
    • 27 Projects under Consideration – QLD • Carmichael Coal Project ($6.8bn) Adani Mining. Feasibility Stage. • Alpha ($10bn) and Kevin’s Corner ($4.2bn) Coal Projects GVK/Hancock Coal. First coal 2016. Work package on ICN Gateway • Galilee Coal Project ($8.8bn). First coal 2016 Waratah Coal. First shipment 2015 • South Galilee Coal Project ($4.2bn). At Feasibility Stage Bandanna Energy.
    • 28 Projects under Consideration – WA • Roy Hill Iron Ore Mine & Infrastructure ($9.5bn) Hancock Prospecting. Production expected 2015. • Oakajee Midwest Development ($4bn) WA State Govt/private. On hold pending review. • West Pilbara Iron Ore Project ($6bn) Australian Premium Iron JV. First shipment 2015
    • 29 Conclusion ─ Australia: a global mining heavyweight undergoing rapid resource expansion ─ Billions being invested in new capacity, but also rationalisation ─ Potential exists for UK exporters but a fiercely competitive market means Britain must play well to niche strengths
    • 30 What can UKTI Australia do for you? ─ Local knowledge: Tailored, experienced, impartial advice to maximise your chances of succeeding in Australia ─ Product launch: In one of our boardrooms, available in most capitals ─ Introduction service: To prospective business partners, Aust Govt. ─ Promotion: PR to local media, UKTI e-newsletters, and social media help ─ Test the Market: Reduce the cost, risk and time of establishing your business in Australia by working in one of our business centres
    • 31 What next? • Ask questions at the end of this or follow the conversation on LinkedIn • Keep in touch with the latest Australian business opportunities • Follow us on twitter @uktiaustralia Linda Miles Linda.Miles@fco.gov.uk Ian Hamilton Ian.Hamilton@fco.gov.uk