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Mining industry in 'survival mode'

The spot price for Australian thermal coal has fallen 36% in 18 months. Add that to a raft of other issues and the optimism of industry leaders is suffering.
The spot price for Australian thermal coal has fallen 36% in 18 months. Add that to a raft of other issues and the optimism of industry leaders is suffering.

THE mining industry appears to be in survival mode, according to the latest Newport Consulting Mining Business Outlook Report, which draws on in-depth interviews with 55 mining leaders.

The latest report delivers a damning outlook where optimism has taken a hit at the hands of rising costs, industrial action, low productivity, an international price slump and a labour and skills shortage that is far from over.

Mining leaders also called for more government support in infrastructure such as road, rail and air transport, with many having to invest in their own systems, which currently takes up an estimated 80% of capital expenditure.

"Only 25% of companies are planning to invest in major CAPEX (capital expenditure) projects this year compared with 52% last year," the report said.

The rising costs of labour and energy were cited as key factors behind the subdued outlook, a topic the industry's biggest representative body, the Queensland Resources Council, has been vocal on.

"Today more than twice as much capital is required to build one tonne of new capacity than it did five years ago," QRC chief executive Michael Roche said.

"The QRC's latest State of the Sector report features analysis by Port Jackson Partners that highlights the threat that rising costs and lower commodity prices pose to the competitiveness of current operations."

Mr Roche blamed unnecessary and poorly designed regulation, increasing labour, energy and transport costs, the higher Australian dollar and a shift towards lower commodity grades.

He said with the drop in prices, the key to success was now volume-based growth through increasing port and rail capacity. He urged industry and government to take action so Queensland could "continue to attract investment and get projects over the line".

The spot price for Australian thermal coal has fallen 36% in the past 18 months. According to the Newport report, companies cannot afford to sit back and wait.


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