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.

1. Opportunities for British
Companies in Australia’s
mining industry
3 July 2013

2. 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

3. 3
MINING IN
AUSTRALIA: AN
OVERVIEW

4. 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. 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. 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. 7

8. 8

9. 9
Major Companies in Australian Mining

10. 10
MINING: A BROAD
ECONOMIC
BACKDROP

11. 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.

12. 12
THE CURRENT
STATUS OF
AUSTRALIA’S
MINING BOOM

13. 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. 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. 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. 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. 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. 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. 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…

20. 20
AREAS OF
OPPORTUNITY
FOR UK
COMPANIES

21. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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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