Australia’s unique sovereign risk settings have enabled the nation’s mid-tier mining companies to capitalise on China driven demand for iron ore and growing global demand for battery minerals establishing the next generation of miners.
A new report by national audit, tax and consulting firm RSM Australia titled ‘Explorer to Producer: Australia’s Mining Regeneration’ found that 20 years of investment in Australia’s mining industry resulted in 40 Australian companies transitioning from explorers into the rare space of producers in the first two decades of the 21st Century.
RSM Australia Partner and mining and resources specialist Carl Di Lorenzo said what was clear from the research was that the shift in exploration and mine development investment back to “safe” jurisdictions like Australia combined with a spike in global demand for commodities had seen a surprising rebirth of the mineral and mining industry.
Di Lorenzo said: “Contrary to the perception Australia was a ‘mature’ mining country, one that was falling behind as a preferred location for mineral exploration and investment, by 2020 Australia actually led the world with a $US1.37 billion mineral exploration investment.
“Because of this investment, ‘company-making’ deposits are currently being defined in Australia and we’re seeing new Australian domiciled miners emerge on the global stage.
“This has meant in the last 10 years, alone the industry has contributed a huge AU$2.1 trillion of resources export revenue, AU$246 billion of mining wages and a staggering 21 per cent of Australia’s GDP growth in the 20-year period.
“This has been driven by our unique economic and socio-political foundations including access to a stable securities market.”
Sandfire Resources chief executive officer Karl Simich said Australia remains arguably the world leader in terms of regulatory and permitting efficiency, and that this, coupled with an environment that supports calculated risk-taking has created enormous opportunities for smaller players.
He continued: “The ASX offers a great risk-sharing mechanism enabling people to make informed judgments about the level of risk they want to take on in common with others of a similar mindset.
“It encourages a belief that if you put good ideas together and convey a clear message to people, and if you’re compliant with the laws, you can raise money quickly. We were able to raise more than our market capitalisation in funds for the acquisition of Minas de Aguas Tenidas SA in Spain effectively in one day.
“If we were a London-listed or Canadian-listed company it wouldn’t have been possible to do that.”
Looking towards future drivers of success, RSM Australia Partner and Director of Corporate Finance Craig Amos said the intersection of technology and battery minerals would play a critical role beyond the discovery phase.
Amos said: “We know lithium and other battery minerals are inputs into many of the products the world continues to demand but it’s also these resources that will be critical within the mining and resource industry to drive decarbonisation and digitalisation and to modernise the industry in line with today’s environmental, social, governance expectations.
“The report looks closely at the pace of change and range of issues faced by Australia’s next generation miners and shows that a shortage in workers and skills remains the biggest current and future challenge to the industry.
“Attracting and retaining the “best and brightest” is a fundamental test for an industry traditionally lacking diversity and fidelity through commodity price cycles.
“Loss of institutional geoscientific and engineering education and training capacity is a rising concern.”