Australia’s mid-tier mining sector is charging ahead due to higher commodity prices, cautious spending and an increasing demand for lithium and other advanced tech metals, according to PricewaterhouseCoopers (PWC)’s 12th Aussie Mine Report.
The report, which analyses the 50 biggest ASX-listed mining companies with market values under $5 billion (MT50), found that the group achieved remarkable results for a second consecutive year, with all but three miners experiencing an increase in market capitalisation, up 28 per cent to $58.7 billion.
The report found that the push towards electric vehicles drove strong interest in lithium over the recording period, which was the second biggest contributor to growth in terms of dollar value to the group’s total market capitalisation.
Lithium was hardly mentioned in earlier editions of PwC’s Aussie Mine Report, but this year’s results indicate that there are seven lithium-related companies in the MT50.
PwC Australia Mining Leader, Chris Dodd, said they have seen another year of stonking results for the mid-tier miners due to cost-focused strategies of prior years, the continuing upward trend in commodity prices and a strong interest in lithium for its use in everyday electronics and rising industrial applications.
“This new boom is the fruit of the fourth industrial revolution, which has brought with it rising demand for modern conveniences like smartphones, electric vehicles, lightweight engines and next-gen batteries. Lithium was a standout, but we’re also seeing interest in other tech metals like manganese, nickel and rare earth,” he said.
Despite this, gold miners continued to dominate since last year’s report, now accounting for 53 per cent of total MT50 revenue.
“Gold is a part of the advanced tech story, but the strong results we’re seeing are more reflective of increased global tensions, given investors often flight to gold in times of high uncertainty,” he added. Gold miners were also the main contributors to growth in the group’s total EBITDA.
The biggest challenges for the MT50 over the period were operating costs (increasing by 10 per cent), impairments, (up by 56 per cent) and exploration (decreasing by 12 per cent), yet Mr Dodd said the most concerning thing remains to be the waning interest in the sector from Australia’s future workforce.
“Studies show broader industry-relevant tertiary enrolments have been declining in recent years, and mining engineer enrolments have dropped each year for five consecutive years, now plummeting to less than one-third of 2013 enrolments,” he said.
“Building tomorrow’s workforce is critical to long-term growth, but from today’s standpoint future supply is far from where it needs to be. The mid-tier group now needs talent with skills in artificial intelligence, data analysis and mechatronics. They need to work hard to remain relevant to future talent and proactively showcase the benefits of a career in mining, especially in the face of heightened competition for a newer age, digitally aligned workforce.”
PWC highlights four top priorities for mid-tier miners to address in order to attract talent:
- Acknowledge that organisational culture must align more closely with the values of graduating millennials, and tailor their culture accordingly.
- Modify existing recruitment strategies and sources to meet the needs of a more digitally enabled mining company.
- Work towards an optimal balance and interaction between the new workforce and the experienced campaigners who have seen the ups and downs before.
- Considering fierce competition from global peers, develop mentoring programs for new recruits to foster high performers and loyalty. This will be particularly important when looking to improve gender equality, as the mid-tier will be unable to ‘buy’ talent the way their global peers can.