Finance Finance News Productivity mining’s biggest challenge

Productivity mining’s biggest challenge

Twitter Facebook Reddit Pinterest Email

A snapshot of the global mining sector shows companies are shifting their focus to maximise profits as the industry’s boom enters its twilight.

Ernst and Young’s yearly report ranks the risks facing the mining and metals sector.

At the peak of the mining boom seven years ago the shortage of skilled workers was the main concern.

The skills shortage has now slipped to ninth on the list, down from fifth last year, while the importance of community support for mining projects is now the third most important risk.

The most important challenge facing the resources sector is now improving productivity.

The head of Ernst & Young’s mining unit, Mike Elliott, says inefficiencies tolerated in the rush to expand are now being tackled.

“How do they give a higher return for the capital that has been granted to them by shareholders and driving more productivity out of the capital that they’ve already invested is what the focus is today,” he said.

Mr Elliott says mining companies are increasingly focused on getting lower costs and better profit margins out of their existing projects.

“The mining investment boom is clearly over, however the extraction of the benefits of what’s been installed over the last decade is still only coming through,” he said.

“So Australia actually ships more material every day than it ever has in its previous existence. The challenge for mining companies is to get the highest return from the money they’ve already spent.”

While the report finds a skills shortage is no longer an immediate concern for resources firms, Mr Elliott warns that many of the problems around training enough professionals have not been addressed.

“It has fallen, but the underlying problems haven’t been removed, and I guess in many ways it will come back, so when we do reach that inevitable next cyclical upswing the question is where are those skilled workers going to come from?” he asked.

“The increase in automation and capital that’s been put into the mine sites mean there’s fewer unskilled jobs and more skilled jobs.”