By: Esmarie Swanepoel
18th September 2012
PERTH (Mining Weekly) – Diversified miner Rio Tinto’s Australian MD, David Peever, has warned that the country’s resources sector needed to become more competitive if it wanted further capital investment.
Speaking at a resources conference in Canberra, Peever noted that rapidly rising costs in Australia was seriously undermining the industry’s ability to deliver new projects, while keeping existing ones cash flow positive.
“Let’s be very clear. Australia now has serious competitors across a number of commodities where we previously held an edge. We have new competitors, and we have better competitors.
“We compete not only for market share, but for scarce capital,” Peever said.
He told delegates that investment capital was highly mobile and dependent on a range of factors, but would eventually settle where the risk-reward equation was most favourable.
“Right now, the case for major new investment in the Australian resources sector is getting increasingly hard to make even within companies like mine with long histories in and an ongoing commitment to this country.”
Peever noted that apart from the expansion of existing mines in the Pilbara, getting final investment approval for projects in Australia was becoming “very, very tough indeed”.
He said that it was necessary for Australia to recognise that it had a productivity and competitiveness problem, and added that myths surrounding the industry needed to be dispensed of.
“With the rest of the world getting its act together, Australia’s market share actually fell in most commodities between 2000 and 2010,” Peever said.
“With all the rhetoric around the resources boom, the two-speed economy and the like, its perhaps understandable that this disturbing trend would have gone unrecognised by many. But unfortunately it’s true and should sound alarm bells.”
Peever suggested that Australia’s policy responses to the changing economic conditions and the demand/supply scenario in the resources sector could create or destroy an economic gain of more than 5% of the nation’s gross domestic product in the next 30 years.
“That is the scale of the opportunity we have in front of us as a nation,” he said.
“If we can maintain our current market shares, something we have failed to do over the last decade, Australia could grow minerals revenues by 65% from today’s levels by 2031, in a sector where revenue has already doubled since 2006.”
Peever added that there was no disputing the benefits of maintaining or even increasing Australia’s market share in the resources sector, which would create income growth, increased exports and investment, job creation, tax revenues and massive flow-ons to support industries in the supply chain.
“If we act to fix the problems, then the resources sector will continue to deliver tremendous benefits for a very long time,” he noted.
Edited by: Mariaan Webb
18th September 2012
PERTH (Mining Weekly) – Diversified miner Rio Tinto’s Australian MD, David Peever, has warned that the country’s resources sector needed to become more competitive if it wanted further capital investment.
Speaking at a resources conference in Canberra, Peever noted that rapidly rising costs in Australia was seriously undermining the industry’s ability to deliver new projects, while keeping existing ones cash flow positive.
“Let’s be very clear. Australia now has serious competitors across a number of commodities where we previously held an edge. We have new competitors, and we have better competitors.
“We compete not only for market share, but for scarce capital,” Peever said.
He told delegates that investment capital was highly mobile and dependent on a range of factors, but would eventually settle where the risk-reward equation was most favourable.
“Right now, the case for major new investment in the Australian resources sector is getting increasingly hard to make even within companies like mine with long histories in and an ongoing commitment to this country.”
Peever noted that apart from the expansion of existing mines in the Pilbara, getting final investment approval for projects in Australia was becoming “very, very tough indeed”.
He said that it was necessary for Australia to recognise that it had a productivity and competitiveness problem, and added that myths surrounding the industry needed to be dispensed of.
“With the rest of the world getting its act together, Australia’s market share actually fell in most commodities between 2000 and 2010,” Peever said.
“With all the rhetoric around the resources boom, the two-speed economy and the like, its perhaps understandable that this disturbing trend would have gone unrecognised by many. But unfortunately it’s true and should sound alarm bells.”
Peever suggested that Australia’s policy responses to the changing economic conditions and the demand/supply scenario in the resources sector could create or destroy an economic gain of more than 5% of the nation’s gross domestic product in the next 30 years.
“That is the scale of the opportunity we have in front of us as a nation,” he said.
“If we can maintain our current market shares, something we have failed to do over the last decade, Australia could grow minerals revenues by 65% from today’s levels by 2031, in a sector where revenue has already doubled since 2006.”
Peever added that there was no disputing the benefits of maintaining or even increasing Australia’s market share in the resources sector, which would create income growth, increased exports and investment, job creation, tax revenues and massive flow-ons to support industries in the supply chain.
“If we act to fix the problems, then the resources sector will continue to deliver tremendous benefits for a very long time,” he noted.
Edited by: Mariaan Webb
No comments:
Post a Comment