Australia Mining Report

Published 02 July 2015

  • 114 pages
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$1,295.00
Australia Mining Report

BMI View: Australia's mining sector is set to suffer the painful spillover effects of a prolonged period of weak mineral prices, in part resulting from a sharp investment slowdown in China.

Australia has been among the biggest beneficiaries of the China-led commodities boom over the past decade, attracting huge amounts of investment into the minerals space. Driven by China's voracious appetite for key commodities such as coal and iron ore, the value of Australia's mining industry had increased by more than six-fold from USD24bn in 2003 to USD154bn in 2013. As a result, this has seen the sector's share of GDP rising from 4.5% to 10.2% over the same period. However, the boom years in the mining industry are over. With China's economy on course for a continued slowdown over the coming years and mineral prices set to remain low, Australia's mining sector will suffer the painful spillover effects.

Boom Is Over
Australia - Mining Industry Value
Australian Bureau of Statistics, BMI Calculation

We believe Australia will be the biggest loser from the mineral imports shift in China. The latter commands a prominent role in Australia's exports of key commodities including coal and iron ore. Already, the mining sector is feeling the crunch of plummeting commodity prices as a string of miners scale back their ambitions and slam the brakes on investment. The rising tide of economic nationalism, declining labour productivity and aggressive minimum wage legislation will compound the challenges in the mining industry, amplifying the downshift in Australia's economy going forward. We expect the value of Australia's mining sector to reach USD191.9bn by 2019, growing at an annual average rate of 3.6% over our forecast period. This contrasts with an average growth rate of 21.5% per annum over the past decade.

Heavy Chinese Exposure
Australia - Exports of Iron Ore (LHS) & Coal (RHS) by Destination (% of Total)
Source: Australian Bureau of Statistics, BMI

Despite the fading...

BMI Industry View
7
SWOT
10
Industry Forecast
12
Bauxite: Weipa Leads Growth
12
Table: Australia - Select Bauxite Projects
14
Table: Australia - Bauxite Production (2011-2019)
14
Coal: Continued Headwinds
15
Table: Australia: Select Coal Projects
20
Table: Coal Production Forecast (Australia 2011-2019)
20
Copper: Constructive Outlook Despite Slower Growth
21
Table: Australia - Largest Copper Projects
21
Table: Copper Production Forecast (Australia 2011-2019)
23
Gold: Golden Years Gone
23
Domestic & International Firms To Remain Active
23
Table: Australia - Largest Gold Mining Projects
24
Table: Gold Production Forecast (Australia 2011-2019)
25
Iron Ore: Maximizing Production In Years Ahead
25
Smaller Players To Focus On Cost Control
28
Table: Australia Iron Ore Production Forecast
30
Lead: Growth Positive But Subdued
30
Table: Lead Production Forecast (Australia 2011-2019)
33
Nickel: Expansion Despite Poor Prices
33
Table: Australia - Select Nickel Projects
35
Tin: Output Growth Ahead
37
Table: Australia - Tin Mining Projects
38
Table: Tin Production Forecast (Australia 2011-2019)
39
Zinc: Century Mine Closure Underpins Negative Outlook
39
Table: Zinc Production Forecast (Australia 2011-2019)
42
Industry Risk Reward Ratings
43
Australia Risk/Reward Index
43
Rewards
43
Industry Rewards
43
Country Rewards
43
Risks
44
Industry Risks
44
Country Risks
44
Table: Australia - Mining Industry Value & Minerals Production Forecasts
45
Asia Risk/Reward Index
46
Table: Asia - Mining Risk/Reward Index
50
Regulatory Development
51
Mining Regulatory Framework
52
Table: Australia - Mineral Taxes
53
State Warming To Uranium
53
Commodities Forecast
54
Commodity Strategy
54
Ferrous Metals
54
Iron Ore: Price To Remain Under Pressure In 2015-2016
54
Steel: Subdued Prices Until 2017
56
Non-Ferrous Metals
59
Copper: Subdued Outlook, Despite Recent Rally
59
Lead: Prices Weakness To Continue
61
Nickel: Subdued Prices Due To Weak Demand Growth
62
Tin: Supply Deficits To Underpin Rally In Tin Prices
63
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
64
Table: Select Commodities - Performance & BMI Forecasts
66
Competitive Landscape
67
Iron Ore Majors To Outperform
67
Table: Financial Data For Key Mining Firms Listed In Australia
68
Company Profile
69
Global Company Strategy - BHP Billiton - Q3 2015
69
Latest Financial Results
72
Table: BHP Billiton - Supply Chain Analysis
74
Table: BHP Billiton - Key Financial Data
75
Global Company Strategy - MMG Limited - Q3 2015
76
Table: MMG Ltd - Supply Chain Analysis
80
Table: MMG Limited - Key Financial Data
81
Global Company Strategy - Glencore Xstrata - Q3 2015
82
Company Overview
83
Latest Financial Results
83
Company Strategy
84
Table: Glencore - Supply Chain Analysis
86
Table: Glencore - Key Financial Data
87
Rio Tinto
88
Company Overview
90
Company Strategy
91
Latest Financial Results
92
Table: Rio Tinto - Key Financial Data
94
Regional Overview
95
Continued Domination Of Iron Ore Production
95
Indian Coal Consumption To Outperform
96
Table: Less Reliance On Coal
98
Indonesian Ban To Continue
98
Global Industry Overview
100
Global Overview
100
1
101
2
103
3
104
4
106
5
108
Methodology
110
Industry Forecast Methodology
110
Sources
111
Risk/Reward Index Methodology
112
Table: Weighting Of Indicators
113

The Australia Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Australia Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Australia.

Key Benefits

  • Use BMI's independent industry forecasts on Australia to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Australia's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Australia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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