From Newport Consulting new Mining Business Outlook:
We consulted key industry leaders, including Gina Rinehart, to collate the most prevalent outlooks, challenges and opportunities facing the mining sector in 2016. This year’s report shows a shift in sentiment, suggesting an industry revival. The key headline findings include:
- Growth outlook is upbeat for the first time in years. For the first time in more than three years, the mining industry is showing signs of confidence, with an upbeat outlook among leaders. Of the leaders interviewed, 43 per cent are optimistic about their growth forecasts for the next 12 months; a definite swing towards revival. This has increased from well below 10 per cent a few years ago. During this time, the number of leaders not optimistic has dramatically fallen from 93 per cent to 55 per cent.
- Miners are focused on growth; not just survival. After a period of focusing on recalibration and cost reduction, miners are more positive about boosting profitability through growth in the long-term. In recent years, survival was the key business strategy. For the year ahead, growth is now a significantly higher focus, with 15 per cent of leaders citing this as a key strategy. This once again suggests the industry is now ready to address topline and bottom line growth.
- Good news: Miners are starting to spend again. There are early signs of increased capital expenditure across the sector. For miners, a new phase of confidence is already beginning, with 27 per cent of companies interviewed for this year’s report either planning to moderately or significantly increase Capex in the next 12 months. This is up from 18 per cent last year.
- Prices to stabilise; another sign of the tide turning. For 1 in 2 mining leaders interviewed, commodity prices are expected to stabilise over the next 12 months, further indicating a shift in sentiment within the sector. Stable prices are set to pave the way for increased capital spending, carving a more positive outlook for miners.
- Fewer companies reducing staff; more hiring. Last year, most miners were reducing staff. This year, there is an increase in new recruits, with more companies planning to hire in the next 12 months.
- Poor market conditions still concern leaders. Despite cautious optimism among miners, poor market conditions, low commodity prices and capital constraints remain key concerns. Faced with an uncertain climate, miners are looking beyond the current economic situation and further into the future, as they prepare for a growth agenda.
