About 30,000 fresh job cuts, more mine closures expected in Australia

About 30,000 fresh job cuts, more mine closures expected in Australia

Dark times ahead for Australia's mining industry. (Image via YouTube)

The Australian mining industry is bracing for more job losses and mine closures next year as coal and iron ore prices remain depressed.

Almost 80% of mining leaders are reducing capital expenditure, up from 44% last year, the latest annual report by Newport Consulting shows.

An overwhelming 93% of the 50 leaders polled are pessimistic about their growth prospects for the next 12 months, significantly up by more than 50% compared to last year. A further 82% are not confident of large-scale projects resuming in the by summer 2016, and instead predict it will take at least three to five years.

What’s clear in the report is that mine managers are getting to the end of their tether. In a sign of how close to the edge some mines are, one unnamed executive said in the report:

“We will maintain controls on spending, capital expenditure is at a minimum and we have made redundant thousands of people. We don’t believe we can cut more. If the market does not improve, we will close mines and put them on a care and maintenance regimen.”

Suppliers and contractors affected

The survey also suggested that the pain is spreading from the miners themselves to ports that service them and the rail contracts that get product to the wharves.

“Supply chains are suffering, employment is suffering, and mines that cannot be run profitably are being closed and there are a lot more redundancies coming,” Newport Consulting managing director, David Hand, said in a statement.

He added that he expected more mines to close and there could be as many as 30,000 jobs lost across Australia over the coming year, especially in the coal states of New South Wales and Queensland.

The annual report traditionally concludes with advice to Canberra from the leaders interviewed:

This year’s issue reveals a general embrace of the new federal government, even as the industry is calling for more action and delivery of promises after one year on the job. A more friendly regulatory environment and flexible IR laws is the top demand by the sector (27%), followed by less red tape (18%).

However, the study argues Australian miners are among the most innovative and entrepreneurial businesses, which means they could quickly make big changes to survive and boost productivity.

“It’s grim, but there’s a future,” Hand said.