Over one-third of Australian underground mines plan to cut spending in 2016
A survey from Timetric’s Mining Intelligence Center (MIC) shows 35% of underground mines are expecting to decrease spending across their operations during 2016, whilst the majority (65%) of surface mines expect investment to stay the same.
At the end of 2015, Timetric surveyed 100 mine managers and other senior decision-makers in operating mines in Australia, asking respondents to outline their predictions for changes in spending over the following 12 months.
Changes in expenditure vary according to the commodities produced (Figure 2). Whilst all iron ore respondents are predicting expenditure to either stay the same or increase, those from the coal sector were most likely to predict a reduction in spend (38%), ahead of precious metals (25%). According to the results, only 8% of surface operations are planning to cut their spending while 35% of underground mines are expecting no changes in expenditure over the next year. In contrast, 31% of surface operations expect to increase their investment in 2016, with the majority expecting it to be stable.
“This is interesting given the iron ore industry is currently experiencing a major downturn. However, the iron ore respondents all tended to be from large companies such as Rio Tinto, Fortescue Metals, BHP and Roy Hill, which are all currently in the process of expanding their operations, as opposed to smaller producers such as BC Iron and Atlas Iron, whom are currently struggling,” comments Nez Guevara, Senior Mining Analyst at Timetric’s MIC.
With low commodity prices still affecting the industry, mining companies continue to avoid any non-essential spending, with expenditure to remain unchanged in 2016 in most cases. However, the iron ore industry has the most stable outlook over the next 12 months with marginally greater opportunities existing in the precious and base metals sectors, where a higher share of respondents expect spending to increase during 2016. These opportunities are in line with expansion plans from companies such as Rio Tinto, BHP Billiton, Fortescue Metals and Roy Hill.