Don’t bet the farm yet
Wednesday 19 October 2016
A director of the Resource Industry Network (RIN) in Mackay says there’s no mistaking a measurable improvement in the amount of work on offer for the local mining support sector following the astonishing coal price rally this year.
The spot price of Australian coking coal has traded above $270 a tonne in Australia which is double where it was just three months ago, and thermal coal is up 70 percent for the year.
RIN Director Mick Crowe says while the price recovery is having a positive impact - both mentally and materially - most businesses remain focussed on keeping the costs down for the longer term.
“You can definitely see little bits of work coming through, and an increase in the amount of work getting done on down days,” he told Shift Miner.
“But I don’t think we are going to see a massive wave of maintenance work in the short term.
“My view is that we won’t see another boom like the one that was, but we will hopefully see a steady improvement.
"The key for our members is, how do we keep our services cost competitive so miners can stay in the lowest cost quartile globally, irrespective of where the prices are.
"So even if the prices are low, we can all still make a profit, and keep the jobs that we have created.”
The totally unpredicted rally in coal prices has once again underscored how hopeless even the most authoritative price forecasts are.
It also explains why the most commonly used mantra in mining is that you need to concentrate on costs because they are the only thing you have any control over.
Looking to the future, Mr Crowe says there is no doubt there's a huge body of maintenance work building up in the coalfields, but he says the challenge for the whole sector is how they manage that task in an orderly, sustainable and sensible way.
In an ironic twist, he says the downturn has led to serious skills shortages in some areas.
“Absolutely, that's the case,” he said.
“People need to eat, and over the last four or five years, skilled people have had to go where the work is, and we have lost some of those people forever.
“But as work opportunities return, hopefully, people will drift back, but right now uncertainty is the order of the day.“I would be amazed if anyone is super confident about the long-term outlook, so it's just short term bets, for now.”
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