Steve Bradbury moment
Slow payment in a mining downturn sees mining administrations peak last year.
Wednesday 13 December 2017
The turnaround in the mining sector this year has come too late for many resource sector businesses according to the Australian Securities and Investment Commission (ASIC).
According to ASIC, Administrators filed reports on 198 mining businesses in the last 12 months, which is roughly the same as last year (193), almost double the number in 2014/15 and nearly four times higher than it was in 2012/13.
According to ASIC, the biggest problem for mining business was the general economic conditions, which administrators blamed for about one in five insolvencies. However, cash flow issues, poor strategic direction, and trading losses were also big problems.
However, for those left standing they might be doing their own “Steve Bradbury” in 2018 with BIS Oxford Economics releasing a report this week predicting the worst of the mining industry downturn had passed.
According to the report, we can expect to a see a significant number of mines taken out of care and maintenance and into production as a resurgent coal prices make them viable again.
“The mining industry is going to be a positive contributor to the economy not just in production, but in terms of investment activity,” BIS Oxford Economics’ Adrian Hart said.
"We are expecting coal production in the Bowen Basin and across Queensland to rise, not just for steaming coal but coking coal as well.
“We are at the point where things are starting to roll, and we are expecting it to have a significant flow-on effect.
“We haven't included Adani in this, but if that were to appear as well, it would be much stronger again.”
The report also predicts maintenance activity would rise nearly 60% by 2023 which would be a much-needed boost to the mining support sector in Central Queensland which has weathered the steepest mining correction in history.