Chris Satchwell, Mandy Bradley Technical Forecasts Ltd Commercial House, 19 Station Road
Mining Supplies and Innovation: An opportunity for the Country Ian Satchwell 11 April 2014
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Transcript of Mining Supplies and Innovation: An opportunity for the Country Ian Satchwell 11 April 2014
Adding value to minerals and energy: mining equipment, technology and servicesMining Supplies and Innovation: An opportunity for the CountryIan Satchwell11 April 2014
• Investment and production
• Redefining the Australian mining sector
• Employment and multipliers
• Case studies of METS development
• Some lessons
• Australian approaches to development
• The value of people
Outline
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Australia’s engineering and construction challenge – the largest investment wave since the 1800s gold rushes*
HOBART
Western Australia
Northern Territory
South Australia
Queensland
New South Wales
Victoria
SYDNEYCANBERRA
MELBOURNE
BRISBANE
ADELAIDE
DARWIN
BROOME
PERTH
Offshore petroleum basins
WA & NT projects to 2016: USD220 billion+
Queensland projects to
2016:USD100 billion+
South West RegionAlumina, mineral sands,
gold
Mid West RegionIron ore, gold,
uranium, nickel,
Pilbara RegionLNG, iron ore, infrastructure
LNG, mining
Bowen, Surat and Galilee BasinsCoal, CSG, LNG
South Australiaprojects to
2016 USD10 billion+
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*Reserve Bank, Australia
Copper, uranium, mineral sands,
petroleum
PORT HEDLANDKARRATHA
Gladstone and North West
Economic TriangleBase metals,
bauxite-alumina
Goldfields RegionGold, nickel, iron ore
New South WalesCoal, gold, base
metals
Western Australia case: investment will result in decades of increased production with lower volatility
* At ten year average prices
Historic and forecast production value* for WA’s key resources
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2005 2009 2013 2017
Val
ue in
$M
*
Gold
Iron Ore
Nickel
Oil/Gas
Alumina and Bauxite
Double 2011 value$m
Source: ACIL Tasman analysis
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Increased sustaining capital and
services
Resource economy in Australia: bigger than traditionally measured
Resource employment by industry 2011-12Share of total employment, financial year
Source: Rayner and Bishop, Reserve Bank of Australia, February 2013
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Gross Value Added – resource economy 2011-12Share of nominal GVA, financial year(has more than doubled in past 10 years)
18% of GVA • 11.5% directly from extraction and
processing• 6.5% from other sectors providing
inputs
10% of employment• 3.25% directly from extraction and
processing• 6.75% from other sectors providing
inputs
GDP contribution of Mining Equipment, Technology and Services (METS) sector has grown faster than mining’s
METS output is growing at 15 to 20% a year• 4% of national output
in 2002-03 • 8.4% in 2011-12METS contribution to GDP• 6.7% in 2010-11 • Est. 9.4% in 2012-13Many METS are knowledge- and technology-intensive
Source: Australian Treasury and Ed Shan / Minerals Council of Australia 2012 6
Source: Austmine 7
METS is now a very important industry sector to Australia
Australian exploration and mining industry is now global – the business dimension of Australia’s strategic interests
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Canada33 companies
United States42 companies
Latin America94 companies
Africa220 companies Indonesia
47 companies
Mongolia19 companies
China16 companies
Europe53 companies
Greater Asia31 companies
Papua New Guinea
25 companies
Laos & Cambodia14 companies
Philippines19 companies
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Australian METS firms are now major exporters of equipment, technology and knowledge
Source: Austmine 2013
…with deep links into the economy
Source: Austmine10
Western Australia METS firms46 manufacturing: equipment,
supplies, chemicals
34 EPCM / engineering / construction
26 consulting
27 contract mining
10 IT developer/ equipment provider
10 technology development/application
15 other professional services
18 other
METS development extends well beyond mining regions
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HEAD OFFICES AND OPERATIONS
METS = Mining Equipment, Technology and Services. Source: Austmine 2013
Head officesBranch operations
Employment growth: driven by mining, but more than just mining jobs – Western Australia example
Source: CCIWA: Building Western Australia’s Workforce for Tomorrow, June 2010
0 50,000 100,000 150,000 200,000 250,000 300,000
Other
Administration and Support
Hospitality
Transport
Manufacturing
Education
Professional Services
Mining
Retail
Healthcare and Social Services
Construction
0 500,000 1,000,000 1,500,000
Non Mining and Construction
Mining and Construction
Current workforce (2010) Additional workers until 2020
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Employment growth by
industry sector
2010-2020
Australian mining
employment multiplier
is 3 – 4
Africa 7 – 10
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Indirect Induced
DirectLocal
manufacturer or
service provider Purchasing expenditure
for local goods and services
Payments to employees
Subsequent backward expenditure for local goods and services along the supply chain
Income of supply chain employees
Taxes paid by suppliers to the Government
Household consumption as direct and indirect employees spend their income within the local economy
Taking a broad view: indirect and induced benefits
Economic output from mining operation
Local dealer
Income of dealer’s employees Taxes paid by dealer to the
Government
Household consumption as direct and indirect employees spend their income within the local economy
Adapted from Saipem 2011
In Australia, for every $1 of mining revenue, 40¢ is spent on goods and services: Reserve (Central) Bank
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Australian Industry Participation in Western Australia resource projects
• Proportional spending on the construction phase of oil & gas projects (but not mining) has shifted towards overseas suppliers over the last 30 years
• But there continues to be a very high level of Australian industry participation
• CME/APPEA Local Content Study (2011)1:
• WA State Government Local Content Report – November 20112
• Publically announced local contracts July 2011 to March 2012 = A$15.5 billion3
Sector Construction Operations
Mining 86% 95%
Oil & Gas 58% 83%
Sector Construction Operations
Mining, Oil & Gas 74% 100%
Sources:1: CME/APPEA Local Content Study 20112: Government of Western Australia, Department of Commerce, Local Content Report 2011 – figures for period 1/1/2011 though 30/9/20113: Media Statement, 8 March 2012, Minister for Commence, Hon Simon O’Brien
Case studies of METS clusters in Australia
HOBART
Western Australia
Northern Territory
South Australia
Queensland
New South Wales
Victoria
SYDNEYCANBERRA
MELBOURNE
BRISBANE
ADELAIDE
PERTH
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• KALGOORLIE
• DARWIN
WHAT WE HAVE LEARNED
PILBARA REGION
North West Shelf LNG
Case study: North West Shelf Project and technology-intensive service industry developmentAPPLICATION OF LEADING TECHNOLOGIES PREVIOUSLY NOT AVAILABLE IN AUSTRALIA
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Technology transfer from
overseas
Technical innovation in
Australia
Transfer to other
projects
Development of petroleum services hub
Development of a new technology and knowledge
intensive industry sector
Services to WA and
overseas markets
Attraction of investment
Case study: Kalgoorlie, Western Australia
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• Mining town since 1900s – ● Gold, nickel sulphide and nickel laterite –
long life operations and evolving industry
• 600 km east of Perth
• Region’s population 45,000
• Mining services developed initially because of remoteness
• Strong regional METS clusters (sectoral and geographic) ● ~200 manufacturing & services sites
• Now a net ‘exporter’ of mining equipment and services to other locations
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• Australia’s most northern and isolated city● Major service centre for mining, oil
and gas, defence and marine sectors• Population 110,000• Mining services developed initially
because of remoteness• Now has a competitive advantage in
mining and petroleum services• Strong regional METS clusters
(sectoral and geographic) ● ~300 manufacturing & services sites● Collaborative business culture
• Exporter of METS to other locations, including Indonesia
Case study: Darwin, Northern Territory
Kalgoorlie and Darwin: Factors of success• Long-life customer mining/petroleum operations ; diverse markets (Darwin – sector
diversity; Kalgoorlie – geographic diversity)• Good business and community infrastructure: serviced industrial land, roads, energy,
water, community • Skilled resident workforce; sustainable demographic profile; attractive town amenity• Education and training institutions: public and private secondary schools, and
vocational training and education; universities / school of mines (Kalgoorlie)• Strong entrepreneurship culture, support networks, business services• Financial institutions that understand mining and services• Supportive, light-handed government interventions, eg: industry participation policies;
partnerships with business to connect customers and suppliers; small business support
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• Collaborations to overcome small scale and lack of capacity • Right size contracts and alliances to help build local firms
● some operations have adopted ‘inside-out’ strategies to help employees become independent services suppliers
• Revise e-procurement and payment processes for small firms● companies offer access to global supply chains for good
performers• Government-business partnerships to build supplier-customer
linkages, eg● Australian Industry Participation National Framework ● Industry Capability Network; Project Connect
• Infrastructure to support business● Government investment and facilitation of business infrastructure
through PPPs
Kalgoorlie and Darwin: overcoming obstacles
Industrial
estates
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• Economic reform and infrastructure partnerships
• Investment attraction, efficient approvals, certain fiscal regime
• Win-win-win approaches: partnerships, delivery of returns for all
• Using mining to facilitate broad-based economic growth
• Importance of technology, knowledge and skills
• Generating strong social licence to operate
Australian approaches to development
Source: Qantas
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GROWING THE PIE
• Market-based reforms to energy, water and transport
• Flexible and diverse labour market
• Demand-responsive education and training
• Liberalisation of trade and investment
• Taxation reform
• Robust policy processes – eg Productivity Commission, Infrastructure Australia, green & white papers, think tanks
• Transparent and open approval processes
Regulatory and institutional processesTHREE DECADES OF REFORM
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<New slide>
People are Australia’s most important assetFocus on attracting, developing and retaining high-quality talent, not just a focus on hard infrastructure
Education and training
institutions: key infrastructure
assets
Complementary to traditional
infrastructure
Public sector and industry collaboration
• Crucial to dealing with challenges and opportunities of the 21st Century
• Advanced education integrated with research
• Knowledge-intensive and knowledge creating• Adaptable and capable to deal with uncertainty and to engage with the emerging new global economy
• e.g. Technical colleges; SKM Learning Centre, GE Energy Learning Centre; University research and teaching centres (Rio Tinto, BHP, Chevron, Shell)
• Knowledge spillovers: trained workers move between projects and firms, taking skill set and culture with them
Integrated policy on industry, education and training
International Mining for Development CentreThe University of Western AustraliaWA Trustees BuildingLevel 2, 133 St Georges TerracePerth WAAustralia 6000Tel: +61 8 9263 9811
Email: [email protected]
Contact
The Energy and Minerals InstituteThe University of Western AustraliaM475, 35 Stirling HighwayCrawley WAAustralia 6009Tel: +61 8 6488 4608Email: [email protected]
The Sustainable Minerals InstituteThe University of QueenslandSt LuciaBrisbane QLDAustralia 4072Tel: +61 7 3346 4003Email: [email protected]
www.smi.uq.edu.au