Australia Mining Trends 2019: Humps, Bumps and Trumps

The Investing News Network takes a look at Australia mining trends for 2019, with a macro view of the issues that came to the fore.

Click here to read the latest Australia mining trends article.

Globally, the overall trends in the resources industry in 2019 were the ongoing impact of the US-China trade war coupled with general uncertainty — as shown by the rising gold price and a mixed bag of results across base metals.

For Australia, it was a year that saw the resources industry holding up the numbers in the country’s economy, with mineral exports keeping the national budget in a surplus (albeit a thin one) and out of a recession, despite faltering national economies the world over.

Overall, the country’s government forecasts that its mining export revenue will be a cool AU$282 billion for the 2019/2020 financial year, a record number.

Even so, analysts approached by the Investing News Network (INN) agreed that 2019 was not an easy year for the sector, talking of growth, but difficulty in financing. Read on for more of their thoughts on Australia mining trends this past year.

Australia mining trends 2019: The year in perspective

To sum up attitudes, Owen Hegarty, who is executive chairman of EMR Capital, told INN at the International Mining and Resource Conference (IMARC) in November, “The trend in 2019 was one of consolidation — the world has seen a few ups and downs, a few humps, bumps and Trumps.”

Hegarty pointed to all the usual suspects impacting the industry: the trade war, the ongoing uncertainty of Brexit as the year wore on and, of course, US President Donald Trump himself.

Despite a year of caution and uncertainty, Hegarty said that there is still good, strong demand for resources around the world.

“You’ve still got demand in the developing economies, in China, India and Indonesia. All of those countries that are near (Australia). They are all good and growing.”

Warren Pearce, CEO of the Association of Mining and Exploration Companies, said that sentiment was more positive in the lead up to 2019, but the year only partially held up to expectations.

“Heading into 2019, we were confident that the coming year would see a strong recovery for the mining and exploration industry, but that has only partially occurred,” he said.

“Strong commodity prices generally have certainly buoyed mining companies and spurred growth and expansion efforts, (and) exploration has continued to grow. However, over the course of the year, we have seen the balance between greenfield and brownfield exploration shift towards brownfield as explorers struggle to raise capital for greenfield projects.”

For his part, Pearce commented, “(This has) partly reflected the fortunes of the industry, with 2019 seeing an extremely difficult investment environment for the resources sector, primarily driven by ongoing uncertainty in the global economy.”

Paola Rojas, managing director of Synergy Resource Capital, said that the two main themes of 2019 in the development of the industry were lithium’s volatile story and the shift away from thermal coal, which she said she doesn’t think is a temporary shift.

“Australia’s energy matrix is still heavily reliant on (coal), but climate change concerns continue to provide incentives to divest from the sector, including shutting down plants.”

That said, Rojas expressed surprise that the Carmichael coal mine in Queensland was approved in 2019.

“Politics carries weight still,” she said.

The other change she noted was the shift to new energy sources and the concurrent decrease in lithium prices — and, given Australia is the world’s largest lithium producer, this is having an impact.

“The increased availability of lithium globally has affected the local miners, pushing valuations to terribly low levels,” she said. For investors, this is noteworthy, said Rojas.

“There are some great opportunities in the space, and also with cobalt and nickel. I believe next year will be ripe with (mergers and acquisitions) in lithium, albeit not only in Australia.”

When asked about the biggest developments in the Australian resources industry over the last 12 months, Rojas said Australian miners have been focused on getting into production, rather than doing exploration and “adding up value to their deposit so they get acquired by a major” like Canadian companies.

Rojas believes the traditional financing model for junior and intermediate companies is “dead.”

“Investors are reluctant to invest when it is a pure gamble as it’s been in the past, adding up that both cannabis and cryptocurrencies are competing for those investors with tolerance for high-risk alternatives (and winning),” she said. “I think juniors should take a page out of the tech startups’ book and come up with a pathway to cash flow, either through their projects or some other adjacent option. In my mind, grade is not king, cash flow is.”

Willem Middelkoop, who is the founder of the Commodity Discovery Fund, told the Investing News Network that heading into 2019, he had expected a broader recovery in metal markets. “This might happen in 2020,” he commented.

When asked about the main theme in the Australian resources industry, Middelkoop said that the “very high margin for gold miners” is hard to go past, while the biggest developments in the year were mergers and acquisitions across the sector overseas, some of which impacted Australian companies.

“This trend could continue in 2020,” said Middelkoop.

Looking more closely at the states, David Smith, who is the director general for Western Australia’s Department of Mines, Industry Regulation and Safety, argued that the industry is alive and well despite general media coverage saying the mining boom in Australia is over.

“There’s been a reduction in activity associated with construction, but now what’s come onstream is the production as a result of the investment that was put in place to deliver,” he said.

Australia mining trends 2019: Quarterly highlights

Here’s a look at some of the big stories over the year in Australian mining.

January to March: Disaster in Brazil boosts Australian mining

In January, the collapse of the Brumadinho tailings dam in Brazil killed 256 people, and another 14 are missing and presumed dead. The tragedy may have happened in South America, but it greatly impacted the Australian economy. This is because it propped up income from iron ore exports as the price of iron ore rocketed in the immediate aftermath, and took hundreds of thousands of tonnes of iron ore output offline for the dam’s owner, Vale (NYSE:VALE) — a direct competitor with Australia’s iron ore giants.

The result was increased interest in Australian iron ore exports as end users sought alternatives.

April to June: Election brings EVs and nuclear to the fore

In the next three months, Australia was hit by a cyclone that trimmed Australian iron ore output, while the mid-May federal election sucked a lot of oxygen.

The election lurched from issue to issue. At one point, the incumbent prime minister talked up nuclear power, but then back pedalled extremely fast following backlash, and electric vehicles (EVs) made an appearance in a culture war-like argument over what Australians want to drive to work. Not losing focus over the course of the election was the future of coal in Australia; it was always top of mind over the course of the election as Queensland inched towards approving the Carmichael mine.

July to September: Rare earths front and centre

In Q3, Australia was still talking about how it could step in to fill the gap left by Vale, while attentions within the sector were turning back to rare earths again, with Australia in talks with the US.

It was mostly a quiet quarter, with the world’s only major rare earths producer outside of China, Lynas (ASX:LYC,OTC Pink:LYSCF), sniffing around Kalgoorlie looking to establish a rare earths processing plant — something that was locked in during the fourth quarter.

Meanwhile, Australian lithium companies were doing deals with Chinese battery end users.

October to December: Climate protesters target mining

In the last quarter of the year, protest politics came to the fore, as police in Melbourne were accused of excessive violence against climate protesters outside IMARC.

Meanwhile, Australia and the US signed a formal agreement to begin cooperating on their respective critical mineral supplies. While Australia does not mention China in its release, the US has made it clear that it’s looking for alternative partners — like Australia.

The Minerals Council of Australia (MCA) took the opportunity to close out the year by reminding policymakers and the general public that it likes nuclear energy and wants the onerous regulations on exploration and development to be lifted, along with the outright ban on nuclear energy generation. According to the MCA, the public feels the same way.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Torian Resources Limited Significant Gold Results from Surface at Mt Stirling

Perth, Australia (ABN Newswire) – Torian Resources Ltd (ASX:TNR) is pleased to advise that recent drilling results continue to extend the Mt Stirling Gold System over ~1.1km of Strike, ~300m at depth, and it remains open in multiple directions.

Highlights:

– The interpreted strike of the Mt Stirling gold system exceeds 1.160km with Mt Stirling Main Zone; Hanging Wall and Viserion lodes all remaining open along strike and down-dip.

Keep reading... Show less

eMetals Limited Updates Shareholders On Exploration – April 12, 2021

eMetals Limited (ASX:EMT) (eMetals or Company) is pleased to update shareholders on exploration activities which have commenced across the Company’s projects.

HIGHLIGHTS

Keep reading... Show less

Discovery Harbour Provides Newcrest’s Planned Program for Fortuity 89, Nevada

Discovery Harbour Resources Corp. (TSXV: DHR) (OTC Pink: DCHRF) (FSE: 4GW) (the “Company” or “Discovery Harbour”) is pleased to announce that Newcrest Resources Inc., a wholly owned subsidiary of Newcrest Mining Limited (“Newcrest”), has provided the details of its planned program for the Fortuity 89 epithermal gold property in Nevada.

The Fortuity 89 property covers very limited outcrop surrounded by a large covered area. The outcrop and interpreted geology are prospective for concealed low sulphidation epithermal gold mineralization below shallow unconsolidated alluvial gravels. Newcrest’s planned activities include a geophysical program encompassing a 675 line kilometre drone airborne magnetic survey, a 250 station ground gravity survey and a 45 line kilometre audio band magnetotellurics (AMT) resistivity survey. It is intended that geologic and alteration sampling and mapping will also be undertaken with a soil geochemical sampling program. The intended outcome of this program is to identify potential drill targets for testing this calendar year.

Keep reading... Show less

Blackdome-Elizabeth Gold Project 2021 Exploration Plan and Update

Tempus Resources Ltd. (“Tempus” or “the Company”) (ASX:TMR)(TSXV:TMRR) is pleased to provide an update on the exploration plan for the upcoming field season at the Blackdome-Elizabeth Gold Project, located in British Columbia, Canada

The 2021 exploration program at Elizabeth and Blackdome is fully permitted and on schedule to commence at the end of Q2, 2021. The program will consist of 7,500 metres of down plunge and along strike diamond drilling at Elizabeth to expand the known gold mineralisation, in parallel with detailed alteration and mapping studies at Blackdome in support of future resource expansion drilling.

Keep reading... Show less

Rio Tinto reaches agreement with Turquoise Hill Resources on financing plan for Oyu Tolgoi

Rio Tinto has entered into a binding Heads of Agreement (HoA) with Turquoise Hill Resources (TRQ) for an updated funding plan (the “Funding Plan”) for the completion of the Oyu Tolgoi (OT) Underground Project in Mongolia. The Funding Plan addresses the estimated remaining known funding requirement of approximately $2.3 billion 1 , building on and replacing the arrangements established in the Memorandum of Understanding that Rio Tinto and TRQ previously entered into on 9 September, 2020.

Under the HoA, subject to securing approval by OT LLC and any required support from the Government of Mongolia, and subject to timing, availability, and terms and conditions being acceptable to both parties, Rio Tinto and TRQ will:

Keep reading... Show less

Top News

Related News