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Published on February 19th, 2014 | by Pete

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Predictions for Australia’s Mining Industry in 2014

As one of Australia’s major cash cows, it pays to keep an eye on what’s happening in mining world. We can look back at 2013, but knowing what’s to come would be even better. Unfortunately, we can’t predict the future, but here are a few (well-educated) guesses for the year ahead.  

Commodity Lottery

When you think of the Australian mining industry, you probably think of iron, coal, and copper. Unfortunately that’s also what China’s government thinks when it considers the Chinese mining industry. Oversupply and government subsidization of Chinese mining are set to lower the global cost of these in ground favorites dramatically. Copper for instance is predicted to fall from US $3.337 to US $3.17 by 2016. But it’s not all bad news. The Australian diamond and gemstone industry is set to boom big in 2014, with a predicted %24 increase in revenue by the end of the year. Diamond mining, which was the epicenter of an earthquake of job cuts in 2013 will be a major source of new jobs in the year ahead. Impressive for an industry from which Rio Tinto itself tried so hard to flee in 2013.

Productivity Concerns

The problem with mining, as a rule, is that companies require something to mine. As the high grade and easy access mineral deposits become depleted, companies have to resort to either low grade, or to digging ever deeper. Both of these options create a significant decrease in productivity. Low grade ores mean expended money for very little return – according to the consultancy firm Deloitte, some gold projects yield less than one gram per ton. The preference of the mining magnates seems to be moving underground. Going from surface mining to sub-terrestrial has saved classic Australian mines such as the Ernest Henry Pit, but the process is increasingly expensive. Adding capacity to an iron ore operation jumped from $100 per ton in 2007, to $195 in 2012, while coal leaped even more drastically from $67 to $176.

Innovate or Fall Behind

You are probably aware by now that the mining industry is facing serious productivity concerns. However taking a profit dive is not the only option. Economic necessity is the mother of invention, and 2014 is set to be full of it. Energy input for example is one of the great money guzzlers of any dig site – accounting for 40 to 60 percent of a mine’s operational costs. However, the recent invention of energy sharing allows mining companies to create an access the same energy sources across multiple nearby sites. By sharing infrastructure, the companies save on building and maintenance costs, as well as staff and transportation. Construction equipment is also top of the hit list for 2014 innovation.  Companies like hyundai construction equipment are producing machines specifically tailored for different kinds of mining environments. Especially impressive are new pieces of equipment with inbuilt precision systems – using laser technology to make sure you are mining, or even more importantly, detonating blasts in exactly the right place.

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