As Alan Kohler has noted today, a report produced for the Minerals Council of Australia on the need for governments to do more to help the mining industry begs more questions than it answers. Particularly around the quality of management in the industry.
The report was a classic of “independent modelling” with absurdly overstated claims, an industry wishlist and responsibility generously apportioned to everyone but those who commissioned it. The coverage of the report included one of the oldest tricks in the rentseeker book: modelling two economic growth scenarios over several decades and then disingenuously claiming that particular policies would cause GDP to shrink by the gap between the two.
Meantime, the problems in the management of major mining companies are becoming more apparent. Fortescue Metals is in dire straits because of its appetite for huge debt at a time when iron ore prices have started coming off their stratospheric levels. Campbell Newman has lashed out at the management of Queensland coal mining industry, driving LNP godfather Clive Palmer to publicly consider abandoning the party that he, more than anyone other than Bruce McIver and Lawrence Springborg, created. Criticism of Marius Kloppers at BHP Billiton is mounting, particularly in the wake of the massive write-down of its US shale gas investment.
The growing evidence of these problems has been accompanied by an increasingly shrill aggression from the mining sector toward the government, with Jac Nasser, Gina Rinehart and Palmer all insisting their problems lay with the carbon price, mining taxes and Australia’s industrial relations laws despite a steady flow of evidence that the industry’s ferocious bidding over available resources, a dollar supported by the mining boom and declining commodities prices have made managing a mining company more challenging than in the past.
Anyone could have made a profit in the mining business when iron ore prices were at US$180 a tonne and thermal coal prices were at US$190 a tonne. Now, with prices softer but still generous by historical standards, miners are struggling.
It says far more about managers who got used to windfall profits than about their employees or governments.
And the miners are already laying off workers, 5 minutes after claiming that they are suffering from what they call skills shortages.
“begs more questions than it answers” ouch!
http://style.radionational.net.au/glossary/b#term-22050
So this sounds like this could have been the work of a “bunch of bankers”?
Yes, and there was likes of Twiggy telling Australians through an always awe-struck media as to how well he and his FMC was doing; and by comparison, how badly the Australian government was managing fiscal policy.
Methinks the caution the Wayne Swan exhibited on the then booming mining industry and of the overt optimism of some of those mining operations are now coming too pass. Is there going to be a return to the Bond / Skase / Connell era emanating of what we are seeing now?
For those mining operations that believe it is all too expensive in Australia, there is a cheap platinum mine going in South Africa. The miner are however no longer prepared to work for next to nothing, however, the police and government can be easily employed to protect the rent seeker side of the mining industry. Our rent seekers might fell more at home there.
And up until next week, they’ve been going ape building new mines in the sky, apparently with no regard for the obvious supply/demand ratio, the more available the lower the price. Combine that with lower demand for other, exigent reasons and the thought occurs, if these magnate are so rich, how come they ain’t smart?