Olympic Dam Expansion Delay not all Doom and Gloom

In light of BHP Billiton’s decision this week to defer the expansion of Olympic Dam, it is important to consider the whole picture to give perspective to the current state of the mining and resources sector in South Australia.

A reported statement by Martin Ferguson, Federal Minister for Resources, has heightened speculation about the end of the so‐called “mining boom” and what the impact will be on South Australia.

Australia has not been experiencing a traditional ‘mining boom’, but rather a ‘super cycle’, the form of which has never before been experienced in history.  Unlike any previous "boom", this is the opportunity for Australia ‐that appears to be slipping from our grasp, with opportunistic and damaging tax imposts, to satisfy short‐term thinkers, rather than fostering an environment that harnesses and enhances Australia's status as the number one mining nation, with all the consequential economic and regional security benefits that entails.

Words are important. People, politicians and investors associate words such as “boom" with "bust".

A more appropriate term is the notion of a super‐cycle which contains peaks and troughs associated with commodity prices rather than a single boom period.

Australian Terms of Trade may have peaked and commodity prices softened, but the international demand for Australian resources remains substantial, as indicated by the RBA yesterday. Mining and resources will be a significant contributor to the Australian economy for many years to come.

his "Super cycle" presents both opportunity and challenge, South Australia has the opportunity to prepare itself via relevant, timely and high quality education, skills and training to ensure we make the most of the opportunities.

RESA believes that the effort to establish pathways for students into the mining sector, the upskilling and training for job seekers and those looking to enter the mining sector should not only continue but be re‐doubled. We have been given an opportunity to take this time to train South Australians so that they are a ready workforce to service the growing list of mining ventures and its allied activities and hopefully in the not too distant future an expansion of Olympic Dam.

Some key facts regarding the South Australian Resources sector:

• There are 20 mines currently in operation that have significant staff attraction and retention needs for skilled candidates.
• The BHP expansion is one of thirty projects in advanced stages of development in SA. The combination of other projects is estimated to have greater net worth than the BHP expansion.
• RESA’s research estimates that there are, at least, an equivalent number of job openings in those other projects, excluding the BHP expansion.
• There were concerns that the BHP expansion was going to place high demand on our economy’s ability to train and supply the State’s Resources sector with a competently skilled workforce. This delay will allow better matching of the demand of SA mining industry job openings and supply of skilled people.

It is also important to note that the National Resources Sector Employment Task Force was predicting a peak jobs demand for resources projects construction jobs nationally over the next 2‐4 years, with potential for significant skills shortages. A deferral will result in decoupling the OD project from national peak demand.

South Australia remains in a strong growth phase which started a number of years ago with the introduction of the government’s PACE (Plan for Accelerating Exploration) program.

In May 2012 the ABS reported the number of employees in the mining industry in South Australia was 14,000 – the highest it has ever been and which does not take into consideration indirect employment in the supporting supply chain, infrastructure and engineering companies which when combined makes the resources sector a significant employer. This increase is due to the growth in the number of major mines operating and under construction and a return to the high levels of mineral exploration currently being undertaking in South Australia, as major projects come on line we expect this to continue.