adding value to minerals and energy: mining equipment,...
TRANSCRIPT
Adding value to minerals
and energy: mining
equipment, technology
and services
Mining Supplies and Innovation: An opportunity for the Country
Ian Satchwell
11 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
2
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
SYDNEY
CANBERRA
MELBOURNE
BRISBANE
ADELAIDE
DARWIN
BROOME
PERTH
Offshore petroleum basins
WA & NT projects to 2016: USD220 billion+
Queensland projects to 2016: USD100 billion+
South West Region Alumina, mineral sands,
gold
Mid West Region Iron ore, gold,
uranium, nickel,
Pilbara Region LNG, iron ore, infrastructure
LNG, mining
Bowen, Surat and Galilee Basins Coal, CSG, LNG
South Australia projects to 2016 USD10 billion+
3
*Reserve Bank,
Australia
Copper, uranium, mineral sands,
petroleum
PORT HEDLAND KARRATHA
Gladstone and North West
Economic Triangle Base metals,
bauxite-alumina
Goldfields Region Gold, nickel, iron ore
New South Wales Coal, 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
Valu
e in $
M*
Gold
Iron Ore
Nickel
Oil/Gas
Alumina and Bauxite
Double 2011 value $m
Source: ACIL Tasman analysis 4
Increased sustaining capital and
services
Resource economy in Australia: bigger than traditionally measured
Resource employment by industry 2011-12
Share of total employment, financial year
Source: Rayner and Bishop, Reserve Bank of Australia, February 2013
5
Gross Value Added – resource economy 2011-12
Share 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 2011-12
METS contribution to GDP
• 6.7% in 2010-11
• Est. 9.4% in 2012-13
Many 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
8
Canada
33 companies
United States
42 companies
Latin America
94 companies
Africa
220 companies Indonesia
47 companies
Mongolia
19 companies
China
16 companies
Europe
53 companies
Greater Asia
31 companies
Papua New Guinea
25 companies
Laos & Cambodia
14 companies
Philippines
19 companies
9
Australian METS firms are now major exporters of equipment, technology and knowledge
Source: Austmine 2013
…with deep links into the economy
Source: Austmine 10
Western Australia
METS firms
46 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
11
HEAD OFFICES AND OPERATIONS
METS = Mining Equipment, Technology and Services.
Source: Austmine 2013
Head offices
Branch 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
12
Employment
growth by
industry
sector
2010-2020
Australian
mining
employment
multiplier is
3 – 4
Africa 7 – 10
13
Indirect Induced
Direct Local
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
14 14
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 2011
2: Government of Western Australia, Department of Commerce, Local Content Report 2011 – figures for period 1/1/2011 though 30/9/2011
3: 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
SYDNEY
CANBERRA
MELBOURNE
BRISBANE
ADELAIDE
PERTH
15
• KALGOORLIE
• DARWIN
WHAT WE HAVE LEARNED
PILBARA REGION
North West
Shelf LNG
Case study: North West Shelf Project and technology-intensive service industry development APPLICATION OF LEADING TECHNOLOGIES PREVIOUSLY NOT AVAILABLE IN AUSTRALIA
16
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
17
• 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
18
• 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
19
• 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
20
Kalgoorlie and Darwin: overcoming obstacles
• 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
21
Australian approaches to development
Source: Qantas
<New slide>
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 processes THREE DECADES OF REFORM
22
<New slide>
People are Australia’s most important asset Focus 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 Centre
The University of Western
Australia
WA Trustees Building
Level 2, 133 St Georges Terrace
Perth WA
Australia 6000
Tel: +61 8 9263 9811
Email: [email protected]
www.im4dc.org
Contact
The Energy and
Minerals Institute
The University of Western
Australia
M475, 35 Stirling Highway
Crawley WA
Australia 6009
Tel: +61 8 6488 4608
Email: [email protected]
www.emi.uwa.edu.au
The Sustainable
Minerals Institute
The University of Queensland
St Lucia
Brisbane QLD
Australia 4072
Tel: +61 7 3346 4003
Email: [email protected]
www.smi.uq.edu.au