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How and why mining continues to be important to Australia’s economy

10th of 12, 2018


Australia is a microcosm of the global mining experience. MMJ finds out from Robin Evans, Program Leader, Sustainable Minerals Institute (SMI) Transformational Learning at The University of Queensland how it is addressing environmental concerns, adopting less harmful energy options, preparing to face the challenges of climate change,adjusting to automation and other issues.  

How is the resources sector in Australia doing? How important would its role continue to be in the Australian economy?
During the first decade of the 21st century Australia experienced a significant resources ‘boom’ as a result of unprecedented increases in global demand for key commodities including iron ore and coal, linked in particular to the rapidly growing Chinese economy. This period saw the largest ever wave of investment in the sector, with major mining companies such as BHP and Rio Tinto rapidly expanding their capacity. At the same time the development of new gas projects saw Australia well on the way to becoming the largest exporter of liquefied natural gas in the world.

The completion of many of these investment projects coincided with a downturn in commodity markets, as prices returned to more normal levels. The reduction in employment in new project activity was accompanied by operational cost-cutting as companies reimposed tighter financial discipline, leading to a popular narrative that “the mining boom is over” and that the sector is in decline. In fact this is quite misleading, and Australian production levels of iron ore and coal have continued to climb to record levels as expansions and new mines have come on line. While prices are still volatile, mining continues to play a significant role in Australia’s economy, and in particular in the key resource-rich States of Queensland and Western Australia.

How has Australia managed to withstand recent ‘shocks’ to the global economy and the associated impacts on the resources sector?
Iron ore and coal still dominate Australia’s export statistics in terms of value, but other important sectors including agriculture, tourism and education add diversity to the national economy and offer some balance. This helps the country weather downturns in the resources sector, but there is an ongoing debate about the longer-term dependence of the economy on mining.

Attention is also now shifting to the commodities required to transition to a ‘greener’ economy, driven by the introduction of new technologies such as electric cars. Metals such as lithium and cobalt are experiencing increased demand, while copper continues to play a key role in global economic development. While much will depend on the global economy, and further volatility can be expected, mining is likely to continue to play a key role in Australia’s economy for the foreseeable future.

How does the work of The University of Queensland’s Sustainable Minerals Institute contribute to developments in the mining sector?
The University of Queensland (UQ) is one of a number of universities in Australia with a strong focus on the resources sector, and in 2018 UQ was proud to be listed as the number one university in the world for Mining and Mineral Engineering in the prestigious Shanghai rankings. This reflects a depth of teaching and research activity across many parts of the university covering engineering, science, business and the social sciences.

UQ’s Sustainable Minerals Institute is a world-leading and unique multi-disciplinary research facility dedicated to finding knowledge-based solutions to the sustainability challenges of the global minerals industry. Our work covers all facets of the life of mine from geology, to minerals extraction, water management issues, minerals processing, workplace health and safety, mine rehabilitation, energy and community engagement. A number of our projects have led to new industry standards in topics as diverse as mine water accounting protocols, and risk management frameworks.

Many research outcomes have also been commercialised, such as the GroundProbe geotechnical monitoring systems that originated in industry-funded projects at The University of Queensland in the 1990’s. This technology is just one example of the success of the Australian Mining Equipment Technology and Services or METS sector, which now represents a significant export generator for Australia in its own right.

How does climate change impact the resources sector, and what efforts are mining companies making to prepare for such changes including the prospect of a carbon tax?
The large global mining companies have generally been clear through their policy positions in accepting the science of climate change, including through the efforts of the peak global organization the International Council on Mining and Metals. Most have developed strategies designed to reduce their carbon footprint through a range of measures. Energy supply in remote locations remains a challenge, but there are an increasing number of operations evaluating hybrid renewable options to reduce emissions. Research into energy-intensive processes such as comminution also has the potential to significantly reduce emissions.

Australia is a signatory to the Paris Agreement on Climate Change, although as yet there is no direct carbon pricing mechanism in place. The focus to date has been on increasing targets for the proportion of renewable energy in the national energy market, and this has been the subject of much political debate. In fact the renewable energy sector is advancing rapidly, with a large number of solar plants in particular under construction in States such as Queensland. Some of this activity is occurring close to existing mine and coal seam gas developments, in order to use existing high voltage transmission infrastructure, so there are some interesting emerging synergies between the sectors.

One relevant and innovative project is based at the closed Kidston gold mine in North Queensland, which has been purchased by Genex Power who have converted the two empty mine pits into a pumped storage hydro-electric power generator. This is now being supplemented by separate solar and wind power developments, turning the closed mine site and its infrastructure into an important renewable power generation facility.



How are new technologies such as automation and digitisation of mining processes impacting  employment patterns in the sector?
The rapid introduction of automation into mining processes both underground and in surface operations is being driven for both safety and productivity reasons. This in turn is leading to a shift in the required skill sets for workers in the industry, including both frontline operators as well as for the technical professionals managing operations. At this point it is unclear what the impact on overall employment patterns will be -- one analysis conducted by the International Institute for Sustainable Development suggested that there could be a reduction in the workforce of up to 30-40% in a typical large-scale open pit mine. However, the General Manager of one underground mine in Australia reported that there had been no net reduction in workforce, but rather operators and staff were engaged in different and less manual jobs remotely managing and coordinating underground loading operations.

The introduction of Remote Operations Centres, which can be located hundreds or thousands of kilometres away from the mine site itself, will also potentially result in the relocation of jobs from remote areas to more populated centres. In Australia these facilities have typically been established in capital cities, for example Rio Tinto’s centre near Perth Airport which manages remote operations at their Pilbara iron ore mines.
The uncertainty in this area warrants further investigation. 

Mining operations in remote locations typically offer significant employment opportunities for local communities, and also generate economic multiplier effects through the provision of local services to the overall workforce. Changes in the overall number and skill requirements of the mining workforce do have potential to change these impacts, and will also flow on to governments through associated changes such as reductions in income tax receipts. In a 2017 interview,Bill Gates suggested that robots should pay income tax. While this proposal seems unlikely to gather much support, a better understanding of the implications of these technologies is needed.

What are the biggest environmental challenges that mining companies face in Australia, and how are they addressing these?
Water is an integrating theme in many of the environmental challenges that the sector faces. In Australia we experience extremes of drought and flood, and the way in which mining operations manage these periods in terms of competition with other users, the management of water quality and long term impacts on water resources are all topics which attract much scrutiny and research. Local and regional communities attach high value to the health of water resources, particularly in agricultural regions, and there are now a number of good case study examples where mining companies have engaged with other stakeholder groups in regional catchment management initiatives.

Mine closure is another particular area of focus at the moment, with both Western Australia and Queensland introducing new frameworks for closure in recent years. The provision of incentives for progressive rehabilitation of disturbed lands is becoming more common, at the same time as ensuring the availability of adequate funds for ultimate closure. Governments and industry have worked together on these topics through consultation processes, and are supporting research on the development of innovative ways to both stabilize the environment and to provide longer term opportunities from the closure process.

What lessons could Mongolia draw from Australia’s experience in mining?
Even though mining is seen to have been a significant contributor to Australia’s development, there are many different views within the country on its role in the economy and society more generally. Industry performance in social and environmental aspects of mining has improved significantly over the last twenty years, but disputes over access to land and environmental approval processes for new mines are still common.  

The single most important element that has contributed to the continued success of the sector in Australia has been the ability of governments, industry and communities to find ways to engage and establish governance processes that deliver common objectives. Such activities include not only appropriate regulatory frameworks but also industry guidelines, community agreements, regional approaches to planning and many others. From exploration through to mine closure, mining is a long-term activity requiring many different technical skills, lots of patience, and the ability above all to develop and maintain long-term relationships amongst stakeholders.  

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