What does 2011 hold in store for the mining industry and those who work in it? What will be the big news stories from around the world in the coming year? Today we take a crystal ball to the year ahead to discuss some of the rising and potential hot topics in mining.
First a little disclaimer: This post is slightly Australian biased (as that’s where I’m located!), so if I’ve missed anything important, or there’s topics or events from other regions that I should mention or discuss, please let me know in the comments section below.
Last week we took a look back at the big year mining had in 2010. Today we turn our attention forward to discuss some of the issues and hot topics Mining Man expects to make news in mining this year, 2011.
Learning from 2010’s Accidents
Changing Role for Mining Regulators
Between Upper Big Branch in the US, San Jose in Chile, Pike River in New Zealand, and many more in China, mining news was unfortunately dominated by disasters and accidents which involved or could have involved multiple fatalities.
As the investigations from these incidents proceed, and their learnings are shared with governments and industry, we can expect to see a trend towards a changing and greater role for mining inspectors and government departments. The disasters have called into question what exact role regulators should have when it comes to inspecting, disciplining, or helping mining operators achieve compliance and safe practices. In the USA, Australia, Chile, India and China the respective mine safety regulators and government departments are each undergoing changes to the way they interact with and help manage mining operations.
Following the Pike River disaster there has been much talk of the value of refuge chambers, and whether men at the mine could have made it to them after the explosion and survived to await rescue. We can expect to hear more on this topic in Australia and New Zealand, where refuge chambers are not a common part of emergency escape systems in underground coal mines. Potential changes may mirror those we saw for US mines in the wake of the Sago Mine disaster.
Investigations at Pike River will undoubtedly take a hard look at how and who managed the incident and the public relations immediately following the initial explosion. There will undoubtedly be a lot of learnings for industry in managing incidents and the media pack which forms around them demanding information.
Managing Fatalities vs Injuries
The mining disasters this year, coupled with the BP oil rig explosion, support a continued trend which suggests the industry needs to refocus on catastrophic and fatality risk management, rather than continuing to focus primarily on our injury rates as our measure of safety success. We need to make sure that our obsession with "zero harm" hasn't distracted us from preventing accidents while permanently change people's lives. Safety and risk programs which address catastrophic risks will become more important, as we are seeing evidence that managing these types of risks requires a different approach to that used to manage injury risk.
Increased Safety Reporting Requirements
This year mining companies based in the US will start to come to grips with new reporting requirements under the Dodd-Frank Act which will require them to report safety results alongside financial and production results to the SEC (Securities and Exchange Commission). The SEC will be gathering information on violations, citations, fines, and fatalities in order to look out for patterns of violation.
Numerous single fatality events in Australia and the USA have resulted from people having to work in very close proximity to large pieces of mobile equipment, often (in the case of undergrounds) in confined work spaces. Likewise in the surface mining environment, equipment continues to get larger and faster, and mining road and operating areas get busier and busier. Technological developments over the last few years seem to be nearly ready to allow for effective and reliable proximity detection systems (between vehicles and pedestrians, or between vehicles and other vehicles). MSHA is talking about it’s “Proximity Rule”, while Australian state mining departments are running free two-day industry seminars on proximity detection to assist mines to implement the technology as quickly as possible.
The slow down of the last few years eased the pressure mining companies were feeling in trying to find appropriately skilled and experienced workers at all levels of their businesses. But as the industry picks up again, the skills shortage is coming back, and is only set to get worse as more and more of the industry closes in on retirement. Low rates of people entering the industry over the past decades has now left a huge gap to be filled as the older workforce retires or ceases full time work. There will be no easy fix to this situation.
On the back of China and the general return of growth to global economies, the mining industry is starting to return to times of higher demand, and hence increased supply. But in many areas, the infrastructure to handle the amount of production that is planned is simply not in place. Infrastructure like rail and port facilities to physically move mining companies’ products to market is severely lacking in many parts of Australia, and again this is not a problem that can be quickly rectified.
Nationalisation of Industry
Governments around the world have watched the booming mining industry and their massive profits, and decided it was time they got a bigger slice of the pie. The Mining Super Profits Tax made huge headlines in Australia, and essentially amounted to a 50% nationalisation of the mining industry. Likewise governments in several South American and Asian countries are looking at changes to royalties and taxation arrangements in order buy in to a bigger share of mining company profits.
Continued Growth with Continued Volatility
While we are making a return to better times, markets and companies are still very sensitive to any news, meaning there is still significant volatility in the financial and minerals markets. The floods in Northern Australia have already shown the unpredictability, only 20 days into the year. Some pundits are tipping this to cause coking coal to rise to US$500 a tonne. I recall it was just US$50 a tonne when I started my career.
Gold Price Continues Upwards
Gold loves volatility and uncertainty. After a great 2010 the gold price seems set to continue its march, and is predicted to climb well above its all time highs from the end of last year. Other metals are predicted to have a similarly good year, as demand returns faster than supply can.
Mergers and Acquisitions
After a very slow 2009 and early 2010, mergers in the industry will be big and plentiful in 2011. Rio Tinto and Riversdale have kicked off the activity already, and undoubtedly BHP Billiton will be looking to get a purchase in the bank after their last few attempts have fallen through.
Country Specific Hot Topics
Australia will be finalising the implementation of nationally consistent health and safety legislation, which will include consistent mining safety legislation across all the states (as part of the National Mine Safety Framework). The Mining Resource Rent Tax will come back onto the scene following rounds of industry consultation, and the impact of fly-in-fly-out operations on local communities will also be a hot topic.
In the USA mountain-top removal coal mining will make more headlines, as the battle between environmental protection and local prosperity continues. MSHA will keep working out what its role should be in inspecting and enforcing, and safety focus topics will include dust, stone dusting, and proximity detection.
Canada can expect to see continued strong growth in the industry, and further improving levels of exploration. The performance of the economies of China and the USA will play a big part in their overall growth in the coming years.
The government in India plans to implement a long-discussed regulatory body to assist with improving competition and pricing structures in the industry, particularly in coal and iron ore. This will go a long way towards supporting a return of indstry growth, stimulation of investment, and a further realisation of the potential of the mining industry in India. Indian mining companies lead by Coal India continue their ambitious overseas expansion and investment plans, looking to secure commoditiy supplies for the surging economy.
In China, the government department responsible for workplace safety, SAWS (State Administration for Workplace Safety) is looking at how best to improve compliance with the revised mining safety legislation now in place, and also further clarifying what their role should be in helping or punishing mining operations for safety performance. Rationalisation of mining operations and the closure of small mines (considered to be the more unsafe mines) will continue.
Mongolia will emerge as a major mining centre, with recent changes to its taxation and national ownership rules, the country is full of major mining deposits and right on the door step of the world’s biggest consumer, China.
Of course China will continue to be the headline act in global mining markets – as a produced, a consumer, and a major international investor in mining companies and projects. China’s government will be working to control the rate of growth in the country, but only a little bit, as it wants to see the good times roll on for itself and its people. How China and its economy performs will be the biggest influence on the global mining industry in 2011.
The question is can South America, India, Mongolia or Africa be the next to start on a high growth boom in mining and domestic growth and take any of the spotlight off China?
Green Pressure and Global Warming
And last but not least, green pressure will continue to grow on the mining industry as a whole, as it always has, and in particular companies working in more environmentally sensitive areas. This pressure will come from all sides – from local action groups, from governments seeking re-election, and from the public in at large with their growing awareness of greenhouse gasses and “global warming”.
The events of 2010, both good and bad, brought recognition in many countries that a successful mining industry is a key strength for a nation – bringing long-term wealth generation both directly through expenditure in the country, and through taxation and royalties. The mining industry has claimed a lot more of the public spotlight, and will undoubtedly continue to do so.
Good luck with whatever hot topics and challenges lie ahead for you in 2011. I’d love to hear your ideas and thoughts about the year ahead in the comments section below.
- Jamie Ross
Mining Man - Great Safety, Leadership and Productivity Ideas for the Mining Industry
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Here’s some links for some more reading on the outlook for 2011:
Top Ten Mining Trends for 2011 from Deloitt:
Canadian Mining Journal:
Resourceworld Mining and Exploration Outlook 2011:
Fat Prophets 2011 Outlook:
Business News America Mining 2011 Outlook: