29/02/2012 - 11:18

Miners on wrong track with technology

29/02/2012 - 11:18


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Driverless trains proposed by Rio Tinto are the thin edge of the wedge and not in Australia’s long-term interests.

Driverless trains proposed by Rio Tinto are the thin edge of the wedge and not in Australia’s long-term interests.

AT the risk of suggesting that the union movement and Australia’s richest person, Gina Rinehart, have something in common ... there does appear to be a thread linking the left and right of Australian society; it’s called driverless trains and Rio Tinto’s dream of fully automated mines.

While the appeal of increased profits, greater productivity and enhanced safety from driverless trains (and ‘people-less’ mines) is clear, it is also obvious that there is a victim in what’s proposed – the country called Australia.

Taken to its logical limit, a mine of the future will be the equivalent of a computer game, or to use another image, the underground equivalent of drone aircraft operated by a man at a computer console on the other side of the world.

In theory, it’s a wonderful use of technology.

In practice it means that the northern half of Australia, where most of Australia’s big mines are located, will be condemned to remain an under-populated quarry supplying the steel mills and factories of Asia with raw materials.

Mrs Rinehart, through her lobby group, Australians for Northern Development and Economic Vision, has development of the north as a primary goal. The union movement interprets driverless as workerless.

I see what’s being proposed by Rio Tinto as not in the national interest, doing more harm than good in the long run.

Two decades ago, an early example of technology delivering cost savings, but damaging society, was the arrival of cheap aircraft travel, which led to the creation of the fly-in, fly-out workforce.

Hailed when it started as a change to please everyone – from shareholders and management to the workers themselves – fly-in, fly-out has severely damaged the prospects of Australia getting the bigger towns with permanent populations it desperately needs in the north.

Defenders of fly-in, fly-out argue that mining companies must operate that way because they can’t get skilled workers to live permanently in the harsh and isolated conditions of the north.

That is just public relations spin designed to mask two facts: the companies have been lax in training workers; and they enjoy the benefits of a mobile workforce that lives in the south (or overseas in some cases), which saves them the cost of investing in accommodation and other essential facilities.

Fly-in, fly-out also exposed the utter nonsense (and more PR spinning) of the mining industry claiming in some way to be ‘sustainable’. A hole in the ground is obviously not sustainable, while a workforce that lives far from work compounds the ‘unsustainable’ nature of the industry.

Technology, which is making driverless trains and people-less mines possible, can be used to make the north more comfortable. Wider use of air-conditioning and easier access to high-speed communications would be a start. Government could also help with a return to the system of rewarding people who live permanently in the north with a generous tax break.

It’s not often that I can see a role for government in any business matter. As a general rule, government is an inefficient nuisance and added cost, which rarely gets anything right.

But the latest proposals for a fully automated mining industry are reason for government to get involved early, if only to understand exactly what is proposed, and where the companies aim to take their technology.

Mines run from the comfort of an office in Perth, or somewhere else on the planet (why not from a steel plant in China to achieve absolute coordination between mine and mill?), are not in the interests of the country, and the concept is certainly counter to the need for the north to have bigger towns, and perhaps even a genuine city.

What’s happening today is a softening-up PR campaign from the major mining companies, especially Rio Tinto which, despite its claims to a few historic Australian roots, is London based and majority owned by foreign shareholders who couldn’t care less whether mine workers live in the north of Australia or the Maldives.

Profit is what’s driving Rio Tinto and there is absolutely nothing wrong with that, just as there is nothing wrong with the claim that Australia must remain a leader in technology and productivity to stay ahead of emerging rivals in low-cost African countries.

What is wrong is that the enhanced efficiency and extra profit being sought by Rio Tinto is potentially at long-term cost to Australia – and a point which is of no interest whatsoever to the major shareholders of Rio Tinto.

For all of the reasons mentioned, government in Australia, state and federal, ought to take a closer look at the track driverless trains are travelling, and start asking a few questions about what’s proposed, and where does the trip end.

Age-old argument

THE world is never short of investment theories, most of which are rubbish. But last week a compelling case was made for investors to feel more confident about the stock market from next year.

Rather than bother too much about whether Europe will recover or whether China will grow rapidly or modestly, the idea from Tim Bond at London’s Odey Asset Management is that the ageing population will work in favour of equity values.

According to Mr Bond, one of the core asset measuring tools, the price/earnings ratio, hit a wall during the past decade as baby boomers (people born between 1945 and 1955) stopped accumulating shares and started to move into retirement. In other words, a large lump of the population was no longer buying.

The demographic deadweight on the market will start to change in 2013, Mr Bond wrote in The Financial Times newspaper, with children of the boomer generation entering their peak asset accumulation phase, which will include acquiring equities ahead of their own retirement.

Global debt levels, Europe’s financial mess, China’s growth rate and many other factors will weigh on the market, but the looming demographic change could be an important factor.


“Humanity is acquiring all the right technology for all the wrong reasons. .”

R Buckminster Fuller


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