25/06/2008 - 22:00

Riding the mining boom in single, global market

25/06/2008 - 22:00


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When the resources boom hit its straps four or five years ago, many profitable mining services and mining technology organisations emerged in Western Australia with a renewed focus.

Riding the mining boom in single, global market

When the resources boom hit its straps four or five years ago, many profitable mining services and mining technology organisations emerged in Western Australia with a renewed focus.

The state's economic upswing was fuelled by a significant increase in aggregate demand for resources, and led to falling unemployment.

Many of the state's mining and resources organisations, including software and technology providers, have expanded globally, with many more filling niche markets.

Collectively, the mining and resources industry has contributed to keeping the nation's economic growth at a higher rate than those of other Western nations.

However, the boom has soaked up a vast amount of labour and investment resources, creating a void of affordable, skilled workers in the process.

The skills shortage has been a focal point of the resources boom, with a recent Australian Institute of Management study showing that more than 70 per cent of big business surveyed indicated a willingness to employ skilled staff from overseas.

The recent WA Business News mining services and mining technology forum asked decision makers from WA mining companies, as well as mining software providers, their thoughts on the boom and whether they were confident current conditions could be sustained.

Skilled labour shortages was a main focus of the forum, however all nine representatives indicated confidence the boom would continue for some time, agreeing that whether it stayed in WA or moved to another region, the boom was a mobile phenomenon.

The Maptek Group, based in Northbridge, is a consortium of companies providing software and mining technology products to the resources sector.

Maptek manager of technical services Claudia Monreal said it was an exciting time to be in the mining and resources sector in WA.

"I am from South America and I really believe Perth is unique," she told the forum.

"With the current situation the particular market is explosive at the moment and there are heaps of opportunities out there in the market.

"The success though lies in the number of skilled people we can get into our company."

Bernard Ridgeway is the managing director of Perth-based Imdex, an Australian Securities Exchange-listed company with a core business focussing on drilling products and services in the mining and resources sector.

He said while Imdex expected "bumps in the road" with the boom in the short-term, he believed the mining industry had a high level of confidence in WA's future prosperity.

"What we've been doing in our business is buying a bunch of smaller businesses and putting them in to larger companies with much more resources to then deliver on the aspirations that some of the key people in the industry have with what's going on at the moment," Mr Ridgeway said.

"We put a lot more into research and development and given we've got better marketing channels and all those things, so I think it [the boom] is a really good story.

"But it's still a very fragmented market and the opportunities to consolidate with the economies of scale are tremendous.

"We've made seven or eight acquisitions over the last three years, so we've been very active on the acquisition trail and those acquisitions are varied in size from $1.5 million to $25 million.

"There's a much higher level of confidence going forward than 1997 to 2002, where there was a down period. I think everyone here is a believer [the boom will continue] but there will be bumps in the road."

ADG Global Supply chief executive Andy Greathead, who oversees the provision of various types of equipment for global mining, earthmoving and drilling industries, agreed that the boom was a worldwide event.

"The sole difference whether the boom's in Africa, China or whatever, is that it's one market now," Mr Greathead told the forum.

"[The boom] might be in South America in 20 years or it might be in India.

"It isn't that market over there and that market over there; go and have a look at the world map, that's the market, that's the danger of regionalising stuff.

"We need to treat places like Dubai like it's an outer suburb of Perth.

"There are different cultures there but you've got to deal with that in the market.

"As soon as we can capture that it's one market, then everything will be a lot easier."

As managing director of Australian Mine Services, Ian Massara has led the company's mining activities in line with other leading organisations in the mining and earthmoving industries.

Mr Massara agreed that, while the boom may not always be in WA, he was confident his organisation would not be without work.

"There's always a boom," Mr Massara said.

"If it's not in Perth it could be in South America, if it's not in South America it could be in Adelaide.

"The boom's here now, but it's a plane flight to the next one, so none of us will ever be out of work I don't believe."

But Mick Caratti, chairman of Lycopodium, an engineering consulting business focused on the process and manufacturing industries, said he doubted the longevity of the boom.

"At some point, at one time or another, the work's going to be in South Africa or some other place," he said.

"But I'm less of a believer that the boom is going to stay forever."


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