Falling iron ore prices force mining companies to rethink 2016 operations
Two years ago, we’d never have dreamed of the challenges facing WA iron ore mining companies would send huge ripples across the whole country and have the dramatic effects we have witnessed.
lost out on billions of dollars
The Western Australia government and Australian federal government have lost out on billions of dollars worth of royalties and taxes as well as mining companies witness their profits slide into the abyss.
When iron ore prices were over the $100 mark in 2014, sentiment was high and mining companies with low production costs such as Rio Tinto and BHP, who operate mega-mines in the iron ore rich areas of the WA Pilbara. They were promoting the fact that because of their low production costs, they could sustain the lowest prices and still turn a profit.
Another interesting fact that came out of the BHP camp was that for every $1 price drop in the price of iron ore, their profits fell $150 million.
“BHP have lost billions in profits over the past 12-18 months”
With that in mind, we can quite confidently assume that to date BHP have lost billions in profits over the past 12-18 months and especially more so during the first months of 2015.
Here we are in the middle of May 2015 and the price of iron ore has dipped again as concerned investors keep a keen eye on a softening Chinese economy, as well as the continuing threat of rising iron ore shipments from Brazil. Not forgetting Australia playing a big role in ramping up iron ore stocks on a global scale never seen before.
Currently, iron ore that typically ship to the Chinese port of Tianjin was trading around $US62.00 a tonne, which is down 0.5 per cent from its prior rate of $US62.30 a tonne.
Investors were also hoping the big mining companies like BHP Billiton and Rio Tinto would cut back production.
“The iron ore and metallurgical coal markets are currently well supplied and we do not expect to invest significantly more in these businesses at this time,”ť BHP boss Andrew Mackenzie said, with Rio counterpart Sam Walsh noting his firm would also invest no new capital in meeting its targets.
Owing to the oversupply on the market, it’s expected that the iron ore price forecast for 2016 financial could be around to $US48 a tonne.
This presents huge challenges for the big miners as well as the junior ones who operate mines in the Pilbara. Not forgetting of course, Gina Rinehart, who has invested billions of Aussie dollars into the Roy Hill iron ore mine. At a time when there is too much iron ore on the market and the demand has slowed from developing nations like China, there are some tough times ahead.
WA miners flock in search of coal mine jobs in the eastern states
Already we have see a new wave of mine workers coming back from WA to the eastern states of NSW and QLD in search of mining jobs in the coal industry. The days of earning a fortune working in the WA mines seem to be a distant memory.
Although there is still money to be made for qualified and experienced workers, new starters would be wise to think again about getting a job without having invested in training and development.
Further training needed for WA mine workers
Many workers who have spent a few years working in open-cut iron ore mining operations in the WA Pilbara are upskilling themselves and realising, they have to look at completing further training if they wish to work in the coal sector.
Work Health and Safety training is highly regulated in Queensland for instance, where all mine workers are required to obtain a Standard 11 mining induction. The 2 day course is essential for workers who want to transition from iron ore mining into coal and metaliferous.
WH&S training is a priority for QLD mine workers and contractors
There is also a Standard 11 refresher course for those workers who have no allowed their current 5 year qualification to expire. For workers who fall into this category, the mining induction refresher course is the most affordable and quick solution.
Mine workers must also be physically fit for work by having a Coal Board Medical examination at their own expense.
For machinery operators who have been working on dump trucks, scrapers, dozers, loaders and water carts etc in WA mines, there is also the consideration of upgrading current ‘tickets’ to RII competencies. This is also referred to as attaining your Black Coal Competencies whereby operators are required to take a practical assessment and prove to an assessor they can safely operate machinery to a per-determined standard.
This is again, yet another QLD government initiative to keep the safety record of QLD mine workers free from blemishes at all times. Queensland mines have a worldwide reputation of being the safest in the western world.
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