New analysis shows Australia’s mining industry is experiencing conditions similar to the boom of 2010, with record-breaking exploration spending and capital raising.
Total exploration expenditure hit a record $974 million in the fourth quarter of 2021, almost double the exploration spending in the same period a year earlier.
Total capital raising also broke a record in the quarter, increasing more than 70 per cent to $3.17 billion compared to 2020.
The figures come from analysis of cashflow reports of 733 resource companies by independent research agency Austex.
Warren Pearce, chief executive of the Association of Mining and Exploration Companies (AMEC), said people had a fear of using the word “boom”.
But he said it was a fitting description of the current environment, with the industry experiencing a sustained period of substantial growth.
Lessons learnt from past bust
In West Australian towns like Port Hedland, Karratha and Newman, the mining boom of 2010 brought soaring wages and house prices — the subsequent bust shocked the region.
But Tony Simpson, chief executive of Regional Development Australia’s Pilbara office, said lessons had been learnt and local economies had diversified.
“Now what you’re seeing is rare earths, some copper and other types of minerals that are coming in, and also now there’s hydrogen coming in there as well,” Mr Simpson said.
“The more we can diversify, we’re not relying on one commodity price or two. Relying on six commodity prices certainly helps level out the field.
Pandemic positive for exploration
The record-breaking expenditure comes at a time when skills and equipment shortages had negatively impacted on industries across the world, but Mr Pearce said the pandemic had the opposite effect on exploration.
“The last two years in the mineral exploration industry and the mining industry, they’ve been exceptionally positive in terms of the economic outputs, the production outputs, and indeed the profits and dividends to shareholders,” he said.
When the WA border re-opened, Mr Pearce expected the industry would grow further.
“Once we’re able to see more people, more skilled workers come into the state to support both the mining industry and the exploration industry, you’ll see a further acceleration of that growth,” he said.