BHP warns Australian mining not ready for low-cost competitors
The boom in demand from China’s industrialization is now “past the period of aggressive growth,” BHP’s Australia President said.
Australian Latin America Business Council Chairman, Jose Blanco, has challenged local mining companies as well as suppliers to be more strategic, adventurous and committed in exploiting the mineral opportunities in Latin America —a region whose geology a market expert believes makes it “an essential hunting ground’ compatible with Australia’s mining strengths.
Addressing attendees to Sydney’s Paydirt 2014 Latin America Downunder Conference, Blanco said that what the region had to offer was of such a scale and so compatible with Australia’s mining capabilities that local miners, explorers, investors and industry players needed to “significantly ramp up” their involvement.
“The resources business is increasingly global and Australian companies in that space cannot afford to limit their activities to the convenience and safety of their home markets,” Blanco said.
“Australian players should look beyond stereotyped assessments of the region (…) That no longer suffices. What they do need to do is undertake in-depth market intelligence and strategic planning that connects Australian business to the region’s capital markets and business elite, making the most of industry trends and cross-border investment flows.”
Blanco called on Australia’s resources players looking to Latin America, to look beyond the traditional Chile-Peru-Brazil axis.
“They need to embrace other markets such as México, Colombia and others,” he said.
“They need to understand and exploit regional synergies, including production and distribution hubs, taxation structures and evolving capital markets.
“Australian companies also need to cease treating Latin America as a secondary market – one which is on the radar but not a critical part of their overall business strategy.
“The sheer scope of the opportunities on offer easily justifies a wholehearted commitment and the investment of real time and money to make Latin America a core operating environment, a core priority, for them.
“The only question is whether Australian business has the foresight and courage to accept the challenge and do the hard work to anchor a mining business within the Latin American offering.”
Blanco said one only had to look at Latin America’s overall credentials when examining why it should figure more prominently on the Australian radar.
The region produces 45% of the world’s copper, 50% of its silver, 26% of its molybdenum, and equally high percentages of zinc, gold and iron ore. It is also home to five of the countries that consistently rank in the Top 10 global destinations for mining investment.
“It is a region that captures 27% of the global exploration budget – and remains a region that is considerably under-explored – even though it has maintained its share of the global budget at close to 25% for more than a decade,” he added.
