When the late Donald Horne described Australia as "a lucky country" in 1964, he intended it as an indictment of what he saw as a lack of enterprise and innovation in his home country, which he believed was "run by second-rate people who share its luck".
Since then, much to Horne's chagrin, his 'lucky country' phrase has stuck around as an affectionate nickname with a more positive connotation. Australia's 'luck', as the wider interpretation of the phrase would have it, is a combination of favourable geopolitical and living conditions that have bolstered the country's economic prosperity. Arguably chief among these favourable factors are Australia's enormous reserves of natural resources.
Australia's resource boom has played an essential role in the country's economic growth, with the mining and resources sector contributing 7.7% to the nation's gross value added (GVA) in 2010-11, representing a gross value of A$96bn. Beneath Australia's sun-baked earth lie the world's largest deposits of brown coal, mineral sands, nickel, lead, uranium, iron ore and zinc.
Australia's mining downturn: time to diversify
But Australia's mining downturn over the last year serves as a timely warning against economic over-reliance on a single sector, especially one as cyclical and exposed to market volatility as mining. Of course, creating 7.7% of a country's GVA is still a massive contribution, but even this represents a gradual decline from 8.4% in 2009-10 and 9.8% the year before. The tightening belt of Australia's domestic mining sector means limited investment, reduced exploration budgets, suspended projects and fewer jobs to go around.
The effects are being felt industry-wide, including the country's highly developed mining equipment, technology and services (METS) sector, which employs 386,000 people (more than the mining industry itself) according to the latest estimate from Australian METS industry association Austmine. As a supporting network for Australia's mining operations, the METS sector has been exposed to the full force of the downturn.
Many mining companies in Australia are focused on cutting costs and reducing risk, but should they be exploring?
The end of Australia's 'commodities supercycle' of investment has seen 18 mine projects delayed or cancelled across Australia, and the Queensland Resources Council has calculated that coal projects worth around A$50bn have been consigned to the back burner.
The stalling of investment has hit mining services companies hard - a 2013 survey of the mining services sector around the Bowen Basin, Australia's most abundant coal-producing region, revealed that 83% of the 120 companies surveyed had experienced a decline in business over the previous nine months, with mass layoffs becoming increasingly common.
"High cost / high service contractors to the mining sector are currently facing the brunt of the adjustment," said BIS Shrapnel's senior manager of infrastructure and mining Adrian Hart after the industry analyst released a report on Australia's mining outlook in November 2013. "There is still a lot of work, but it is either being redirected in-house or to lower-cost suppliers."
Going global with Australian METS
Although the Australian mining construction boom might have given way to a more production-centric period, to the detriment of the domestic services market, the long-standing development of the country's mining industry has nurtured a level of skill and technical innovation that is renowned far beyond Australia's borders.
Australian miners' expertise and technological know-how, coupled with their familiarity with harsh, remote sites, has put them in global demand. And for a METS sector that is facing a dearth of opportunities at home, expanding mining markets in Asia, Africa, South America and elsewhere are providing a robust foundation for the export of that proficiency, with Australian companies currently exporting METS to 50 locations around the world.
Aussie-developed mine software, like the Commonwealth Scientific and Industrial Research Organisation's REMOTE Technology, is also used in more than 65% of the world's mines, according to Steve Scott, a diplomat at the Australian Embassy in Manila, where the Australian Trade Commission (Austrade) organised a mining showcase for the Philippines.
As Dan Sullivan, trade commissioner at the Australian Embassy in the Peruvian capital of Lima told Australian Mining in December 2013: "Australians are recognised as being great at bulk mining and transportation, as well as supplying remote mines, due to their experience in the harsh Australian mining industry...Our engineers are so used to doing bulk mining projects for demanding clients in rough conditions that they often bring their own technology and innovations with them."
An Austmine survey of 860 Australian METS companies between December 2012 and March 2013 confirmed the extent to which the sector is setting its sights abroad for current and future expansion plans. "METS are highly internationalised and export to every corner of the globe, with 55% of METS companies surveyed and 41% of exporters having offices or operations offshore," said Austmine's deputy chair Elizabeth Lewis-Gray. "Of those companies that do not currently export, 18% plan to export in the next 1-2 years."
Individual company successes are bearing out the wisdom of global METS export; in an interview with the Financial Times in April 2013, Brian Piggott, the founder of protective mining footwear supplier Steel Blue noted: "Sales are growing by double-digit percentages every year, with the strongest growth in Asia and Africa."
The FT also mentions the surprise success of Adelaide-based metal detector manufacturer Minelab, which has seen sales of its GPX 5000 gold detector double to A$100m since 2008, primarily driven by a surge of demand from Africa after Sudanese artisanal miners used the device to unearth gold nuggets worth $100,000 in 2009.
Strengthening international trade ties
The South Australian Chamber of Mines and Energy (SACOME) is hoping to engage its youth by getting their creative juices flowing.
As well as the advocacy of Austmine, the METS industry is receiving ample support from the Australian government in its drive to unlock new opportunities in foreign markets. Austrade has 50 offices around the world, and has made a strong commitment to maintaining and expanding the international presence of Australian METS.
As well as a well-developed online publicity effort, this involves lots of overseas mining showcases and trade missions, often under the wider national brand of 'Australia Unlimited'. At the Perumin mining convention in Peru in September 2013, the Australian Pavilion featured a specific space to promote Australian mining education and skills. OzMine, meanwhile, is an annual Austrade-run event in Jakarta dedicated to facilitating partnerships between Australian mining companies and operations in South-East Asia.
Most recently, Austrade brought its METS mission to India in early February 2014, touring through New Delhi, Kolkata and Hyderabad to introduce Australian companies with expertise that matches the Indian mining industry's requirements.
"India's mining industry has enormous potential over the long term, and we believe these companies have expertise which may be able to help it realise that potential," said Australian trade commissioner Tom Calder at the time. "This delegation will give them the opportunity to showcase this expertise and explore commercial opportunities."
With plenty of support and a formidable international reputation, it's unsurprising that Australian mining technology and services companies are finding a new footing in the international markets as demand wanes at home. The potential to become a global METS leader, with companies as much at home in Indonesia or Russia as Pilbara, offers the chance to improve resilience against market risks, not to mention achieve growth that wouldn't be possible in Australia alone.
Former Queensland Premier and current cheerleader for Australian METS Peter Beattie stressed the importance of this sector to create sustainable mining growth at an industry event last year. "The METS sector represents the mining jobs of the future," he said. "This sector will create the dynamic, high-tech, highly innovative jobs that are needed to engage young people and ensure continued employment growth for generations to come."
Horne's 'lucky country' phrase suggested that while other countries were being clever to grow their economies, Australia simply coasted on the luck provided by circumstance. Now, after years of domestic investment and development, government and industry are seizing the chance to transition to a 'clever' growth model based on technology, research and skill, both at home and abroad. As Ian Satchwell, director of the International Mining for Development Centre, put it: "Australia is converting its natural advantages in mining and agriculture into a wider knowledge-based, diversified and service-oriented economy."
Australia's resource boom was certainly a product of blessed geology, but the maturity of its mining industry is now giving companies the opportunity to find the value in developing innovative people and technologies, and taking them around the world.