renth

Down And Out In Down Under

'"The current feeling on St George’s Terrace (Perth’s main business street) amongst brokers and miners is that today is worse than the GFC ever was. It’s 100% pain out there” Perth mining investor'

http://www.zerohedge.com/news/2013-0...out-down-under

GarryP

They are confusing stock prices with the state of the market. That would assume that market traders weren't anything other than panicking sheep.

The most telling line was
Which tends to paint this as big time financial fraudsters artificially pushing down the market, so they can sweep in and buy up resource assets for less money. I wouldn't put it past chinese cash rich groups to be part of that - converting foreign earnings into hard assets and cutting out the middle man in their suppliers at the same time. I wonder if they can force the WA government into allowing in badly paid chinese 457 workers - that would change the economics...

I'm not saying I don't expect GFC II - they haven't fixed what caused GFC I, so you'd be mad to expect anything else. However, this "the sky is falling" site isn't any more prescient or knowledgeable than the rest.

verystormy

As someone in the game, this is how I see it. I have never seen it as bad. I was in Oz for the GFC and that was nothing like we are seeing now.
A mate was made redundant 3 months ago. He is a geo with 12 years experience and can't find anything - he called today to ask if I know anyone that could give him a laboring job on a building site

This morning Barrick sacked their entire exploration team Oz wide. That means not only a lot of jobs gone, but new projects won't happen. They have also said there will be big job losses at existing projects

Newcrest today announced their Brisbane office will close. All of their geologists, including those in WA are part of the Brisbane office.

Silver lake are making redundancies.

I know more than one of the very big WA mines (those employing more than 1000 people) which are being reviewed for closure in WA

BHP yesterday cut it's budget for the year again. This time saying the budget is a maximum, not something that is to be spent up to. It has already announced all exploration in Oz is cancelled. That means no new projects in the future.

The junior market is dead. They can't raise money and are laying off staff left right and centre. Those with a bit of money are dropping Oz projects and taking on projects in Africa and South America where small cash reserves go further.

The reason for all this is fairly simple. It has just become too damned expensive to operate in Oz. A new garment won't make a difference.

The Chinese are not going to swoop in. They have the same mind set. I FIFO from Perth to Tanzania. The planes going from Dubai into Africa are full of Chinese. They are not stupid and are diverting their cash to where they get more for it.

IvanM

Oz mining became expensive because of so many projects. Commodities always has been boom bust and the bigger the boom the bigger the bust. This was always a matter of when, not if. I got laid off by mining services before.

Frankly the Chinese are unreliable payers and unsafe employers. There is still a massive project pipeline. It is just contracting to a more sustainable level.

scrubbedexpat098

I'm working on the Rio expansion, loads of frankly un needed management and bean counters getting hoofed but the jobs being pushed through regardless, I've always worked on the rail and bust tends to equal good time to invest in infrastucture

verystormy

I wouldn't bank on that here. Fed gov are broke. State gov are bust and the miners who have bankrolled a lot of infrastructure are waving goodbye.

There will be some nasty surprises to come through in the next couple of months.

ozzieeagle

Seen it before back in 1982 through to 86.... Aus was one of the hardest hit Westernized countries in the world at that time.

WA and QLD really suffered. Came out of it again though, and will do again. So circa 18-24 months time when things start to look their worst will be a time of great opportunity.

Time for farming and agriculture to take the reins..... Lets hope for good weather.

scrubbedexpat098

You may be right but from my view point the future of the project is looking pretty healthy, Rio pretty much stumped up the cash straight up and as much as said here you go if you make a decent profit good on ya. When the bust as it's being called is over they stand to make an absolute killing shifting 353 megatonnes of ore per annum. During the GFC Rio cancelled projects left right and centre but BHP pushed through with RGP5. It's swings and roundabouts, there'll always be work to be done here, as long as they don't follow the chinese way of pumping the ore to port as a slurry.

verystormy

I am not so sure this time. Not for mining. Previously, a lot of companies only operated in Oz or Canada - everywhere else was just considered too risky by many companies. Now, a heck of a lot of juniors are taking on projects in Africa. The ground in Oz is largely considered over explored. A lot of third world countries have made it clear they are very open for business.

jimbo_d

Yeah whilst the mining construction is winding down there is still demand for the ore so the big players will still make a buck given the scale of their output. It's very tough working in engineering in Perth at the moment, I know of many people who've lost their jobs. Most have been picked up again elsewhere, but when the likes of your project wind down it's going to be extremely tough for anyone in just mining. The rest of the town is being kept going by Chevron. The O&G side of things does look pretty good, but it's so hard to get a shoe in without the experience. It will be interesting if they come up trumps with the fracking in the Kimberly, that could be huge and easily replace what Browse took away.

jimbo_d

Like South Africa and Mongolia then. Rio/Anglo not having such a good time in these places. If the dollar keeps falling Au will become more and more attractive again, particularly if there's a government more favorable towards mining.

IvanM

With the budget, all governments at state and federal level are looking at higher mining taxes. WA has already done it.

Minerals are the wealth of the nation, not the wealth of the few. If mining cannot contribute to Australias wealth then Africa is welcome to Slave pay and dangerous conditions.

verystormy

Yep, both have been headaches. Neither are surprising. But, there are a lot more places in Africa than SA.

I think BHP's budget for greenfield exploration next year says it all. Only going to spend in South America.
It's not the dollar anymore. The cost of mining in Oz is just too high. I remember the first meeting in had in Oz. I had just arrived and looked at costs and realized we were paying truckies $100k. I looked up and said to the management team that as a business we were not sustainable. Nobody disagreed. Everyone just shrugged.