Posted January 06, 2019 17:59:30 A miner’s market is in danger of being permanently invisible as prices for the minerals it supplies rise to a record high.
Key points:Miners will have to pay higher prices for more minerals in 2019The National Mining Market (NMM) is expected to cost around $12.7 billion in 2019NMMs average price has risen by almost 80 per cent in the past decadeA report from the Australian Industry Group (AIF) says the “economic and political risks” of mining prices in 2019 are not insignificantThe NMM is the main form of pricing in the nation’s mining industry and has been in place since 2000.
But that has been under threat as the industry has struggled to compete with cheaper overseas competitors.
“There’s been an increasing focus on mining, and it’s a natural consequence,” NMM chief executive Michael Gorman said.
“It’s a way of putting in place the structure that can support growth.”
A recent report from AIF found that the NMM could cost about $12 billion in the coming financial year.
That is almost double the $4.5 billion that the mining industry spent in 2015, according to the Australian Bureau of Statistics.
“The NMP is a very powerful tool,” Dr Gorman told ABC News Breakfast.
“You can’t just have the mining boom go away.”
The price of the minerals used in the NMW is set by the Australian Government, and a wide range of mining companies, from big miners like Rio Tinto to smaller players like Nym, have their own markets.
“In many cases, the NMP works well and it works in a way that’s much more transparent than we’re used to,” Dr Paul Pomeroy, senior adviser to the Minerals Council of Australia, told ABC Radio Perth.
But mining company executive director Peter MacGregor said the market was “very fragile”.
“You need to have a clear system in place to make sure the NMR doesn’t collapse in the short-term and then you need to keep the NMA stable,” he said.
The Government and major mining companies have pledged to boost investment in the mining sector and tackle rising costs.
“We’ve got a plan in place that’s designed to ensure the NMI continues to be able to provide the same level of service for our mining industry as it did for mining before the financial crisis,” Agriculture Minister Greg Hunt said in July.
“But there are also costs and risks associated with the use of that technology, and so it is a constant process of ensuring we keep costs low, keep costs in check and that we have the best technology available to provide a very secure mining environment for our miners.”
The Minerals Industry Association of Australia (MICAA) has warned that the “market is at risk” of being completely disrupted in 2019.
“If we don’t have a way to manage the market properly in 2019, then the market will become unresponsive, unresponsive and unresponsive to the needs of our miners,” the MICAA’s managing director, Paul Davenport, told the ABC.
“For us to get to that point of stability is a long way off.”
The MICAA is also urging the Government to consider “reforms that would enable the NM to operate with less volatility and more certainty”.
“It is a real concern that we are facing the prospect of a complete collapse of the NMC in 2019,” Dr Davenpon said.