Issue link: https://read.dmtmag.com/i/166113
AFG Equipment, in late August after operating for a decade that tracked the rise and fall of Australia's mineral boom. "There's just absolutely nothing happening. We're just treading water," he said. "It may bounce back in 12 months, it may bounce back in five years. It's hard to say." With China recording its fifth straight quarter of growth below eight percent, Howard isn't optimistic that Australia's biggest export market will rekindle the cooling mining industry any time soon. China's response to the global recession was to pour hundreds of billions of dollars into new highways, bridges, bullet trains and factories, unleashing a new wave of demand for Australia's mineral riches that helped extend its mining boom. But new communist leaders are resisting calls for another round of stimulus, preferring instead to let the economy settle at a growth rate of 7-8 percent, still far outpacing developed countries, but a substantial shift lower from earlier double-digit expansion. Falling coal prices have hastened the closure of some financially marginal mines in the Bowen Basin and shed thousands of jobs. The price of Australian coking coal, the premium grade used in steelmaking, has fallen from a peak of $330 a metric ton in late 2011 to around $135. The iron ore price has tumbled from $192 in early 2011 to around $130. The Bureau of Resources and Energy Economics, a government forecaster, said in May that the cancellation or postponement of 150 billion Australian dollars ($139 bil- lion) in major resource projects meant the years-long upswing in construction for mining and gas projects had peaked. The bureau said AU$350 billion in committed and potential projects could slump to AU$25 billion in 2018, half of what it was when the boom began in 2003. Tim Miles, chairman of the Mackay Chamber of Commerce, said the mining downturn struck suddenly in the space of a few months late last year, with widespread economic ramifications. "It stopped very quick, so a lot of people have had to downsize their businesses to suit the new market," Miles said. "That has meant offloading a lot of equipment if they can, parking a lot of equipment which they still owe money on but are just not making income from, and being forced to charge less for their goods and services," he said. Sugar cane was Mackay's original boom industry and is still important to the region, but not big enough to pick up the slack. And while Australia will continue to be a significant minerals exporter, digging up and shipping ore and coal overseas soaks up far fewer workers than building new mines. Mines that are being constructed are designed to be more cost efficient in preparation for a future upswing in demand that is likely to be far more modest than the past decade's. The new reality is still sinking in.Ken Smith earns a living hauling enormous mining truck tires that can exceed more than 4 meters (13 feet) IDA UNIVERSAL September-October 2013 high between the Bowen Basin and his depot more than 1,000 kilometers (600 miles) away in the state capital Brisbane. He A worker repairs a drag line bucket used to dig coal in the nearby Bowen Basin at a workshop in Mackay city. drives up to 5,000 kilometers (3,100 miles) ment forecast a budget deficit a week and maintained a hectic of AU$18 billion. Last week, it work schedule until July when announced the shortfall would orders dropped off. be nearly twice that. He is confident that a gold A euphemistic government rush mentality will return. order for a bigger "efficiency "They say it's slowing dividend" will require all down, but they're still building government departments and new mines," Smith said. "Once agencies to cut spending. it all starts up again, once the The central bank cut its money comes back into the benchmark interest rate to a coal, there'll be a big scramble record low of 2.5 percent. for staff again," he said. "We thought we could see After accounting for about it coming," said Howard, owner half of Australia's economic of the heavy equipment busigrowth in the past two years, ness. "We didn't know whether the contribution of resource it was a year away, two years extraction industries, such away or possibly five years as coal and iron ore mining, away. We just had a feeling we would fall to one-third, Aushad to pull back eventually." tralian Treasurer Chris Brown He now fears wages in told the National Press Club Australia have become too last month. high for the mining industry to "We have reached a crosscompete internationally. road," he said. "This is not a "I travel around the world crisis, but it is a challenge." everywhere buying and selling To maintain economic gear, and I think we've become growth at its long-term average a bit complacent. We need to of three percent, Australia must have a good hard look at what turn to industries other than it costs us to get coal into a mining and gas, Bowen said. train compared to other counThe government expects tries," Howard said. the unemployment rate to This story is part of "Chirise to 6.25 percent by the na's Reach," a project tracking middle of next year from China's influence on its trading about 5.7 percent at present. partners over three decades Its own finances are rapidly and exploring how that is deteriorating as slowing ecochanging business, politics and nomic growth weighs on tax daily life. ● www.cfnews13.com August 6, 2013 revenues. In May, the govern- 47