tojo3005 Posted March 13, 2014 Report Share Posted March 13, 2014 hi all just heard Australia could be heading for recession any thoughts tojo Quote Link to comment Share on other sites More sharing options...
verystormy Posted March 13, 2014 Report Share Posted March 13, 2014 I have not seen anything to suggest that. It is slowing down, but growth in most sectors is still very strong. Some states are going to have struggles, but not the country as a whole. Quote Link to comment Share on other sites More sharing options...
Bibbs Posted March 13, 2014 Report Share Posted March 13, 2014 Recession is two quarters of contraction in the economy? I've only a WA bias, but I can't see it. Worse case, it'll flat line here (with all the current projects carrying on). I just don't think the growth could continue as it was. I'm not involved in mining at all, neither are my main clients. They all seem to be pushing forward and investing heavily. But who knows if the failings of others states, could drag us down as a whole? Quote Link to comment Share on other sites More sharing options...
bugsyburrell Posted March 14, 2014 Report Share Posted March 14, 2014 80,000 new businesses established in the last six months is a good sign which is also a massive boost for the unemployment rates. Globally, countries are coming out of the recession and showing industrial growth which will keep the mining steady. Personally I think it's hit a peak and now will stabilise for the next few years. Only my 2cents worth:) Quote Link to comment Share on other sites More sharing options...
verystormy Posted March 14, 2014 Report Share Posted March 14, 2014 Actually, since wiriting my earlier comment this morning, there are some worrying stories in the press today. Unemployment is not doing so great in WA and a lot of the rest of the economy does rely indirectly on mining. http://au.news.yahoo.com/thewest/business/wa/a/21973358/wa-jobless-rate-worst-in-10-years/ It is very hard, if not impossible to predict what will happen in the chinese economy and data is often suspect. At the moment there is a uncertainty of what its economy will do as there has been a fair amount of negative data come out, but it is hard to predict how this data will play out. Hence why the market is very up and down when chinese data has come out. A lot will depend on the iron ore price. At the moment, although it is a lot lower than i was, it is still fairly healthy for most producers. If though it were to head significantly further south - sub US$90, then that would certainly generate a lot more problems. Quote Link to comment Share on other sites More sharing options...
bugsyburrell Posted March 14, 2014 Report Share Posted March 14, 2014 If you look at the general output mining figures they have stayed pretty steady, even shown slight increases over recent months. I don't think the unemployment figures in WA have been helped by the floods of, not just the immigrants, but the east coast Aussies and kiwis jumping on the mining bandwagon only to find positions exhausted and going cap in hand to the government. Quote Link to comment Share on other sites More sharing options...
verystormy Posted March 14, 2014 Report Share Posted March 14, 2014 Yep. Most sectors are producing more. That does not mean the industry is in good shape. The iron ore guys, particularly Rio and BHP have recently brought on stream a lot more ore and increased production capacity and are not too concerned about the current down turn in the price. Most of their production is either hedged or goes through the Glencore stream of sale and what is on spot is produced at about $40 per tonne. The mid caps and smaller such as my company are much more concerned - most of the small companies have issues at around $105 and $90 is known as the FMG point as that is the point FMG can not make money. The non ferrous guys though are in much more brown stuff. They are producing more because they are having to rely on only the high grade parts of the deposits. The medium grade and low grade is now sub economic. The issue that does though is that, in effect changes the cut off grade, which is turn massivly reduces the deposit size - there is a 1:1 relationship between cut off and tonnes in resource. Increase cut off and the resource decreases proportionatly. It is for this and a big range of other factors that the amount produced is not a good measure of the industry or the companies within it. For example, my own company have had big increases in production. But we are having serious problems. There are a number of mines that have closed in the last 12 months and a lot that have cut things - including staff - to the bone in order to try and survive. Only time will tell if they do. But at present more than one of the biggest gold mines in WA are not making money and this weeks copper decline will be hurting (most gold miners have been surviving on the copper credits they get as most gold mines also produce copper). The nickel industry is leaching money so fast it is scary - the majority of the WA nickel mines need at least $8 per pound on the spot market and the current price is just over $7. A good baromoter of how the industry is doing is the employment level for geologists - my own area - as they are needed for everything in the chain from finding the ore body, building the resource model, mining the ore and everything else even down to decomissioning and taking the decisions on when care and maintanance is to be done. The current unemployment rate in WA is 20%. What that is saying is that companies are not exploring for new deposits or exploring to increase their current and are doing what is known distastefully as "raping the deposit". Basically just take the model of the high grade and just get it through the mill. Problem is it risks a very early closure for the mine. Quote Link to comment Share on other sites More sharing options...
bugsyburrell Posted March 14, 2014 Report Share Posted March 14, 2014 Thank you VS for your thoughts on it. Part of our new business in Perth was focusing on selling products to the mining firms so always like to hear inside opinions. We wouldn't be reliant on sales to these guys but it would have been a nice addition. That's why we have taken an interest and been asking a lot of mining insiders, all of which have varied views in the future but most are confident it will stay consistent for many years to come? Also, wasn't BHP and Rio investing quite heavily elsewhere globally? Are the BHP and Rio's slowing down now to help inflate future costs? So do we break out the metal detectors and start investing in Iron and copper now? Quote Link to comment Share on other sites More sharing options...
verystormy Posted March 14, 2014 Report Share Posted March 14, 2014 BHP and Rio are both expanding and will be increasing production this year. That is one of the things being debated in the industry - how their increased production along with increases from people such as Vale (the biggest mining company in the world) and a lot of the smaller ones are also increasing. At the same time, china is showing some signs of wobble. So no one is sure what this will mean for prices. The biggest guys will be fine. The rest is a wait and see. I certainly wouldn't be going out looking for copper given it's price is collapsing. Chinese policy makers can also come up with some surprises such as they did this week when they announced that they will try to force the closure of companies using low grade ore. That will put a smile on the face of BHP and Rio. But cause some headaches for FMG. There is still good prospects for selling to mining companies for the right product and right price. In fact if you have a product that can undercut price wise or show it improves efficiency then you might do very well indeed. I think a conversation I had with our chief financial officer last night sums it up well. Me: so how are the beans (bean counter) Him: well there aren't so many to count now. Quote Link to comment Share on other sites More sharing options...
tayloal Posted March 15, 2014 Report Share Posted March 15, 2014 22 years without one, it has to happen sooner or later but who would be better prepared for one other than ex Poms who have been through it a few times in the UK, same rules apply! Quote Link to comment Share on other sites More sharing options...
colinmacl Posted March 20, 2014 Report Share Posted March 20, 2014 80,000 new businesses established in the last six months is a good sign which is also a massive boost for the unemployment rates. Globally, countries are coming out of the recession and showing industrial growth which will keep the mining steady. Personally I think it's hit a peak and now will stabilise for the next few years. Only my 2cents worth:) How many of those ABN's are people working on building sites who are not really business but are paid this way so as the employer can save money and get rid of easy. A young brickie on a WHV with an abn for example is not a business. Quote Link to comment Share on other sites More sharing options...
Arwen Posted March 20, 2014 Report Share Posted March 20, 2014 How many of those ABN's are people working on building sites who are not really business but are paid this way so as the employer can save money and get rid of easy. A young brickie on a WHV with an abn for example is not a business. You exude positivity with every single post you make!!! Quote Link to comment Share on other sites More sharing options...
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