Productivity a significant growth obstacle for mining sector

While optimism has increased amongst Australia's mining leaders, many still need effective productivity solutions in order to fully recover from a three-year period of low confidence.

Twice as many leaders surveyed by Newport Consulting felt optimistic about future growth this year compared to last. Additionally, there was a 9 per cent drop in those with no confidence. However, with just 16 per cent of leaders displaying optimism compared with 84 per cent who are not, the mining industry still has a long way to go in terms of recovery. 

Last year, confidence was at a five-year record low and many firms were forced to take cautionary action to avoid disaster, including cutting back on staff and the number of mines open. This feeling of uncertainty has spilled over into the current year as many miners are not investing, as seen by the 78 per cent of leaders planning to pull back on CAPEX spend.

Peter Harris, chairman of the Productivity Commission, was interviewed for the Mining Business Outlook Report and explained the importance of productivity in this recovering industry.

"The story for the mining sector is about productivity recovery following under-performance," he said.

"One opportunity is addressing the flexibility of resource allocation at the national, state and local planning levels."

Many mining businesses are already aware of the challenges that productivity presents as 34 per cent highlighted this as a major issue, the most popular answer given. For this sector in particular, becoming more productive is vital for staying competitive in the global market, as spending cutbacks and redundancies can only go so far. 

While the industry is showing signs of recovery, it is still in the early stages and is expected to be slow, especially as mining faces tough economic conditions from the global market.