IT MAY come as a surprise in light of the rather dismal economic environment but more than half of Australian mining professionals are optimistic about the future of the industry over the next three months, while only 17 per cent are pessimistic.
Maybe most think things can't get any worse, seeing as 53 per cent of the respondees to Australian Mining's quarterly business sentiment survey reported job cuts at their workplace over the past month.
But miners - even those who have survived enough busts to exercise caution during boom times - tend to be natural optimists looking for a new discovery with plenty of "blue sky".
Unlike most sectors in the Australian market, such as retail, beverages, airlines and telcos which are in effect duopolies with only incremental growth available, mining offers the prospect of growth due to its access to huge export markets.
Mining also attracts some colourful characters, due to the entrepreneurial nature of the business. It can be entertaining to observe the antics of relative mavericks like Andrew Forrest of Fortescue Metals, Wayne McCrae of CuDeco and Robert Friedland of Ivanhoe Mines and Ivanhoe Australia.
So The Drum hopes readers don't mind a bit of a look back at the last few years of the mining industry in Australia.
From boom times …
This columnist has had a spectacular time observing the ups and downs of the mining industry over the past four years, a period that coincided with the start of the boom, when BHP Billiton and Rio Tinto had just achieved a spectacular 71.5 per cent rise in the iron ore price.
Back then, Fortescue was an explorer that had just lost its trumpeted "binding contracts" with Chinese infrastructure providers which are now the subject of a well-publicised hearing in Federal Court in Perth.
WMC Resources was in its dying days as an independent company, having received a bid from Xstrata that sparked a higher offer from BHP. Cleveland-Cliffs was bidding for Portman for the first time and CopperCo hadn't yet built a mine but was trying to buy the neighbouring explorer Universal Resources.
The mineral sands miner Iluka Resources was one of the biggest miners around by market value, while Oxiana was a goldminer with an operation in Laos looking to build a copper mine at the site. And China was only starting to be at the forefront of investors' minds, with the traditional markets of Japan and Korea receiving a lot more attention by the market then than they do today.
And signs of a bust
Since then, a lot has happened in the mining industry. Many of the good, mid-tier Australian miners are no longer listed, having succumbed to takeover bids. The list includes Excel Coal, Jubilee Mines, Zinifex, LionOre Mining, Equigold and Portman.
Other oft-named takeover targets like Alumina, Newcrest Mining, Equinox Minerals, Felix Resources and Macarthur Coal are still around.
Some of the most promising project developers, the market darlings during the boom, have gone bust because of the sudden, steep downturn in metals prices.
CopperCo and Albidon are among the biggest disappointments, with Allegiance Mining an honourable mention since it was saved financially by a bid from OZ Minerals, but its Avebury mine is now closed. Those losses are particularly sad since they were among the few companies to manage to build new greenfields mines during the boom - hardly an easy feat.
OZ is also a huge disappointment, having lost all of its mines except for Prominent Hill after difficulties refinancing debt.
Bright outlook
Despite the downturn, the future of the industry looks bright - particularly if the most recent boom/bust cycle remains in everyone's collective memory in the years to come. In what promises to be the event with the biggest implications for the industry this year - and perhaps this decade - the future of Rio will be decided within a few months.
The Drum's private prediction since the Chinalco deal was announced was that Rio would end up doing a rights issue instead and its finance director, Guy Elliott, would be appointed the next chief executive. Like the BHP bid, the debate could prove another monumental waste of everyone's time.
But if the Chinalco deal does proceed as planned, it is likely that within a decade or two the Chinese will have majority control of Rio, with huge implications for the global mining sector.
Signing off
This column's reminiscing and predictions for the future this week have a purpose. In light of a recent merger between the business sections of the Herald and The Age, this is the last edition of The Drum. It will be replaced by Barry FitzGerald's Garimpeiro column from next Monday.
This columnist will now switch from covering mines to wines, as the new retail and beverages reporter for both newspapers. It would be a very, very long list if The Drum tried to thank each individual contact in the mining industry for the help and friendship demonstrated over the past four years.
But as a final note, Ian Levy and Brian Rear deserve a special mention. Every new mining reporter needs a mentor within the industry, and both of them did a wonderful job. They never asked for anything in return, but both are owed a great deal of gratitude. Thank you.
