A recent rebound in commodity prices and company profits for miners has been somewhat of a bright spot in an otherwise wild month for markets.
However, while healthy appetite for copper and iron ore (as well as solid company performances) have helped lift the miners higher presently, there are future threats facing the industry.
Peter Bryant, managing director of business consultancy firm Clareo, told Business Breakfast that much more would need to be done to bring on the next era of profitability.
“By and large, there are still these headwinds that I think undermine the long-term financial performance of the industry,” Bryant said.
15 years of declining productivity, increasing social activity against mining activity as well as production and asset pressures will all help depress the future bottom line.
“I think these three things conspire to really potentially undermine the overall performance of the industry and really need to be addressed,” Bryant said.
Given these pressures, it’s paramount that mining sector invest in innovation Bryant said or they risk declining profits.
“The industry has had persistent underinvestment in innovation over the last 15 years, really by a factor of five or six behind manufacturing, oil and gas,” Bryant explained.
“As assets decline, this is just going to get harder and harder and really undermine returns on capital.”