An economic survey of companies in the Australian mining technology services and equipment sector, 2006-07 to 2008-09
Leanna Tedesco and Chloe Haseltine
ABARE–BRS research report 10.07
July 2010
© Commonwealth of Australia 2010
This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire document may not be reproduced by any process without the written permission of the Executive Director, ABARE–BRS.
The Australian Government acting through Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, the Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law.
ISSN 1447-8358
ISBN 978-1-921448-73-7
Tedesco, L and Haseltine, C 2010, An economic survey of companies in the Australian mining technology services and equipment sector, 2006-07 to 2008-09, ABARE–BRS research report 10.07, Canberra, July.
Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences
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Acknowledgments
This report uses data collected in an ABARE (now ABARE–BRS) survey of Australian mining technology services and equipment (MTSE) companies. The survey was voluntary and depended on the cooperation of companies to provide confidential information on their businesses. The survey would not have been possible without their full cooperation and assistance. The authors would also like to thank the MTSE and minerals companies that participated in confidential discussions with ABARE–BRS, providing more detailed information on the sector and supplier/customer relationship.
Throughout the project, members of the funding bodies provided significant input and feedback on various aspects of the project, which the authors greatly appreciate. In particular, the authors would like to thank Ben Jarvis, Chris Stamford, David Murtagh and Susan Yeomans (previously employed) from the Australian Government Department of Resources, Energy and Tourism for coordinating the project on behalf of the project proponents. Further, the authors appreciate the valuable contributions of several ABARE–BRS colleagues, including Eden O’Mara, Lindsay Hogan, Alan Copeland and Jane Melanie.
The project was funded by a range of government departments and industry organisations. The three main financial contributors (in decreasing order) were the Australian Government Department of Resources, Energy and Tourism (co-ordinating body); Queensland Department of Employment, Economic Development and Innovation; and Western Australian Department of State Development. Other organisations that made equivalent financial contributions were the Australian Government Department of Innovation, Industry, Science and Research; South Australian Department of Trade and Economic Development; Australian Trade Commission (Austrade); and Austmine. In-kind support was provided by the Commonwealth Scientific and Industrial Research Organisation (CSIRO).
1Foreword
Australia’s mining technology services and equipment (MTSE) sector is at the forefront of global innovation in the development of solutions for both the Australian and international mining and minerals processing industries. The application of this leading edge technology is primarily focused on making a mine work at the site and related mineral processing activities. This in turn benefits the minerals industry through improved mining practices, reduced costs and increased productivity.
Developing alongside the Australian minerals industry, the MTSE sector has been able to develop a range of technology goods and services that are suitable for Australia’s demanding conditions, which contribute to the sustainable development of Australia’s mineral resources and the overall Australian economy.
Extending this Australian experience, MTSE companies have been able to apply this knowledge to other challenging mining conditions around the world. Over the years, Australian MTSE goods and services have found their way into mining operations in various regions internationally, and as a result the sector has seen export earnings increase significantly.
This study, the third in its series, used a survey based approach to gather up-to-date quantifiable information on the sector’s relative contribution to innovation, the economy and export performance. In addition, ABARE (now ABARE–BRS) consulted with a selection of MTSE companies and minerals industry customers in Australia to gather more specific information on the supplier/customer relationship. Together, this information will be used by Australian and state governments and industry to guide future policy and decision-making, and to raise the profile of the sector in the general community.
This study was undertaken by ABARE–BRS for the Australian Government Department of Resources, Energy and Tourism (coordinating body); Australian Government Department of Innovation, Industry, Science and Research; Queensland Department of Employment, Economic Development and Innovation; Western Australian Department of State Development; South Australian Department of Trade and Economic Development; Australian Trade Commission (Austrade); Austmine; and the Commonwealth Scientific and Industrial Research Organisation (CSIRO).
Phillip Glyde
Executive Director
November 2010
Contents
Acknowledgments......
Foreword
Summary......
Key results......
Comparison of ABARE–BRS estimates......
1. Introduction......
Mining inputs and the MTSE sector......
Related industry statistics......
Project objective......
2. Methodology......
Scope of the MTSE sector......
Questionnaire......
Requirements of a government survey......
Survey participants......
Conducting the survey......
Reporting the results......
Reliability of sector estimates......
Data quality......
3. Australian profile: survey results......
The Australian industry......
International experience......
Skilled labour force......
Innovation activities
Operating a technology business......
4. MTSE sector estimates......
Australian profile......
State profiles
Industry category profiles......
Comparison of ABARE–BRS estimates......
5. Supplier and customer perspectives......
Australian MTSE company perspective......
Australian minerals industry perspective......
Appendix A: Strengths and weaknesses of Australian MTSE companies......
Appendix B: Strengths and weaknesses of overseas MTSE companies......
Appendix C: ‘Other’ responses, by question......
Appendix D: ABARE–BRS questionnaire for Australia’s MTSE sector......
The Australian industry......
International experience......
Skilled labour force......
Innovation activities......
Operating a technology business......
Other issues......
Appendix E: Country listing by region......
References......
List of Tables
A. Comparison of MTSE sector estimates, Australia......
1. Survey statistics for Australia......
2. Survey statistics by state/territory......
3. Survey results: time taken to complete questionnaire......
4 Survey results: share of industry categories (2008-09)
5 Survey results: share of state/territory office location (2008-09)
6. Survey results: share of mineral resources (2008-09)
7. Survey results: gross sales revenue of Australian MTSE production a (2006-07 to 2008-09)
8. Survey results: number of months of the year the business was operational (2006-07 to 2008-09)
9. Survey results: gross export sales revenue of Australian MTSE production (2006-07 to 2008-09)
10. Survey results: share of export countries and regions (2008-09)
11. Survey results: number of months of the year the export business was operational a (2006-07 to 2008-09)
12. Survey results: share of state/territory head office location a (2008-09)
13. Survey results: share of overseas head and other office locations a (2008-09)
14. Survey results: size of labour force 2008-09
15. Survey results: share of highest qualifications completed (2008-09)
16. Survey results: importance of occupations required to deal with current job shortages (2008-09)
17. Survey results: research and development expenditure (2008-09)
18. Survey results: share of collaborative research and development projects with Australian organisations a (2008-09)
19. Survey results: share of collaborative research and development projects with overseas organisations a (2008-09)
20. Survey results: patents owned by MTSE companies (at 30 June 2009)
21. Survey results: importance of factors that affect competitive performance in Australian market (2008-09)
22. Survey results: importance of factors that affect competitive performance in overseas markets (2008-09)
23. Survey results: importance of issues that affect integration of products/services into Australian supply chains (2008-09)
24. Survey results: importance of issues that affect integration of products/services into overseas supply chains (2008-09)
25. Survey results: importance of challenges that affect commercialisation and integration of innovation 2008-09
26. Australian profile: estimates for global sales revenue as share of GDP a (2006-07 to 2008-09)
27. Australian profile: estimates for sales revenue of Australian MTSE production (2006-07 to 2008-09)
28. Australian profile: estimates for global sales revenue by state/territory office location and by mineral resource (2008-09)
29. Australian profile: estimates for export sales revenue by export region 2008-09
30. Australian profile: estimate for size of labour force (full-time equivalent basis) 2008-09
31. Australian profile: estimates for research and development expenditure 2008-09
32. State profiles: estimates for Australian sales revenue a (2006-07 to 2008-09)
33. State profiles: estimates for export sales revenue a (2006-07 to 2008-09)
34. State profiles: estimates for global sales revenue a b (2006-07 to 2008-09)
35. State profiles: estimates for global sales revenue as share of GSP a (2006-07 to 2008-09)
36. State profiles: estimates for global sales revenue by industry category a (2008-09)
37. State profiles: estimates for global sales revenue by mineral resource a (2008-09)
38. State profiles: estimates for export sales revenue by export region a (2008-09)
39. State profiles: estimates for size of labour force (full-time equivalent basis) a (2008-09)
40. State profiles: estimates for research and development expenditure a (2008-09)
41. Industry category profiles: estimates for Australian sales revenue (2006-07 to 2008-09)
42. Industry category profiles: estimates for export sales revenue (2006-07 to 2008-09)
43. Industry category profiles: estimates for global sales revenue a (2006-07 to 2008-09)
44. Industry category profiles: estimates for size of labour force (full-time equivalent basis) 2008-09
45. Industry category profiles: estimates for research and development expenditure (2008-09)
46. Comparison of MTSE sector estimates, Australia......
47. Survey results: strengths of Australian MTSE companies a......
48. Survey results: weaknesses of Australian MTSE companies a......
49. Survey results: strengths of overseas MTSE companies a......
50. Survey results: weaknesses of overseas MTSE companies a......
List of Figures
a. Mining inputs and the MTSE sector......
b. Survey results: share of head office location (2008-09)......
c. Survey results: share of companies with overseas offices 2008-09
d. Survey results: share of labour force by Australian/overseas office location (2008-09)
e. Survey results: share of companies undertaking collaborative research and development (2008-09)
f. Australian profile: estimates of share of export and Australian revenue relative to global sales revenue (2006-07 to 2008-09)
g. Australian profile: estimates of share of global sales revenue by state/territory office location (2008-09)
h. Australian profile: estimates of share of global sales revenue by mineral resource (2008-09)
i. Australian profile: estimates of share of export revenue relative to Australian revenue (2006-07 to 2008-09)
j. Australian profile: estimates of share of export revenue by export region (2008-09)...
k. Australian profile: estimates of share of research and development expenditure by type of activities (2008-09)
l. State profiles: estimates of share of Australian sales revenue a (2006-07 to 2008-09).
m. State profiles: estimates of share of export sales revenue a (2006-07 to 2008-09)...
n. State profiles: estimates of share of global sales revenue a (2006-07 to 2008-09)....
o. State profiles: estimates of share of global sales revenue by industry category a (2008-09)
p. State profiles: estimates of share of size of labour force (full-time equivalent basis) a 2008-09
q. State profiles: estimates of share of research and development expenditure a (2008-09)
r. State profiles: estimates of share of research and development expenditure by type of activities a (2008-09)
s. Industry category profiles: estimates of share of Australian sales revenue (2006-07 to 2008-09)
t. Industry category profiles: estimates of share of export sales revenue (2006-07 to 2008-09)
u. Industry category profiles: estimates of share of global sales revenue (2006-07 to 2008-09)
v. Industry category profiles: estimates of share of size of labour force (full-time equivalent basis) 2008-09
w. Industry category profiles: estimates of share of research and development expenditure (2008-09)
x. Industry category profiles: estimates of share of research and development expenditure by type of activities (2008-09)
An economic survey of companies in the Australian mining technology services and equipment sector, 2006-07 to 2008-09Summary
Over the past decade, the Australian mining technology services and equipment (MTSE) sector has grown significantly in both Australian and export markets. The sector has increased in size and depth of knowledge to maintain a dominant presence in the global market for the supply and development of technology goods and services for the minerals industry. As the technology progresses, the applications also extend. Accordingly, several companies are now able to supply industries beyond mining, which in turn yields greater revenue streams and breadth of experience.
In this study, the MTSE sector is defined in general terms to comprise establishments that supply goods and services that embody specialist technology, innovation, intellectual property or knowledge specific to the minerals industry. This technology is defined to include the introduction or implementation of a new or significantly improved good, service or operational process.
The technologies that belong to the MTSE sector are specialised products/services or processes that are sold to the mining industry. They can either remain in their original form or can be integrated into existing mining services, pieces of equipment or processes. For some companies in the sector, mainly small to medium sized enterprises, these technologies represent the majority of their business. For the remaining companies, these technologies represent only a proportion of their business.
The minerals industry includes activities that are focused on making a mine work at the site and related mineral processing operations, including exploration, mine development, extraction, processing (on or off-site), maintenance, closure and remediation. The minerals industry covers both non-energy and energy minerals. Non-energy minerals include bauxite/alumina/ aluminium, base metals (copper, lead and zinc), gold, iron ore, mineral sands, nickel, industrial minerals (excluding coal), rare earths and other metals. Energy minerals include coal, uranium and thorium, but specifically exclude oil and conventional gas, geothermal, underground coal gasification and coal seam gas activities. These are covered in a forthcoming study.
The MTSE sector is mainly characterised by small to medium sized companies employing 50 people or less.
In this report, we only consider technologies that are specific to the MTSE sector and not activities beyond these technologies.
Key results
- In 2008-09, global sales revenue for the Australian MTSE sector was estimated at $8.7 billion, or 0.7 per cent of gross domestic product. This revenue can be divided into Australian and export sales revenue. For the same financial year, Australian sales revenue was estimated at $6.2 billion, while export sales revenue was $2.5 billion.
- The total number of employees in the Australian MTSE sector in 2008-09 was estimated at 31 300 people (on a full-time equivalent basis).
- Total research and development expenditure in the Australian MTSE sector in 2008-09 was estimated at $985 million.
box 1 Snapshot of the Australian MTSE sector
The main characteristics of the MTSE sector for the 2008-09 financial year were:
- The sector was characterised by small to medium-sized companies employing 50 people or less.
- The Australian states where MTSE companies were most active included Western Australia, Queensland and New South Wales.
- Queensland and Western Australia employed the largest number of people. Companies manufacturing equipment and machinery were the largest employers of the sector.
- All industry categories made a significant contribution to the sector, but equipment and machinery manufacturers earned the largest share of revenue.
- The coal industry was a major customer for the sector.
- Main export destinations included Oceania, Africa, North America and Europe. On an individual country basis, Indonesia was significant.
- Companies that had a presence overseas owned offices mainly in North America, and Latin America and the Caribbean. On an individual country basis, Chile was significant.
- Research and development was largely centred on in-house activities, with companies located in New South Wales and Queensland spending the largest amount. Research and development activities were also significant for all industry categories, except contract services.
- The sector was most in need of engineers (including metallurgists), and tradespersons and related workers to fill vacancies.
- In 2008-09, global sales revenue as a share of gross state product ranged from a low of 0.4 per cent in Victoria to a high of 1.1 per cent in both Queensland and Western Australia. In New South Wales and South Australia, this share corresponded to 0.6 and 0.7 per cent of gross state product, respectively.
Australia is a major exporter of mineral resources to the world market. In 2008-09, Australia’s mineral resources exports (excluding petroleum) were valued at $139 billion, increasing from $91 billion in 2006-07. This is equivalent to an average annual growth rate of 24 per cent (ABARE 2010). Over this same time period, the MTSE sector also experienced significant growth, with global sales revenue and export sales revenue growing (on average) at 20 and 25 per cent, respectively, per year (table A).
Between 2004 and 2008, the global minerals industry experienced boom times and, as a result, companies in the Australian MTSE sector also experienced substantial growth. However, in the second half of 2008 when the global financial crisis began, even though sales revenue for the MTSE sector dropped, the sector was reasonably insulated from a severe downturn and still managed to maintain a relatively high level of growth.
However, MTSE export activity was still vulnerable to fluctuations in the exchange rate. In 2006-07, when the Australian dollar against the US dollar (US$/A$) was 78 cents (ABARE 2010), there was significant growth in exports in the sector. However, one year later in 2007-08, when the Australian dollar rose to US 90 cents, export growth was more subdued. In 2008-09, a proportion of MTSE companies also lost some export contracts, most likely as a result of the global financial crisis.