Over the past decade the Australian mining services sector has ridden the wave of the Millennium Mining Boom. Recent commodity price falls, and the resultant deferral of major mining projects, have prompted some commentators to call the end of the mining boom. Whilst such comments are premature, the mining boom is transitioning and this will have fundamental implications for Australian miners and the mining services sector.
The 'volume over cost' approach adopted by Australian miners over the past decade is no longer sustainable. As the mining industry shifts it focus to productivity and costs, the mining services sector must do the same.
In this publication we provide an overview of the mining services industry and the competitive environment it operates within. We also examine how, in a new era of cost focus, mining services players must respond by increasing productivity through an analysis of their key value drivers and baseline costs. For those contractors who do not adequately respond to the changing environment, their risk profile is likely to increase significantly, with a consequent rise in trading underperformance and, potentially, business failure.
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