Australian Mining Bubble Where is ICT?

Author: Mark Warry

The information technology (IT) consequences of the current, overall contraction in Australian mining are quite profound, but the extent of change depends on which sector you are part of: coal seam gas (CSG), coal, iron ore to name but a few.

Throughout the boom, investment in technology was inconsequential in comparison to the amounts being spent on expansion, infrastructure and people. No expense was spared to address technology gaps and problems, in order to maximise production. Substantial and complex technology initiatives such as covering pit-to-port, asset management, enterprise resource planning and business intelligence, were pursued by miners as they looked for competitive advantage in a lucrative, expanding market.

Apart from CSG, markets have markedly contracted from their recent heights. Coal and iron ore are in rapid decline, due to lower demand from China and unsustainable production costs.

Queensland Resources Council chief Michael Roche told a mining conference in Berlin recently that "In Australia, the coal industry is staring down the barrel of the toughest operating environment in more than a decade. Compared to 12 months ago, there are now 8000 fewer coal industry workers in Queensland alone. Those cutbacks are continuing. Thermal coal mines are particularly vulnerable."

For many miners, technology is now being seen in a new light. Rio Tinto has recently signed a global outsourcing deal with IBM to manage its back-office functions, including IT.  The contract is expected to run for up to ten years, and is worth an estimated $100m. Last year, the company’s former chief executive, Tom Albanese, announced that Rio would be cutting $5bn from its mining operations in response to weaker commodity prices.

This focus on technology rationalisation and cost reduction is prevalent throughout the industry, with many looking to optimise their return on IT investment. Business Aspect is currently working with clients in this sector to  assist, supplying our expertise, critical thinking and innovative solutions to help miners, and the industries that supply to miners, get more from their IT-enabled investments.