Let the Games begin.
This scribe still has fond memories of attending the Diggers & Dealers Mining Forum in Kalgoorlie some time last decade and enjoying the fact the morning sessions of the Olympics, hosted in a far-flung place, provided night-time entertainment on the big screens in the watering holes up and down Hannan Street.
The Commonwealth Games, beamed in from Birmingham this week, won’t be quite as exciting but, after a full day of Diggers presentations and networking in the southern hemisphere’s largest marquee, they will do.
- Don’t miss – Core Lithium (ASX: CXO), Australia’s next lithium producer, presents today at 3.30pm.
- Drop in – Battery metals explorer St George Mining at Booth 108
- Sugar hit – Will The Perth Mint (Booth 78) run out of gold chocolate bars
So what should we expect from three days of Diggers, apart from record crowds – 2620 delegates, apparently – and the likelihood of rain, which is rare for the Goldfields capital this time of year?
Here are three themes worth considering.
Timing
What a difference a few months have made.
When presentation slots were dished out and exhibition booths allotted back around May, the world – from a mining perspective – seemed to be in rude health. COVID appeared somewhat under control, as did costs, and we were yet to see the inflation numbers that frightened Reserve Banks from Sydney to Frankfurt to New York.
All of a sudden interest rates are being ratcheted up at furious pace, equity prices have dropped, commodity prices (ex-lithium) have fallen sharply and even iron ore is back down to around $US100 a tonne, which doesn’t seem as high and profitable as it would have been 15 years ago.
Today, cost inflation and cost control are the top topics for investors, as was highlighted by the just-completed round of June quarterly reports.
It was all about scrutiny of free cash flow and companies’ plans to reinvest money made. Capital budgets were questioned and volume-over-value strategies interrogated.
The focus has shifted from capturing the prize to protecting margins.
The sudden escalation in costs – probably brewing for a while but masked by a perception of strong macro conditions – is causing major grief for marginal producers and those in the middle of a building program.
The rhetoric has changed from “this is going to be the best development ever” and “market conditions are conducive” to “we are on schedule and within budget” – for now.
The pain has been felt across the board.
Keep count of how many times presenters over the coming three days mention “we are lucky we locked in contracts, we would be paying 20 to 50 per cent more today”.
It will be a change of tone from the proposed “investing to capture strong growth opportunities” rhetoric we were rehearsing back in May.
Reality
CSR has become ESG has become Sustainability.
It is expected of all but that will necessarily bring with it a decent dose of greenwashing as companies talk bigger talk than they can deliver.
At Diggers, the biggest sustainability focus of attendee companies is that they deliver products for the clean energy world – led by lithium, nickel, copper and rare earths – and are using reducing volumes of fossil fuels to do so.
Mining is not sustainable – once it’s mined, it’s gone.
But mining practices must have a strong sustainability focus that extends way beyond just environmental best practice.
Has the time come when reporting on sustainability ambitions is no longer a stand-alone presentation slide but woven throughout the presentation in terms of actions and tone?
Change
There is the usual list of companies that have pulled out from their presenting slots because of a change in corporate circumstances.
Gina Rinehart’s Roy Hill iron ore miner is a no-show after many years and many Diggers awards.
Western Areas, taken over by IGO, is obviously no longer around to present. Dacian Gold, in the cross hairs of takeover suitor Genesis Minerals, was a late withdrawal, as was the near-collapsed gold hopeful Firefinch.
More interestingly are the number of sudden or surprise CEO changes that have triggered a shift in nominated presenter.
Australian Strategic Materials, Core Lithium, Westgold Resources and Pilbara Minerals have all announced leadership changes over the past few months, with varying degrees of surprise, and will be presenting new faces this week.
The incumbents at Mincor Resources and Fortescue Metals Group, meanwhile, have announced their departures but are back for one last Diggers hurrah.
