During the global financial crisis, Australia’s economy performed well, emerging somewhat unscathed and one of the standout performers throughout that period. There was much debate at the time on what carried Australia through, including the question – did the resources boom stave off a recession?
Aurecon has seen first-hand how Australia’s resources and mining sectors have surfed the waves of economic market fluctuations, crises and export pressures.
Here we are in a more complex crisis, which some could argue is a much wider disruption and at a far greater intensity and severity. This complexity is brought about through uncertainty in supply, demand and financial stability. Can the resources sector, once again, stay open for business to allow Australia to recover and reinvent itself through and beyond the COVID-19 disruption?
The curtailment of manufacturing activity in China will ripple through Australia’s economy. Global stock markets have already dropped, commodity prices are unsettled, and mine production is being disrupted in developing countries.
There are critical factors that will be faced by Australia’s mining and resources sectors in the next 6 to 12 months:
There was unanimous support for a co-ordinated national approach to ensuring continued operation of the resources sector as an essential industry by the nation’s resources ministers in late March 2020. As the resources sector comes to terms with the industry protocols around protecting workers and jobs, there’s important factors to consider in the short and medium-term.
In the short term, while risks are increasing day-by-day, focus should be centred on:
In the medium term, while managing risks back to acceptable levels, focus should shift to:
In a crisis, it’s easy to get caught up in the ‘here and now’ – addressing the minute-by-minute demands that arise. However, this is the time where you, as a leader, need to trust the teams you have built to run with the ball. Empowering operational leaders to manage the ‘now’ problems will enable business leaders to keep an eye on the medium and long-term business objectives. This will be of benefit of everyone; maintaining jobs, getting capital works projects off the ground in the future, managing risk and sustaining product delivery.
The greatest impact that business leaders can have while continuing to manage risk through a crisis is to keep looking ahead.
The phrase ‘thread the needle’ is likely to be the resources sector’s call to arms as countries battle COVID-19. The challenge for business leaders is to continually prioritise the health and safety of their employees and host communities’ while addressing operational pressures to keep materials flowing into global supply chains under rapidly changing conditions.
If we can ‘thread the needle’ in Australia by keeping the resources sector operating, in combination with keeping our health system intact, we will likely come out of the COVID-19 disruption in a different way to other countries. This will only be the case if we harness our collective leadership capacity and chart our course accordingly.
To date, Australia has approached the COVID-19 situation differently to other resources-producing countries. The industry has the strength and capability to sustain the economy in a time of national crisis while making a strong contribution to regional communities. Mining companies are continuing operations, albeit in line with social distancing restrictions, as many other global mining economies and operations head into lockdown.
As painful as it might be, this is also the time where learnings need to be captured and analysed, to benchmark the resilience of any country or company to be able to respond to other rapid changes in years to come.
Federal resources minister Keith Pitt has shared that the resources sector has already shown that the resources sector has great resilience to be in a position of strength as we headed into this current crisis, and it will be key to Australia’s economic recovery once the COVID-19 pandemic has passed.
One of the key differences from pre-global financial crisis, is that major resources companies have accepted the global challenge of climate change, investing in reducing emissions while providing sustainable access to affordable energy.
The resources sector is well placed to supercharge a post-crisis economy as we’ll need resources, and the world will need resources, for the recovery and for the future. If policy makers and industry leaders can ‘thread the needle’ between prioritising health risks while maintaining the operation of Australia’s export supply chains for raw material, there will be consistency in how the mining and resources sectors can lead Australia’s recovery beyond COVID-19.
At a time like this, business leaders also need consistency, as well as being persistent and insistent, listening to their teams to find connections between what we hear and where we need to go, so that when we get there, we’ve got a strong foundation for the future. When the dust settles on the tireless efforts of our medical professionals around the globe we’ve got sectors that can enable the Australian economy to rebound.
This thinking paper is part of a collection of insights and expertise from Aurecon as it explores leading through and beyond the COVID-19 disruption. Explore our insights here.
Aurecon’s Resources Industry Director, Tony Richardson is focused on helping our clients and partners navigate the disruptive world that we live in today. Having a long history of working in the resources sector, in operational, project development and delivery and advisory roles, Tony has a passion to see the industry play its part in shaping future generations.
The resources sector has been a powerhouse in a global economy by fuelling growth through the industrial revolution. As organisations navigate their pathways into the future, the role of leaders within our sector will evolve and the role that organisations play in shaping the landscape for global society will be profound. Our opportunity is to embrace the disruptions that we encounter and harness the space between them and our future environment.
Tony has a passion for helping clients to find and define wicked problems and create the environment and culture for these problems to be solved.
This article was originally published by Tony Richarson on LinkedIn titled, 'COVID-19: Why the resources sector will be critical to ‘threading the needle’ for Australia'.