Mining industry sentiment has finally started to improve, after several years of gloom amid a commodity price slump that saw iron ore prices plunge more than 70 percent from 2011 highs.
According to a yearly survey of 50 leading Australian mining executives by Newport Consulting, 43 percent were upbeat about industry prospects for the year ahead — more than double the 16 percent who gave the same answer a year ago. It was also the first time in three years that sentiment took an upturn.
Just over half, or 55 percent, however, indicated that they were not optimistic.
"It's about an expectation that commodity prices have bottomed. [They] don't know when they are going to move significantly but they expect the next move will be up," David Hand, Newport's managing director, told CNBC's "The Rundown."
That 27 percent of respondents indicated they would boost capital expenditure was a sign of early upward momentum, he added.
"All the multi-billion dollar mining investment projects that were mothballed two, three, four years ago on the back of falling commodity prices...(are not) going to start again straight away but they are seeing signs of real optimism," Hand said.
While the survey found optimism across the board, thermal coal still faced headwinds, he added. Hand did not elaborate on the problems faced by the thermal coal industry but known issues included unfavorable regulatory environments as governments shifted toward clean energy such as natural gas.
Survey respondents also picked out the main challenges still faced by miners:
- 28 percent said commodities pricing and the global economic climate was a/the major challenge
- 25 percent cited profitability and cash flow as a/the biggest issue
- 21 percent were most concerned about productivity
About a quarter of mining industry leaders interviewed for the survey also said the Australian government needed to urgently address red tape, particularly in the project approval process, as politicians continued to weigh the environmental impact of mining, just as miners considered investing again.
"The miners are saying...we would like the government to make it a bit easier for us and not continue to put barriers in our way," Hand said.