Page 26 - gmj145-Oct-Dec-mag-web_Neat

Global Leader in Responsible Refining Technology abcrefinery.com

NEWGENGOLD PREVIEW

Reopening must be done right: BDO

by Fraser Palamara

ommodity prices have upheld Australia’s exploration sector
Cthroughout the pandemic, fuelling high expenditure and
record fundraisings but landing the reopening somersault may
be the most important twist to the Olympic-style act.
Exploration spending from ASX listed companies during the
June quarter achieved a seven-year high after increasing 34%
to reach $666 million, an upgrade over a two-year average,
while the latest flurry of IPOs banked a record $2.54 billion in
funds raised.
An industry report from BDO said oil and gas, gold, rare earths,
nickel, copper, graphite, sulphate of potash and uranium were
the standout commodities in the exploration and IPO bull run.
The sector’s success is expected to continue over the short
term, but commodity prices can’t carry the weight forever in the
face of restricted interstate travel, bottlenecked mineral assays Sherif Andrawes
and skills shortages.
BDO global head of natural resources Sherif Andrawes said
how and when Australia approaches its reopening act will pressure point for so many in the sector. If the sector can take a
dictate the sector’s ongoing performance. lead on it with the Government’s permission for collaboration, I
think that would be a very healthy outcome.
“I think the biggest issue is the mobility of people,” Andrawes
told GMJ. “Although changing that is out of the sector’s hands, “People are important. If the sector can show some leadership
we are seeing a fair bit of lobbying for State and Federal in accelerating how we deal with it, then that’s something that
Government to improve that. should be supported really.”
“It’s tough to see movement really being addressed this year, Andrawes also said injecting cash into economies has been a
hopefully early next year that will improve…a lot of companies good move by governments over the last two years.
in our survey have projects overseas, including Africa, South “I think global government stimulus has been a big part of [the
America and Asia, so they would like to travel more.” strong market],” he said. “Stimulus creates a demand for building
While many have held their breath for 2021 to triumph over the infrastructure and a lot of commodities are required for that. It
previous year’s lockdowns and stoppages, the Delta variant of also puts more money into people’s pockets who spend it on
COVID-19 threw a spanner in the works of those hoping for a goods, rather than services…whether it be iPhones, computers,
fully reopened world by now. or furniture – you need the materials to build them. All those
Most industries have abstained from implementing mandatory factors, along with low interest rates, have helped commodity
prices to go up.”
vaccinations that would potentially fast-track the reopening of
hard borders, but state governments such as Western Australia Of the resources IPOs in the June quarter, a record 60 raised a
have begun to turn up the heat. WA healthcare workers are minimum of $10 million, led by gold, oil and gas, and sulphate of
mandated to have had at least their first dose by December and potash, while spending in exploration shows “no sign of slowing
must be fully vaccinated against COVID-19 by January. down”.
Key industry leaders and executives have not yet mandated Andrawes expects gold and other commodities to stay healthy,
vaccinations upon staff, but the likes of Fortescue Metals Group unlike iron ore futures which dropped as low as $US95.55 in
Ltd’s Andrew Forrest have been outspoken in their desire for September amid financial uncertainty surrounding Chinese real
a more rapid vaccination uptake. The WA Government has estate giant Evergrande Group.
explored possibilities to mandate vaccines for exploration and “At the moment, it’s hard to see [the gold price] changing too
resources workers but is yet to make a move beyond opening much,” he said. “It’s not like the iron ore price, which has lost
up vaccine clinics for FIFO workers. its place a bit…that comes down on the likes of BHP [Ltd],
Andrawes said he wouldn’t be surprised if the industry eventually Fortescue and Hancock-type groups.”
collaborated with Australian governments for a vaccine blitz. “I can’t see [commodity prices] slowing down in the short term. I
“I can see that happening,” he said. “It’s been such a big promise the rest of this financial year looks pretty strong.”

Page 26
Page 26