“During the downturn, significantly less drill rigs were in operation, and a substantial amount of skill left the industry. It has been a great challenge trying to attract that talent back to the industry; people have been burnt by the ups and downs of the mining cycle.”
The Australian Drilling Industry Association (ADIA) is a not-for-profit organization representing approximately 800 members. Could you outline its mission?
ADIA’s mission is to be the voice of the drilling industry in Australia. The members within the drilling industry that we represent include the mineral exploration sector, water bore drillers, the mining sector, environmental drillers and the civil infrastructure sector. Western Australia (WA) hosts approximately 50% of our members, based on the fact that half of the mineral exploration work in Australia is done in WA. Queensland, the second largest mining jurisdiction in the country, hosts approximately 25% of our members and the remaining percentage is spread out amongst the other states in the country. Additionally, ADIA also represents a small number of Australian companies working abroad in South East Asia and Africa.
With respect to advocacy, what approach is the association taking at both a state and federal level?
Over the last few years, ADIA has had a focus around the skills shortage in Australia. As drilling and exploration activities started to increase following the downturn, the lack of qualified skill to meet industry demand was clearly discernable. During the downturn, significantly less drill rigs were in operation, and a substantial amount of skill left the industry. It has been a great challenge trying to attract that talent back to the industry; people have been burnt by the ups and downs of the mining cycle. Moreover, the salary levels have to increase, and this can only happen when drilling rates increase.
In the past, Australian drilling companies were allowed to employ international talent, but this option was discontinued by the federal government a few years ago. ADIA has been campaigning to get this decision overturned so that the industry has the means to fulfill the short-term needs and overcome the challenges presented by this enormous skills shortage.
The association also campaigned quite strongly against the proposed gold tax the WA government wanted to implement. If the proposed tax was implemented, it would have limited the amount of funds available for exploration, which would result in a decrease in the number of drill rigs in operation.
How has ADIA seen the increase in mineral prices affect the organization’s members?
The upturn has certainly been welcomed. We have seen rig utilization increase by approximately 35% from 2016 and the overall utilization is currently at about 75%.
Given the federal elections in May 2019, what are your expectations for the industry this year and do you have a final message to our international readership?
Although 2019 is election year, we do not foresee it having a huge impact on our members. Both major parties realize that they need the mining industry for the economic benefit of the country, and there are some very good incentive schemes in place to encourage exploration. World events do, however, affect the industry, and over the last few months we have seen a leveling off in the amount of work. Another challenge is that junior exploration companies are still struggling to attain finance. Moving forward, we hope to see more funding return to the industry, and we are very excited to see where the industry goes next.
What ADIA has heard from our members is that drilling rates (what contractors are paid for their work) are still well below where they should be. There is acknowledgement that rates have gone up a bit, but there is still significant room for improvement. Members would like to see this rate to increase as it gives them more security. A significant amount of the money also gets put back into new rigs, equipment and training, which benefits the entire industry. It is clear that the drilling industry plays a significant role; without drilling, mining cannot continue.