MINING MONEY HELPS COPE WITH VIRUS
These are challenging times, as the world comes to grips with the effects of COVID-19. Every resource sector has been affected, but most companies are making efforts to consolidate and prepare themselves for the recovery phase that will occur once the catastrophe has passed.
Australian Mining Review interviewed the company’s managing director, Warwick Lorenz, about how he views the situation.
Q: What’s the connection between mining and this horrific pandemic?
A: I haven’t heard of anybody blaming the mining industry for the coronavirus. No doubt sooner or later, somebody from a new age political party will find a way to make a connection, especially if it has something to do with coal. However, mining does have a very strong connection, not with the disease itself, but rather with the solution.
Q: How can the mining industry solve the corona problem?
A: That’s pretty simple. Most of our population don’t understand the true significance of the Australian mining industry. Of Australia’s 25m population, it’s hard for most of them to comprehend that the mining industry, employing around 230,000 people, can contribute so significantly to the Australian economy.
Q: In what way is it significant?
A: The answer has to be found in the ABARE report that tells us just how important mining is. If you take mining, and resources including oil and gas, you see that 73pc of our product export comes from that industry. The value is $285 billion, so you can imagine the impact of it on our balance of trade.
When I am trying to explain this to somebody, I suggest to them that without the mining industry, the imported motor vehicle they’re driving would only be around 27pc of the size of the current vehicle. I do that to make a point. The reality is, we’d all be driving clunkers if not for mining!
Q: In what way does that reflect on the coronavirus? How can it beat the disease?
A: In the last weeks, we’ve seen the Morrison government do a brilliant job of taking prompt action to beat the pandemic.
Everything that has been done (apart from the Ruby Princess) is text book action, taken expeditiously to halt the disease in its tracks. It doesn’t just take will and communication, it takes money! That’s where the mining industry comes in.
Q: So you’re saying that’s where the government is getting the money from to try to kickstart the economy? Even when we’re having to self-isolate and in many cases, work from home?
A: Well, all of us who pay taxes are contributing to that but the support schemes the government implemented for people who are unavoidably losing their jobs, with money pumping into the economy to get people spending, even if it’s buying lattes, is all about getting money moving. Where the mining industry comes in is that huge impact on the Balance of Payments made by our exports of resource industry product.
Q: Are you suggesting that the mining industry tax and royalties are what is giving the government that ability?
A: No, not entirely of course. People who work for the mining industry obviously pay taxes, just like you and I do. The point is, when it comes to the Balance of Payments, it’s the mining industry that provides a positive result. In other words, paying for all those important motor vehicles, fridges, earthmoving and mining equipment; even agricultural tractors, combine harvesters and sprayers, as imports, are compensated for by the mining industry’s exports of raw materials.
Q: Surely everybody knows that?
A: No, it doesn’t work like that. About 65pc of our entire population lives in four cities. Their minds are on other things, and they blindly accept the bounty produced by farmers and miners that produce the export income that buys us the commodities mentioned earlier. Believe it or not, buying those imported commodities, and the marketing of some of those commodities, employs an awful lot of people and at the same time, they all pay tax too. It’s all part of the mighty wheel of the economy.
Q: So how does that impact on beating the virus?
A: It’s simple. Without money, we can’t beat COVID-19. Without the funding available, the Federal Government couldn’t do the things they’ve done in the last weeks. Sure, we’re going to get ourselves into debt. Absolutely, we will lose the chance of surplus for maybe one year or two years, maybe five years, maybe longer! But that doesn’t matter. What we’re talking about is keeping people alive. It is a great stroke of luck that we are an island continent. Keeping our borders safe is not as difficult as Asia, Europe or even the United States. No wonder they call Australia the “lucky country”!
Q: So what does Australian Pump Industries have to do with all of this?
A: Australian Pump is one of the very few Australian designers and manufacturers of machinery specifically targeting earthmoving, infrastructure, mining and gas projects. Our products are used widely throughout those industries and our customers appreciate the huge amount of Australian input in our equipment. Q: Are all the components made in Australia?
A: Of course not. Nobody makes diesel engines in Australia. Nobody even makes petrol engines in Australia anymore. The way I understand it, we don’t even make lawnmowers. No, we have to import our engines and we have to import some of the more sophisticated pump kits, but we design and match those products and build them with Australian componentry with Australian-sourced add-ons. That makes them more suitable to the most demanding applications than any other product in the world.
Q: How do you know? How do you compare other nations’ products?
A: That’s easy. We know our competitors very well, whether they’re made in Germany, Italy, United States, Japan or even South America. It is a global environment and it isn’t hard to be up to date with what everybody is doing, if they’re significant in the business. Our products are used in copper mines in South America, gas projects on the border of Somalia and Kenya, copper mines in Mongolia. Our export department is very proactive, particularly in the mining machinery business.
Q: How are Australian small and medium-sized enterprises able to achieve that kind of penetration?
A: Most of our best salesmen are Australian mining engineers who have experienced the product in Australia. They then wind up in mines all around the world selling their skills and expertise to the benefit of multinational companies that are experts in selecting the right people, and the right products. We owe a lot to the mining industry in Australia because that’s where we learnt to make machines that are different!
We do a lot of research directly with mines and we are always dialoguing with mine operators, whether it’s coal, copper, gold or other exotic material like lithium. It’s from that we get the inspiration to improve our product. We keep adding value and fortunately, as our volume grows, we’re able to compensate for increased costs.
Q: Why can’t the international players do that as well?
A: That’s a very good question. We’re aren’t quite sure about that because we think in today’s world, although, we can register the design, it’s very easy to emulate somebody who is being innovative. That way you don’t have to spend any money on R & D, you just copy. Normally however, the problem is more to do with the level of motivation needed to develop the copy.
Q: What do you mean by that?
A: Well, if the motivation is to make money, rather than actually solve the problem on a mine site, then you know the product will ultimately fail. It’s all about integrity. The integrity of the design, the integrity of the design concept and taking the trouble to understand exactly what the challenges are. Sometimes industries can go on doing things in a similar manner for decades without realising that there is a better way, a better product, a more efficient way of doing things. We have worked towards saving the mining industry a lot of money on maintenance costs over the years and will continue to do that by providing the right product.
Q: What is it you actually do that helps the mining industry to be efficient?
A: We just set out to make sure the products last longer and have an easy servicing capability. Then we can back up those design ideas with longer warranty than any of our competitors. For example, our unique Aussie Fire Chief in mine spec configuration, is built like a tank but light enough to be carried by two men, comes with a five year pump end warranty. We normally use Yanmar diesels to drive them and we do that because they also come with a two-year warranty.
Q: Do you get a lot of support from your vendors?
A: You bet we do. People at Yanmar and Kubota have been very supportive over the years. They work with our product development, carefully making sure that all the components we use are match-tested to ensure complete compatibility to engine capability and pump performance.
Q: Does that apply to pressure cleaners as well?
A: Yes, that’s absolutely true. Our range of heavy duty “Extreme” mine spec hydroblasters are extremely popular because we carefully matched them to Yanmar water-cooled diesel engines. We build them into a frame with either a big high flow high pressure pump (one specification is 4300 psi at 31 litres per minute), or the high pressure version. The biggest we go is 500 bar (7300 psi). We will have a 700 bar range out soon!
Q: What you see as the future of this country, once the coronavirus has been beaten?
A: It’s all about supporting our primary industries. A huge proportion of our population lives in four cities. Well, 85pc of them live within 40km of the coast. In other words, the inland is almost as empty as it was when Arthur Phillip sailed into Sydney Harbour 200 years ago. The reality is, we are on the way to being the most urbanised nation on earth.
That obviously has to change, especially with the world’s population heading for 8b; and within 50 years we will probably be well on the way to 10b. All those souls have to be fed, but even more importantly, given useful things to do! Mining and agriculture are the heartbeat of this country. Most people don’t know it. Agriculture could be as big as mining but there are obstacles. Q: What obstacles do you mean?
A: Well, the big one is water! Our water security in this country is poor to say the least. Former Prime Minister Tony Abbott planned to do something dramatic about building 100 dams, but unfortunately wasn’t around long enough to do it. That was costed at $30b, a fraction of what we’re spending on the corona remedy from the Federal Government. Surely it is possible to provide water security for farmers with a series of dams, channels and reconfiguring the landscape in order to provide water security for farmers.
Q: Is there a connection between farmers and miners?
A: I think there is. I think that farmers and miners really understand what makes this country tick. They are the heartbeat of the economy.
It’s the export of their products that provides us with the ability to import everything else we need. To be able to build Australia’s production of agricultural products for export, beyond the $60b per year now, is a joke without water security.
Q: Do you relate to farmers?
A: Here at Aussie Pumps, we certainly do. 90pc of our customer base is in regional Australia. We see towns dying because of lack of water security. We see and hear about more desolation being caused by the recent drought than there will be by COVID-19 in Australia.
Q: So, what’s the problem?
A: It seems to be political will and not enough people who are prepared to fight for the bush.
Q: Do you have any allies for this program to provide water security?
A: Try every farmer in the country! Try every regional local government body who had to truck in water during the drought. Try Twiggy Forest, Gina Rinehart, Alan Jones and loads more. Dare I mention Barnaby Joyce? He was forefront in the 100 Dams Project!
Q: So drought-proofing Australia is going to have some impact on the future of this country?
A: It certainly will. It will change demographics, taking pressure off the cities and provide water for not just farmers, but also miners.
The mining industry needs a huge amount of water to make it work. We hear stories all the time, like the problems Cadia were having over struggles to get sufficient water to operate efficient mining processes.
Q: If you had some way of changing the way people think about mining and agriculture, what would you do?
A: First of all, I would tell the population the truth. Without mining and agriculture, this country would be broke and all the welfare programs and emergency packages would be nonexistent.
Have you ever noticed that we have plenty of money to clean up after a flood but not enough to build dams to prevent it? Try Rockhampton and Townsville in the last couple of years and see how long it took the Queensland government to finally decide to build the Rookwood Weir! Even now, the speed at which that is happening is monumentally slow. Why let all that water go to waste?
Q: Do you only have this opinion because you’re a pump man?
A: I’ve been in the pump business now for over 40 years and yes, I think in terms of water. Anybody who has ever read Joan Didier’s essay, “Holy Water”, will know what I mean. When you’re in the business of making and developing pumps to solve people’s most basic and essential requirements, you have a profound respect for water. To quote Ion Idriess, that terrific Australian, writing about the inland he said, “Water is Life”.
Copies of this interview are readily available. Warwick Lorenz welcomes your comments. His platform is to support the mining industry’s efforts as without its 230,000 people, everyone would be in real trouble during this “age of corona”.