SYDNEY — THE view from the Australian mineshafts is not pretty. World mineral prices are clunking along at low levels. In the past year lead has plunged 35 percent, zinc 40 percent, and silver 28 percent. Copper is down 7.5 percent and gold is off nearly 5 percent. Even coal is down - 2.5 percent.
New low-cost mines seem to be opening up every day on other continents. A new tin mine in Brazil is putting a profit squeeze on a mine in Tasmania. The giant new Escondido mine in Chile produces copper at low prices - forcing miners in Mt. Isa in Queensland to tighten their belts.
With interest rates relatively high, new investment funds are hard to find. And the high interest rates are helping prop up the Australian dollar. A strong A-dollar makes it more difficult for Aussie exports to compete.
"The downturn in Australia is relatively severe in relation to the international economy," says Peter Crowley, economist for the Australian Mining Industry Council, a trade and lobbying group in Canberra.
For both Australia and the mining industry this is bad news. Mining is Australia's largest export earner, representing 48 percent of merchandise exports last year. The downturn in minerals prices is one of the reasons why Australia's balance-of-payments deficit has blown up to $15 billion (Australian; US$11.7 billion).
The view is not totally bleak. Iron ore prices are holding reasonably well, Mr. Crowley says. Most of Australia's iron ore is shipped to Japan. "The world iron ore market will remain tight," predicts the Australian Bureau of Agriculture and Resource Economics in Canberra.
Gold producers likewise are still making money. According to Gold Fields Mineral Services Inc., the average cash cost of mining an ounce of gold in Australia is $247 per troy ounce. This leaves producers a profit of $110 per troy ounce before interest. Until this year, profits were tax-free.
This picture attracted a lot of prospectors. In 1990, there were seven significant gold discoveries in Australia, which became the third largest producer of gold in the noncommunist world. Gold Fields is predicting 21 new mines will open this year, but only nine in 1992. "All the easy discoveries have been made," says John Roth, a mining consultant based in Sydney.
The downturn in base metals, such as lead, zinc, and tin, is absorbing profits. M.I.M. Holdings Limited, which owns the huge Mt. Isa mine in Queensland, reported a 44 percent drop in its six month-earnings.
The scarce profits are prompting the miners to tighten their belts. M.I.M., for example, recently laid off 150 miners at its Collinsville coal mine. Collin Myers, an M.I.M. spokesman in Brisbane, says workers and management have agreed to reduce costs at Mt. Isa by A$100 million over the next several years.
Last month, Renison Goldfields Consolidated Limited said it would close its Tasmanian tin mine unless it received concessions from its unions. Initially the unions voted against the management proposals. After the company closed the mine, the unions agreed to the lay-off of 100 employees and work-rule changes.
The cutbacks were needed, says Campbell Anderson, Renison's chief executive, because of the lower cost tin mined in Brazil. "In the case of Brazil it has very high-grade reserves," Mr. Anderson says. "They were producing the additional supply at more economical prices than Australia."
In the past the unions might have fought the changes. Today the union leaders concede some changes are necessary. "In some parts of the mining industry some of the work practices set up 20 years ago and tolerated by management in good times, are probably unreasonable," says Bill Bodkin, a Sydney-based official of the Australian Workers' Union, which represents many of the miners.
For example, if a worker got "called out" from home after the shift ended, the worker could automatically get four hours pay even if the job only took 30 minutes. Mr. Bodkin says it was not unusual for workers to get called out two or three times in a night if there was a maintenance problem. "Management accepted that was the price they had to pay. They didn't worry much about competition from Brazil," he says.
Changes are also taking place in manning levels as companies automate more of the mining operation. In the past, the union would insist on a minimum number of men to run a machine. "That seems to have gone by the way," Bodkin says.
And, for the time being strikes for higher pay are scarce as well. "Wages have not kept up with cost-of-living increases," Bodkin says. But he concedes it is unlikely the workers will strike over the pay issue.