BHP, Rio Fortescue CEOs look at 2024 with cautious optimism, although challenges remain

The big miners are optimistic demand created by the energy transition will improve their prospects but agree government industrial relations policy is a thorn in their sides.

Australia’s largest miners are cautiously optimistic about the year ahead, believing Australia is in a prime position to take advantage of global demand for resources.

However, the companies’ CEOs are aware there are challenges around the corner.

Mike Henry, chief of the world’s largest miner, BHP, said Australia was in a good position to take advantage of the “megatrends” that were reshaping the global economy – decarbonisation, electrification and population growth.

“The energy transition and population growth will drive huge demand for metals and minerals: copper and nickel for electric vehicles, wind turbines, solar panels, batteries and wiring, and steel to build this new infrastructure,” he told The Australian’s 2024 CEO Survey.

“Australia has significant critical mineral resources, but many other nations around the globe are equally – or even better – endowed and are moving with pace to capture this same opportunity. Australia must be ready and able to compete.”

BHP chief executive Mike Henry.

However, Mr Henry said the Australian economy faced significant underlying structural challenges such as the cost-of-living crisis, the tight housing market, an ageing population and inflation.

“Productivity growth is at 60-year lows. Business investment as a share of GDP is at low levels not seen in 40 years. Australia needs a greater diversity of sectors to match the leading economies with which we compete,” he said.

Iron ore producer Fortescue Metals chief Dino Otranto said inflation and the tight labour market had taken its toll.

However, he said Fortescue viewed 2024 with optimism and expected demand for about one billion tonnes of steel coming out of China.

“So our products, and the Australian iron ore sector which is a major contributor to our economy, should be well positioned for the immediate future,” he said.

Lynas Rare Earths chief executive Amanda Lacaze agreed that cost inflation for materials and labour had hurt, while global uncertainty was also a concern.

“We are a global firm; all our direct customers are outside Australia. Our customers are affected by changes in the global economy and the China economy in particular,” she said.

“The global economy remains muted and we are seeing that global economic uncertainty translating to more conservative choices by consumers.”

Amanda Lacaze, the chief executive of rare earths processing company Lynas.

Gold miner Northern Star Resources boss Stuart Tonkin said he expected Australia’s GDP to continue to grow in 2024.

“Growth over the past year hasn’t been out of control so I wouldn’t expect a major correction in Australia’s economic fortunes. Having said that, I wouldn’t be surprised if the RBA again increases the cash rate,” he said.

Mr Tonkin said the federal government should focus on industrial relations policies which improved productivity.

“On an investment front, I would like to see the commonwealth maintain its spending on infrastructure that enhances the economy, and we need to continue to take in skilled migrants,” he said.

Pilbara Minerals CEO Dale Henderson said the Australian resources industry as a whole would continue to be a “backbone of the national economy” and the investment outlook was underpinned by demand for critical minerals.

“That said, Australia can’t afford to rest on its laurels. In Western Australia, for example, there are $148bn worth of projects in the pipeline,” he said.

“Opportunities, especially in critical minerals, won’t realise themselves. It’s an extremely competitive global space and to capitalise, the sector needs to continue to improve productivity, remain cost competitive, invest in innovation and develop the workforce of the future.

“Tightness in the labour market is one of the challenges and it’s essential that we can access the skilled workers we need now and in years to come.”

Pilbara Minerals chief Dale Henderson.

Diversified miner Rio Tinto boss Jakob Stausholm said Australia needed to maintain and improve its competitiveness at what was a pivotal time for the world and the resources industry because of the global energy transition.

“Commodities demand is growing and shifting to energy transition materials, and Australia needs to make sure it grasps opportunities and does not price itself out of the market,” he said.

“Overall, we remain positive about Australia as a place to do business and we have future investment plans across the country, but the global conditions are increasingly competitive and economic reforms must drive productivity.”

South32 chief Graham Kerr believed Australia’s economy would have a “soft landing” in the event of a global economic downturn in 2024.

“Strong population growth and resilient private consumption is expected to support GDP and the ongoing relatively tight labour market is likely to generate wage growth,” he said.

“However, we are seeing a slight easing of the labour market as forward-looking indicators, including job vacancies and advertisements, have fallen.”

Mr Kerr said he shared the concerns of his fellow CEOs over the federal government’s changes to industrial relations law.

“While we are continuing to assess the same job, same pay reforms following their recent passage through federal parliament, we expect the legislation could materially impact our costs, productivity and global competitiveness,” he said.

“At a time when more investment is needed to produce the commodities required for the transition to a low-carbon world, we think this is a negative outcome for our industry.”