Making waves as mining sector booms

While China’s trade bans may have hurt the Australian economy, its phenomenal demand for iron ore is making up the difference.

Business is booming for Perth businessman Dan Joyce, pictured at his showroom with a floor full of jet skis that are all already sold. Picture: Colin Murty

As a barometer of the health of the mining industry and the strength of the Western Australian economy, Dan Joyce’s jetski dealership in the Perth suburb of Ascot is as good as any.

And in the past few months, Mr Joyce says, sales have surged by around 40 per cent to a level not seen since the China boom of more than a decade ago.

That boom — which gave us the social phenomenon of cashed-up bogans — is in many ways being eclipsed.

Today iron ore is being sent from Australia to China at a higher price and at lower cost and in greater volumes than ever before, pumping tens of billions of dollars into the coffers of companies, billionaires, investors and governments.

If China is trying to hurt Australia’s economy with its recent tariffs and restrictions on a host of exports, from wine and barley to lamb and lobster, its phenomenal demand for our iron ore is more than making up for the damage.

More than $100bn of exports have left WA for China over the past 12 months. If current prices hold, that number should be eclipsed over the coming year.

A sliver of that windfall is finding its way to Mr Joyce’s dealership, as flush FIFO workers throw their disposable income around.

Such is the demand that the wait time for delivery of a new jetski has blown out from between two to four weeks, to three to four months. And competition for labour from the mining sector means Mr Joyce has been battling to find the mechanics he needs to assemble and service his products.

Mr Joyce, who owns jet ski, Harley Davidson and dirt bike dealerships across Perth. Picture: Colin Murty/The Australian

“With mining going gangbusters and everything else, we are trying to find staff but they are non-existent. Skilled trades and mechanics are very hard to find, the mining sector is sucking up a lot of them and paying them some crazy money too,” he said.

“We’ve lost staff, and the staff we do have, we have had to pay them some very good salaries way above and beyond what a typical mechanic would earn.”

The boom in jetski sales is by no means the only example of history repeating.

The iron ore industry itself is now seeing the resurrection of small, opportunistic iron ore miners seeking a quick return from the scrappy deposits considered too small to be worth the while of the established producers.

Among those looking to take advantage of the current conditions is a familiar name from the last iron ore boom: Dave Flanagan, who grew Atlas Iron from a start-up into a one-time multibillion-dollar miner that was ultimately all but wiped out when iron ore prices tanked.

Battery Minerals managing director David Flanagan also found an opportunity to grow his business these past few months. Picture: AAP

Mr Flanagan has now returned to the iron ore sector as the chairman of CZR Resources, which hopes to develop small iron ore projects in the Pilbara.

Another junior company, Fenix Resources, is due to start shipping iron ore out of Geraldton this month. It aims to ship in a year what the likes of Rio and BHP ship in a day, but if current prices hold it could still prove to be a handy earner. Its shares jumped almost 30 per cent on Friday.

Mr Flanagan said that whatever trade tension exist isn’t reflected in the unsolicited interest being shown in CZR.

“I’m getting phone calls now from people I used to sell iron ore to in China who are wanting to invest in our company or who are wanting to buy iron ore,” he said.