Running out of cash, Australian miners get creative to survive
China’s slowdown has helped cool a decade-long commodities boom that pushed gold, copper, iron ore and coal prices to record highs, leaving Australian miners facing a painful transition.
From pooling office space to paying bills with company stock, small and mid-sized Australian miners are finding new ways to stay afloat during one of the sector’s worst downturns.
China’s slowdown has helped cool a decade-long commodities boom that pushed gold, copper, iron ore and coal prices to record highs, leaving Australian miners facing a painful transition to lower margins and weak investment interest.
Only a year ago, with miners flush with cash and desperate to retain staff, six-figure salaries and executive-style perks for everyone from truck drivers to kitchen help were commonplace.
Now, with traditional funding drying up, smaller miners are devising novel ways to keep from going broke.
Unable to pay bills in cash, some are offering drill rig operators, caterers and even public relations firms company stock to keep them on the job - acts of desperation last seen at the height of the 2008-2009 financial crisis.
“When this happens, the shares are often just dumped on the market, which destroys the share price,” said Peter Strachan of Stock Analysis, an Australian research company focused on smaller miners.