Nearly 170 Australian mining insolvencies so far this year

28th July 2016 By: Mariaan Webb - Creamer Media Deputy Editor Online

JOHANNESBURG (miningweekly.com) – Nearly 170 companies went bust in the Australian metals, mining and steel industries in the first five months of the year, as demand for their products declined.

Citing data by the Australian Securities Investment Commission (Asic), credit insurance provider Atradius MD Mark Hoppe said on Thursday that the mining industry was still experiencing difficulty.

“The slowdown in China is putting some pressure on the insolvency landscape, as is the continuing slump in the commodities market, which makes up a large portion of Australia’s export volume. These forces are leading to an increased risk of insolvency rates in the Australian market, with some industry sectors facing more exposure than others.

“Despite the hard times we’re experiencing now, the mining sector is likely to start to pick up as continuing urbanisation, growth in manufacturing, and increasing investment in key infrastructure in Asian nations means that demand for Australia’s minerals will continue to grow,” he said.

Although 167 insolvencies between January and May is considered a high insolvency rate, the mining industry is still better off than the construction industry, which has the highest insolvency rate so far this year.

The industry has reported 625 insolvencies, accounting for 18% of the total Australian insolvencies (3 634) for the five-month period.

“The Australian construction industry has been experiencing high insolvency rates for some time now. Compared to other industries, it has the highest number of insolvencies by far,” said Hoppe.

The accommodation and food sector experienced the second highest level of insolvencies at 316, followed by manufacturing at 172 insolvencies and mining at 167.