Mining company FMG ties up with Australian, Chinese universities for research model

Mining (3) — Workers are seen underground South Africa's Gold Fields South Deep mine in Westonaria, 45 kilometres south-west of Johannesburg, South Africa, March 9, 2017. Reuters/Siphiwe Sibeko

Mining company Fortescue Metals Group (FMG) will be collaborating with universities from Australia and China to introduce a mining and cooperation innovation research model. The universities involved in the tie-up are University of Western Australia (UWA), the WA School of Mines at Curtin University, Central South University (CSU) in Changsha, and Sun Yat-San University in Guangzhou.

Company chief executive Nev Power expressed excitement over the graduate program, emphasising on its potential. "We used innovative ways to develop and mine orebodies in the Pilbara [in north-west WA] that other companies considered uneconomic," he said.

Strengthening relationship with China would bring in substantial expertise, according to Power. The company’s second largest investor, following founder Andrew Forrest, is a Chinese group.

"We will never have all the ideas ourselves within Australia," he said. "The more of these links we can build, the more collaboration between universities, the greater level of cultural understanding between countries adds to innovation and helps Australia build its business."

The news comes as FMG chief financial officer Elizabeth Gaines talked about her plans to steer the company into a direction of net cash position by seeking to strike a balance between investment and shareholder returns. Nevertheless, Gaines, speaking in her first interview with The Australian Financial Review after coming onboard, said she will not be introducing “sudden changes” to FMG’s strategy. In the past, the company has benefited from more than expected iron ore prices, which have helped it reduce its debt.

At the half year, the company had US$1.2 billion cash on hand. The number was inside the bracket of “liquidity balance” of between US$1 billion and US$1.5 billion. While the company has not set a gearing target, reducing its debt remains a priority of concern, she said. The company will strive to achieve a net cash position. According to analysts, the company could find itself in a net cash position in the next financial year – provided iron ore continues to remain strong.

Professor Sam Spearing – who serves as the director of Curtin University's WA School of Mines, one of the collaborative academics in the innovation model – commented on the progress the mining industry was making. He said while the industry had been poorly reflected in the press due to its decline, there was little understanding of the production phase it had arrived at.

The operation of the sector as well as future job profiles were being changed as a result of innovation, he added. "Basically the way to make mining safe is to move people away from the working space," he said. "That means more instrumentation, more robotics, more autonomous machines, which in turn needs different skill sets.