Monday, 6 April 2020
Evaluating how ChAFTA will Benefit the METS Sector
Austmine Limited
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Evaluating how ChAFTA will Benefit the METS Sector

Written by John Miller

The China Australia Free Trade Agreement (ChAFTA) will result in a deeper commercial relationship between Australia and China which will benefit Australia’s Mining Equipment, Technology and Services (METS) sector when it needs it most, according to Austmine CEO Christine Gibbs Stewart.

With the mining and METS sectors reeling from low commodity prices and reduced demand, lack of capital for exploration, new projects or expansion of existing projects, and changing market dynamics, which have made Australia less competitive, she said it was imperative that business was able to take advantage of opportunities presented by the ChAFTA.

Austmine, the peak body representing the interests of Australian METS companies, said time was of the essence and Australia needed to take advantage of this FTA before China moved to conclude other agreements with larger economies which were direct competitors, especially in services.

“Both sides of politics in Australia need to come to an agreement sooner rather than later as the ChAFTA will stimulate new trade, new investment and most importantly new opportunities for the METS sector,” Christine Gibbs Stewart said.

“The ChAFTA will improve market access in China for a range of products and services Australia is good at, including provision of METS. Demand for these products and services will continue to grow as China continues its transition to a consumer-based economy, urbanisation continues, and focus increases on environmental and safety issues in mining.”

The Australia China Business Council (ACBC) said more than 85% of the 2013 value of Australia’s goods exports to China would enter duty free upon entry into force of ChAFTA, rising to 93% after four years and 95% when fully implemented. The agreement would deliver duty-free entry for 99.9% of Australia’s resources, energy and manufacturing exports within four years.

ACBC said this would make Australia more competitive against other source markets like the USA and European Union, while placing Australian businesses on a more level footing with those from countries like New Zealand and Chile, which already had China FTAs in place.

Christine Gibbs Stewart said recent surveys of Australian businesses indicated that the majority were keen to pursue opportunities in larger overseas markets. Australia’s International Business Survey 2015, conducted by the Export Council of Australia, Austrade, Efic and the University of Sydney, showed that Australian companies selected China as the top market with which an FTA was most desired and ranked China as the second most popular target market for new business behind the US.

She said Austmine’s 2015 survey showed Australia’s METS companies were globally focused with 66% reporting that they export with key destinations being Asia and the Americas. Of those companies not exporting, 16% planned to within the next two years.

“The survey indicated that METS companies have a core competency in minerals and mining. The backbone and majority of METS companies are highly innovative, entrepreneurial SMEs that are often world-leaders in their particular niche. Qualities such as these are in demand in China as the nation strives to become a modern, efficient, productive and sustainable economic force.

“Australian METS companies need the ChAFTA to be finalised as it will unlock significant opportunities and enhance competitiveness,” Christine Gibbs Stewart concluded.

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