Industry Q & A: Superfunds for the Resources Sector
The following article and interview was conducted by Austmine.com.
Austmine was delighted in October 2014 to welcome on board our newest Industry Partner, Resource Super. Resource Super is a truly unique superfund, offering a tailored offering to the resources industries. We took the opportunity to catch up with their CEO, Tim Baker, to understand why superannuation choice is actually more critical than ever for mining companies and service providers in the current market environment.
Given the current state of the mining industry, why is superannuation choice so important right now for any company operating within the sector?
The drive to reduce costs and to increase productivity in the resource sector is not confined to processes and systems. Ensuring people are as productive as possible is also critical for companies to reach their productivity goals.
Superannuation is the largest and mostly costly employee benefit after salary for employers. Given its also mandatory, it makes sense for both employees and employers to get the most out of this benefit.
How can the right superannuation default fund help towards making your brand the employer of choice brand in the mining sector?
All funds are not created equally. By taking the time to review the variety of options, employers can ensure they keep up to speed with changes in legislation as well as changes from competition within the superannuation industry.
Employers who tangibly make their employees future savings funds better off are quite rightly seen as ‘employers of choice’.
An engaged workforce leads to a more productive workforce.
What are some of the issues Resource Companies face when dealing with superannuation?
Resource Companies face a number of challenges primarily because superannuation is not a top line agenda item for most companies, especially given where we are at in the commodity cycle at present.
Specific challenges around inadequate insurance coverage, high fees, and inconsistent fund performance arise regularly. Risk-gaps are particularly pronounced when an employee has had a serious accident if the insurance benefits in place are grossly inadequate.
Many Australians are not engaged with superannuation, especially those further away from retirement. That means the onus is on their employers to help them get the basics right. In our experience the companies that help their staff become more financially aware have a more engaged workforce.
How has Resource Super helped these companies?
Our core offering is to provide a super fund with competitive fees, higher levels of insurance including default income protection combined with a fund manager with global scale and expertise.
One of our most recent successes has been the ability to offer an underground nickel miner almost six times more death and total & permanent disablement cover than their incumbent fund. This brought them into line with the levels historically associated with white collar workers. Given the higher than average salaries in our sector, a decision to offer limited cover can have severe consequences for employees should they need to make a claim.
Also in recent times we have halved the fees paid by employees of an ASX listed company. If you think about the compounding impact that savings on fees can have during the life of a fund, a little goes a long way to ensuring more money in your employee’s pockets.
Servicing our clients and members is another critical piece of our offering. We go onsite to all of our clients. Our ‘Super Sessions’ enhance employee engagement not only with super, but it also sends a positive message that their employer is looking after their financial wellbeing.
What attracted you to work with Austmine?
Some of our existing clients are members of Austmine. They were huge advocates of and spoke highly about how you are trying to address the pressures faced within the METS community. Austmine have initiatives in place that presents a strong front for the broader Resource Sector.
We love working with our Austmine members and we hope that into the future we earn the right to be the ‘go to’ people for Superannuation within the Austmine community.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.