Learning from how the Big Australian considers its options

The new year is off to a bright start with good weather for most but looming floods for the Riverland. Fires will undoubtedly arise in all the well-watered bushland and scrub. Climate change is a major challenge but so also are cyber crime and warfare let alone deglobalisation and economic inflation.

Australia has some light in the tunnel with improved relations with China, our largest trading partner, while national security has the AUKUS tripartite agreement and enhanced relations with Japan to further develop.

The first issue of The Australian, the only national broadsheet, had some food for thought arising from a story about BHP, the Big Australian, as they consider their options for further development of Australia’s second largest export — iron ore — from north-western Australia. In the same edition were two other stories of major current importance: the emergence of cloud-information storage that is free of direct exploitation for ulterior motives; and the imperative to find other sources of skilled workers besides just issuing more visas.

BHP is carefully analysing the alternatives of continuing to expand the existing rail and ship-loading infrastructure serving Port Hedland even though the remaining life of the central mine site in this arrangement is already limited; or alternatively investing in a completely new infrastructure including new rail networks and shiploaders based on emerging new mine concentrations, requiring massive investment at a time when return on that investment carries some risk.

This all reminded me of the analogous situation where we have switched from continuing with currently-held-technology for submarine propulsion to making the significant step to nuclear propulsion. The advantages of this step include a dramatic increase in capability with a marginally less number of boats and the dedicated support of the two international partners with whom Australia has its most profound national security relationships: the USA and the UK.

BHP has dedicated engineering and project management teams working their two options leading to the ultimate board-level decision in a year or two hence. Australia has already made its choice between continuing as before or making a big investment in new capability and is now engaged in the next step of looking at the options, with major input from our two partners.

So back to the financial framework in the two case studies: in both cases, the timeframe is long and the return on the proposed investment is even longer. BHP is highly experienced in dealing with these extended timeframes; Australian national security force structuring is less so, finding it sometimes unable to confront the timeliness essential to effective investment when the return is much later and may be too late to address more immediate issues.

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The secret of course is that both short and long-term investments are needed, and the trade-off is more about the actual funding required in each budget cycle rather than the overall total cost long term. BHP understand this very well and also has to deal with fluctuating market prices and other international trade variations from such unexpected shocks as the Ukraine war.

The second intriguing story was about a Polish billionaire who has built up an international network of cloud-based data storage facilities and also offers to provide the material and management for private cloud-based networks that are not accessible for either cyber crime or commercial exploitation without proper attention to privacy and are guaranteed not connected to the internet. These would operate as alternatives to the big players who currently control so much of the online marketplace. National security has already taken a similar approach but at great expense and with significant complexity, such that it may have cut itself off from workable, affordable alternatives.

The third interesting story was about finding new solutions to the shortage of skilled workers and proposed finding ways to attract expatriate Australians back to work here but the major message was that Australian organisations must start making real investment in skills development. This applies very much to the Australian Defence Force (ADF) and is not purely about pay and conditions. Rather it must take a proactive marketing approach to show how ADF service is a cost-effective and highly relevant means to achieve cutting-edge skills that will be welcomed in industry after the requisite ADF service has completed.

This applies especially in new areas of technology such as all the several AUKUS technologies that will have widespread civil as well as military application in years to come.

This is also important for Australia to become more self-reliant in critical technologies that contribute to sovereignty and reduction in vulnerability to interruption of international supply chains. A very important case of this is the commitment made to in-country manufacture of guided weapons and related devices such as uncrewed aerial, surface and undersea vehicles (popularly called drones). There is widely held expectation that drones, operating in swarms or distributed networks, will play a significant role in all future confrontation and conflict.

So best wishes for the new year to the national security teams working hard to complete the Defence Strategic Review and the nuclear-powered submarine report but maybe take a moment to glance at the business pages to see how others are dealing with similar big challenges in their fields.