Five-year mining boom underway: Report
A new report released by industry research specialist BIS Shrapnel has found that Australia’s mining sector is likely to continue to boom over the next five years.
BIS Shrapnel found that fixed capital investment – covering construction of assets and equipment – will rise 75 per cent to nearly $60 billion by 2015. As a share of total private investment, mining investment will have risen from 7% to 20% over the decade to 2015.
Despite growing concerns over the state of the global economy and the start of new domestic taxes on carbon and mining profits, the mining sector is predicted to experience an unprecedented boom in investment and growth.
BIS Shrapnel’s Mining in Australia 2011 to 2026 report found that annual investment in the mining sector will surpass $80 billion by 2015, with exponential growth in investment in oil, gas, iron ore and copper driving the overall expansion in the sector.
The report found that Australian mining is due to pick up strongly across all commodity sectors and will accelerate in the coming years as global demand increases and investments mature.
According to the Mining in Australia report, the real value of mining production will rise by nearly 50 per cent over the five years to 2014/15, following a decline of 2.8 per cent in 2010/11 due to the Queensland floods.
The report found that the coal sector has enjoyed a strong return to form, recording a 60 per cent increase in investment in the last year as Queensland returns to full productivity.
“Black coal production is expected to rise 30% during these two years, and surpass 600 million tonnes per annum by mid-decade. From 2012/13, surging oil and gas, and iron ore production from multi-billion dollar greenfield and expansion projects will sustain record rates of growth. Over the five years to 2015/16, mining production is forecast to rise 45% in real terms — the strongest rate of growth since the 1980s. Mining maintenance activity will also rise substantially — from A$6.5 billion to A$8 billion per annum (in constant 2008/09 prices) — due to the rapid expansion in capital stock and the ability of miners to pay for maintenance work,”the report found.
The report found that despite a temporary pause in investment in the 2009/10 year in response to the global financial crisis, new mining investment has increased by 11 per cent in the 2010/11 year.
“The strongest increases will come from new oil and gas investment – and particularly the new LNG projects underway or proposed for Queensland (Curtis Island, Gladstone, Australian Pacific, Shell) Western Australia (Gorgon, Wheatstone, Prelude) and the Northern Territory (Ichthys). Importantly, many of these projects will still proceed even if global economic conditions remain weak,” the report found.
However, the BIS Shrapnel has warned of increasing supply side pressures, including emerging skills and equipment shortages, capacity constraints in key rail and port transport chains and a lack of supporting infrastructure in regional mining locations.
The report can be found here