Australian Mine, Energy Project Spending Falls 10% as Boom PeaksPhoebe Sedgman
The value of mineral and energy projects being developed in Australia, the world’s biggest iron ore exporter, dropped 10 percent to about A$240 billion ($219 billion), reflecting the peaking of the nation’s mining boom.
“This large drop in investment is the result of two records being set in the period – a record high for the value of projects being completed (A$30 billion) and the lowest value of new projects being sanctioned in the past decade (A$1.7 billion),” the Bureau of Resources and Energy Economics said today in its twice-yearly report on project investment. At April 30, the value of projects was A$268 billion.
The Reserve Bank of Australia said this month that mining investment will continue to decline from the record reached in the past year and may drop more than previously anticipated. Mining companies, including BHP Billiton Ltd. and Rio Tinto Group, are cutting staff, delaying mines and curbing takeovers as the China-led commodity boom that drove gold to iron ore prices to records begins to wane.
“Australia is now seeing a transition from the investment phase of the resources boom to the production phase,” the bureau said in a separate statement. “Forward projections indicate that investment in the resources and energy sectors is likely to decline over the medium term.”
Five projects worth a combined A$1.7 billion moved to the committed stage in the six months to October, the lowest number and value in more than a decade, it said. An additional 71 projects in the planning stages of the investment pipeline have been delayed by a year or more in the past six months, it said.
In 2015, there’s the potential for a rebound in resources and energy sector investment as there are a large number of projects that are assessed as requiring financial approval in that year, the Canberra-based bureau said.