Mining sector continues to attract investment

It would appear that reports of the demise of the Australian Mining Industry have been grossly overstated.

New figures from the Major Mining Industry Projects October 2011 report released by the Bureau of Resources and Energy Economics show investment in Australia’s resources sector continues at a pace.

The report has established that here are currently 102 minerals and energy projects in Australia, at an advanced stage of development.

This represents committed capital expenditure of $231.8 billion.

This figure is up nine per cent, while total committed capital of advanced projects is up 34 per cent in the six months since the last count taken in April 2011.

Minister for Resources and Energy, Martin Ferguson said the report outlined committed expenditure on advanced projects to be dominated by three commodities, petroleum, iron ore and coal.

Australian private minerals exploration expenditure 2010–11 dollars. Source: BREE

“The figures released today are further evidence that the Government’s resource taxation reforms are the right policy, at the right time, and are not posing an impediment to continued record investment in our resources sector,” Ferguson said.

“Final investment decisions on a range of major projects including Wheatstone, APLNG and Prelude, have seen $58 billion added to the value of Australia’s major resources projects in the past six months alone.

“Both the number and value of completed projects has risen, and exploration expenditure – vital to the continued future growth of the sector – was the second highest on record in real terms.”

Ferguson said the report from The Bureau of Resources and Energy Economics (BREE) also highlighted the scale of the current resources boom.

“The value of advanced major resources projects today is 16 times what it was a decade ago when the total value of advanced minerals and energy projects in 2001 was just $14.3 billion,” Ferguson added.

“Our resources sector is creating jobs and the revenue from these projects will go on supporting economic growth for decades to come.”

According to the BREE report there are another 302 projects that didn’t make the count as they are considered to be at a less advanced stage of development.

These sit with an estimated capital cost in excess of $224 billion.

Since the April 2011 list was published, 13 projects have been completed with a combined capital cost of $9.6 billion.  This compares with 10 projects completed in the six months prior to April 2011 with a combined cost of $2.8 billion.

The $231.8 billion consists of a record 102 projects at an advanced stage of development (committed or under construction) including 40 minerals projects, 37 energy projects, 21 infrastructure projects and four mineral processing projects.

New capital expenditure 2010–11 dollars. Source BREE

“Significant growth in coal, iron ore and gas exports are expected to occur over the medium and long term, underpinned by the capital investment that is occurring in these sectors” BREE Executive Director and Chief Economist Professor Quentin Grafton said.

BREE said Western Australian accounted for around 64 per cent of expenditure on advanced projects, which is not too much of surprise given the state does host the majority of Australia’s oil and gas and iron ore projects.

The country’s other major mining state Queensland accounts for a further 30 per cent supported by three coal seam gas LNG projects and the development of a number of coal projects and associated infrastructure.