28 May 2014
Expectations for Australia’s economic growth have slumped to a three-year low, weighed down by a new tumble in mining investments in the past six month to April, a government report released Wednesday shows.
In its latest compilation of projects across the country, the Bureau of Resources and Energy Economics (BREE) puts the value of committed investments by the end of last month at $212.1 billion (A$229), down from $248 billion (A$268) a year earlier. That is a $36 billion, or 14.6% fall on the number of committed projects underway at the same time last year.
The data also reveals that only 21 projects worth a combined $24bn (A$ 26bn) were completed since October last year.
“While the investment cycle has peaked, Australia is now moving into a period of significant increases in the production of resources and energy commodities,” Wayne Calder, Deputy Executive Director of BREE said in a statement.
BREE’s experts believe Australia’s mining sector distinct the transition to an output phase is likely to boost iron ore and coal exports to Asia and other markets. But they warn it may also weigh on prices as increasing supplies of those commodities and others enter the global market, pushing prices down.
The price of iron ore, one of the country’s top commodities for export, slipped slightly overnight and it was sitting at $98.10 a tonne at 9:00 am ET.
Darkest hour just before the dawn?
Not many projects have moved forward since October last year, the Canberra-based bureau’s report shows. Only eight projects worth a combined $11.9 billion (A$12.8bn) progressed to the committed stage in the period. Of them, the largest by far was Gina Rinehart’s Hancock Prospecting’s $9.9bn Roy Hill iron-ore development in Western Australia.
By 2018, based on projects under consideration or considered likely, the experts predict the total value of projects underway will have fallen to about A$100 billion ($93bn). Of that, almost two-thirds would come from projects now considered “likely.”
Despite the slowdown in projects construction and price, the bureau concludes the mining sector would continue to boost the country’s overall economy.
Courtesy of Mining.com
28 May 2014