Australia’s mining production predicted to increase in next five years

A new report from economic forecaster BIS Shrapnel provides some welcome news for Australia’s miners as it predicts that mining production will soar by 41 percent in the next years.

This increase will help offset some of the negative economic effects of declining investment in the sector, according to the report, “Mining in Australia.”

The report says mining activity as a share of Australia’s GDP will rise from 18.7 percent to almost 20 percent.

Adrian Hart, BIS Shrapnel’s head of infrastructure and mining, said despite growing concerns about how Australia will cope without the resources investment and construction boom, mining will continue to drive economic growth.

"The growth in the mining part of the Australian economy is being driven by production from here," he said. "So the strong growth that we see in production is going to boost the share of mining, in terms of the share of the Australian economy.

"It’s going to more than outweigh the detraction caused by a weaker construction and investment profile."

At the same time, mining investment is expected to fall by 20 percent and lead to mixed results for workers in the resources sector, ABC Online reported.

"We’re forecasting a 40 per cent fall in buildings and structures activity over the next five years in mining,” Hart said. “But on the other hand, if you’re involved on the production, operations, maintenance, facilities management – all of these areas are going to go ahead quite strongly through the next five years."

Hart says overall employment in the sector will suffer as a result of mining production becoming more reliant on machinery.

Meanwhile, in other findings about the industry, accounting firm PricewaterhouseCoopers said volatile commodity prices and higher costs have hit the bottom line of the 50 medium-sized mining companies on the Australian stock exchange.

"I don’t think we are going to find that there are less companies around, but I certainly think there is, within certain sectors, the possibility of greater consolidation," he said.