Investment to Australian resource projects rose by nearly A$8 billion
Australian government figures released on Nov. 28 found that while the number of resource projects at the committed stage of the investment pipeline has declined by 11 since April 2012, the investment to Australian resource projects rose by nearly A$8 billion in the six months to the end of October, in part underscoring rising construction and labor costs in Australia’s resources sector amid weakening demand.
Committed investment in major resources and energy projects in Australia increased to A$268.4 billion according at Oct 31 from A$260.8 billion recorded at the end of April, government figures show.
“Looking forward, any substantial net increase to the dollar value of committed projects will require either cost increases to larger, existing projects and/or a new final investment decision on a large project within the coming year,” said professor Quentin Grafton, Executive Director of Australia’s Bureau of Resources and Energy Economics (BREE).
Declines in most commodities prices, driven by a drop-off in demand from China, has caught many by surprise and forced miners — from the world's largest, BHP Billiton, down to the smallest — to review their investment plans, Reuters reported.
The commodities rout has thrust Australia into a debate over whether the mining boom is over and can no longer be relied on to create jobs, power growth and raise tax revenue in a $1.4 trillion economy that has gone 21 years without a recession.
Miners concede the days of ever-rising prices, which in the past eight years earned them record profits and prompted $70 billion of Australian investment, look to be over.