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AUSTRALIA RIDES HIGH ON RESOURCES INVESTMENT
Australia’s mining and energy sector was currently experiencing record robust growth - with short to medium term, forecasts predicting continued high levels of investment activity.
The latest report of major minerals and energy projects, issued by the Australian Bureau of Resource Economics (ABARE) has revealed that 91 ‘advanced’ projects were under construction or committed to - at a record value of $57.9 billion.
ABARE’s Executive Director, Mr Phillip Glyde, said these figures depicted a record value of advanced projects and represented a 33 per cent increase since ABARE’s April 2007 report. The report - Minerals and Energy: Major Development Projects – October 2007 Listings - show that the latest investment levels represented a 66 per cent increase year on year.
In total, there were a record 305 major projects in the October 2007 listing – 214 were at less advanced stages and still undergoing feasibility studies; 29 had been completed and 51 had been added to the list since April 2007.
“This level of investment will increase the production capacity of the mining sector, enabling it to contribute to meeting the world’s growing demand for minerals and energy,” Mr Glyde stated.
“Energy projects accounted for around 55 per cent (or $31.6 billion) of the estimated capital cost of $57.9 billion for all of the advanced projects. Investment interest was also strong in iron ore, nickel and gold, which accounted for a further 20 per cent, 5 per cent and 5 per cent, respectively, of the estimated total capital cost.
Western Australia accounted for over 73 per cent of capital expenditure on advanced projects, including 12 petroleum projects (valued at $22.5 billion) and nine iron ore projects ($11.7 billion).
Capital expenditure on advanced projects in Queensland accounted for a further 18 per cent. Coal mining and infrastructure projects account for 57 per cent ($5.9 billion) of this capital expenditure in Queensland.
Between April 2007 and October 2007, three projects – the Pluto LNG project and Pyrenees oil project in Western Australia and the Yarwun Alumina Refinery expansion (Queensland) – were committed to, at a value of over $16 billion. This accounted for a significant proportion of the increased value of committed projects.
Mr Glyde noted that scarcity of skilled labour, and increased materials and construction costs continued to have an impact on the timing and overall costs for some projects.
In the short to medium term, high levels of investment activity are expected to continue in the resource sector.
“While not all of the less advanced projects would necessarily proceed to development, the record number of 214 provided another indicator of the strong growth prospects of the sector,” Mr Glyde said.