Investment strong despite fall in advanced projects: ABARE

THE latest round of figures from the Australian Bureau of Agricultural and Resource Economics shows that investment in the resources sector remains strong, despite a number of mining projects being put on hold as a result of the global financial crisis.
Investment strong despite fall in advanced projects: ABARE Investment strong despite fall in advanced projects: ABARE Investment strong despite fall in advanced projects: ABARE Investment strong despite fall in advanced projects: ABARE Investment strong despite fall in advanced projects: ABARE



According to ABARE’s Minerals and energy, major development projects – April 2009 listing report, total capital expenditure in advanced mining projects during the six months to April 2009 came to $A80 billion, with 321 major projects under development, of which 247 projects are still undergoing feasibility studies.

“Advanced minerals and energy projects to the value of $80 billion support expectations of growing demand for minerals and energy commodities in the medium term,” ABARE executive director Phillip Glyde said.

“The relatively high value of advanced minerals and energy projects was achieved despite a number of projects being placed on hold.”

Over the half-year to April 2009, 18 major minerals and energy projects with a total capital expenditure of $5.2 billion were completed, while a further 74 projects were at an advanced stage with projected expenditure of $80 billion.

While the global financial crisis is not evident in the value of advanced projects, it is reflected in that only 11 new projects have been added to ABARE’s list in the six months to April 2009, compared to 31 projects added in the six months to October 2008.

According to the report, the number of projects at an advanced stage of development for the six-month period was the lowest since April 2005 and was down from 85 in October 2008.

ABARE noted that this was due to more projects being completed (18 projects) than have progressed to an advanced stage (11 projects) in the past six months.

In addition, a number of advanced projects were placed on hold as miners responded to falling commodity prices.

Overall, iron ore projects accounted for 25%, or $20.4 billion, of capital expenditure, while Western Australia accounted for more than 70% of the capital expenditure on advanced projects.

Four new gold projects came online during the six-month period, including Conquest Mining’s Mt Carlton mine in central Queensland.

Meanwhile, nine mining projects were completed at a capital cost of $3.4 billion, with the largest project in terms of capital expenditure being the $US952 million expansion of Rio Tinto and Robe River’s Cape Lambert iron ore port.

OZ Minerals also completed its Prominent Hill copper mine during the six-month period, at a capital cost of $A1.15 billion.

Three gold projects were also wrapped up, at a combined cost of $482 million – Bendigo Mining’s Kangaroo Flat project, Lihir Gold’s Ballarat East mine and Apex Minerals’ Wiluna project.

In terms of exploration expenditure, mineral exploration in Australia is tipped to be $5.6 billion in 2008-09, similar to 2007-08 levels.

However, data released by the Australian Bureau of Statistics suggests exploration expenditure for the first half of 2009 will be down 13% on the same period in 2008 as a result of the fall in commodity prices.