CEN DEC
17
MININING
TRENDS
WITH CHINA’S ECONOMY
on course for a rude slowdown over the coming years, Business
Monitor predicts Australia’s mining sector is set to suffer the painful spill over effects of a
sharp investment slowdown. Already, the mining sector is feeling the crunch of plummeting
commodity prices as a string of miners scale back their ambitions and slam the brakes
on investment. Business Monitor forecasts the value of Australia’s mining sector to reach
US$181-billion by 2017, growing at an annual average rate of 4.3% over the forecast period.
This contrasts with an average growth rate of 23.3% per annum, over the past decade.
Australia has been among the biggest beneficiaries of the China-led commodities boom
in the past decade, attracting huge amounts of investment into the minerals space. Driven
by China’s voracious appetite for key commodities such as coal and iron ore, the value of
Australia’s mining industry increased by more than six-fold from $24-billion in 2003 to
$147-billion in 2012. As a result, this has seen the sector’s share of GDP rising from 4.5%
to 9.6% over the same period. However, Business Monitor believes the boom years in the
mining industry are over.
It predicts that Australia will be the biggest loser from the mineral imports shift in China. The
rising tide of economic nationalism, declining labour productivity and aggressive minimum
wage legislation will compound the challenges in the mining industry, amplifying the
downshift in Australia’s economy in future.
Despite the fading of the mining boom, Australia will remain a leading player in many
segments of the global mining industry, given its rich deposits of minerals, including iron
ore; nickel; bauxite; copper; gold; uranium; diamonds; zinc and coal. Moreover, Australia’s
mining sector is one of the most business-friendly in the world, with domestic companies
and overseas miners operating in the country. Business Monitor expects Australia to remain a
highly attractive destination for foreign investment, despite the introduction of a 30% super
profits tax on coal and iron ore miners on July 2012.
With its vast potential and high quality of infrastructure, Australia is home to some of the
biggest players in the global mining industry. Multinationals operating in Australia include
Australian companies BHP Billiton and Newcrest Mining and large overseas miners such as
Rio Tinto, Norilsk Nickel and Xstrata. The report forecasts that the mining industry is set to
witness a wave of consolidation activity over the coming quarters, as a growing number of
miners come under pressure from weakening mineral prices.
Is mining going
Business Monitor has just
released its latest findings on
Australia’s mining sector in
its newly-published Australia
Mining Report.
down
and
under?
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