THE WA Government is under renewed pressure to foster a competitive resource environment after recent slides in global commodity prices have pulled the sector back a peg.
THE WA Government is under renewed pressure to foster a competitive resource environment after recent slides in global commodity prices have pulled the sector back a peg.
Preliminary statistics estimate the value of WA’s mineral and petroleum sales in 2001-02 have contracted by 5 per cent to $26 billion in response to a sharp decline in petroleum sales.
This follows a 29 per cent increase in resource sales to record levels during the previous year.
While the volume of petroleum sales increased to record levels, the total value slipped 9 per cent, shedding $980 million. Crude oil sales increased 8 per cent yet the 20 per cent decline in average oil prices during the year set the value of sales back 12 per cent, to $4.2 billion. The same trend is evident for nickel, diamonds, alumina and base metals, which all reported static or decreasing sales values despite physical sales volume increases.
Seeking to put the lacklustre performance into perspective, the Department of Mineral and Petroleum Resources said it was noteworthy that the value of current mineral and petroleum production is well over double that of a decade ago.
“It has demonstrated a solid average annual growth rate of 8.1 per cent per annum and represents a doubling of the value of production every 10 years, far outstripping growth of the economy in general,” the department says.
Chamber of Minerals and Energy CEO Tim Shanahan was also upbeat about the numbers, seeing the decline as no more than a correction after two years of unsustainable growth.
“All of the forecasts are for the resource sector to grow at around 4 per cent. I think the future is still optimistic in terms of growth forecasts,” Mr Shanahan said.
But he said it was important the Government continued to reform and reduce the red tape that had hindered the industry in the past.
“Commodity prices are not really in the control of the companies. It underlies why the chamber is so concerned about controlling input costs such as energy prices, labour relations, the approval process or environmental and Native Title issues,” Mr Shanahan said.
“WA is a player in the global market and must remain competitive. We have to make sure we keep our pencils sharpened.”
And nationwide figures from the Australian Bureau of Statistics on Mining Operations 2000-01 shows that the mining companies have been doing just that.
Trading profit margins increased for the total oil and gas extraction, coal mining and metal or mining industries from 56 per cent to 62 per cent; returns on funds across industry rose 13 per cent to 25 per cent; returns on assets increased from 9 per cent to 18 per cent; while the debt-to-assets ratio fell from 58 per cent to 56 per cent.
The oil and gas extraction industry recorded an increase in return on funds from 16 per cent to 33 per cent, while return on assets increased from 12 per cent to 26 per cent.
Favourable profitability figures despite lower revenues resulted from productivity gains and consolidation within the industry.
But while the WA industry has experienced a slight decline in revenue, the WA Government, banking on sustained royalty revenue, has fallen short of its budget estimates.
Royalties from petroleum production fell 19 per cent during the 2001-02 year to $428 million. Liquefied natural gas royalties fell 20 per cent, or by $35 million, to $138 million, while condensate fell 26 per cent to $91 million.
In all, royalty receipts dropped more than $100 million, or 10 per cent, during the year excluding royalties collected on behalf of the Commonwealth. Yet they remained above the billion-dollar watermark for the second year in a row and accounted for approximately 10 per cent of total State Government revenue.
The royalty slump surpassed even the estimates from State Treasury outlined in the 2001-02 budget.
The 2001-02 Government Financial Results Report released last month pointed out a $44.6 million shortfall on the budget estimates as a result of a decline in North West Shelf royalties, while other resource royalty income was $8 million below the cautious government expectations.
Iron ore sales increased almost 4 per cent to $5 billion in the 2001-02 year on a 1 per cent decline in volume to 160 million tonnes, thanks to higher prices and the devaluation of the Australian dollar.
Preliminary statistics estimate the value of WA’s mineral and petroleum sales in 2001-02 have contracted by 5 per cent to $26 billion in response to a sharp decline in petroleum sales.
This follows a 29 per cent increase in resource sales to record levels during the previous year.
While the volume of petroleum sales increased to record levels, the total value slipped 9 per cent, shedding $980 million. Crude oil sales increased 8 per cent yet the 20 per cent decline in average oil prices during the year set the value of sales back 12 per cent, to $4.2 billion. The same trend is evident for nickel, diamonds, alumina and base metals, which all reported static or decreasing sales values despite physical sales volume increases.
Seeking to put the lacklustre performance into perspective, the Department of Mineral and Petroleum Resources said it was noteworthy that the value of current mineral and petroleum production is well over double that of a decade ago.
“It has demonstrated a solid average annual growth rate of 8.1 per cent per annum and represents a doubling of the value of production every 10 years, far outstripping growth of the economy in general,” the department says.
Chamber of Minerals and Energy CEO Tim Shanahan was also upbeat about the numbers, seeing the decline as no more than a correction after two years of unsustainable growth.
“All of the forecasts are for the resource sector to grow at around 4 per cent. I think the future is still optimistic in terms of growth forecasts,” Mr Shanahan said.
But he said it was important the Government continued to reform and reduce the red tape that had hindered the industry in the past.
“Commodity prices are not really in the control of the companies. It underlies why the chamber is so concerned about controlling input costs such as energy prices, labour relations, the approval process or environmental and Native Title issues,” Mr Shanahan said.
“WA is a player in the global market and must remain competitive. We have to make sure we keep our pencils sharpened.”
And nationwide figures from the Australian Bureau of Statistics on Mining Operations 2000-01 shows that the mining companies have been doing just that.
Trading profit margins increased for the total oil and gas extraction, coal mining and metal or mining industries from 56 per cent to 62 per cent; returns on funds across industry rose 13 per cent to 25 per cent; returns on assets increased from 9 per cent to 18 per cent; while the debt-to-assets ratio fell from 58 per cent to 56 per cent.
The oil and gas extraction industry recorded an increase in return on funds from 16 per cent to 33 per cent, while return on assets increased from 12 per cent to 26 per cent.
Favourable profitability figures despite lower revenues resulted from productivity gains and consolidation within the industry.
But while the WA industry has experienced a slight decline in revenue, the WA Government, banking on sustained royalty revenue, has fallen short of its budget estimates.
Royalties from petroleum production fell 19 per cent during the 2001-02 year to $428 million. Liquefied natural gas royalties fell 20 per cent, or by $35 million, to $138 million, while condensate fell 26 per cent to $91 million.
In all, royalty receipts dropped more than $100 million, or 10 per cent, during the year excluding royalties collected on behalf of the Commonwealth. Yet they remained above the billion-dollar watermark for the second year in a row and accounted for approximately 10 per cent of total State Government revenue.
The royalty slump surpassed even the estimates from State Treasury outlined in the 2001-02 budget.
The 2001-02 Government Financial Results Report released last month pointed out a $44.6 million shortfall on the budget estimates as a result of a decline in North West Shelf royalties, while other resource royalty income was $8 million below the cautious government expectations.
Iron ore sales increased almost 4 per cent to $5 billion in the 2001-02 year on a 1 per cent decline in volume to 160 million tonnes, thanks to higher prices and the devaluation of the Australian dollar.
