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Is second boom coming?

DEREGULATION in the energy sector will pay off for remote WA and contribute to a second minerals boom as the cost-benefits of the changes are realised by mining groups.

This is the optimistic assessment of WA’s future resource investment profile by BIS Shrapnel.

While resource investments will be in a trough in 2000, the following year will shape up to be a terrific year for resource investments, according to the report Engineering Construction in Australia 2000-2014.

“Our optimism about the strength of resource investment is related mainly to much lower energy costs,” the report says.

“Lower energy costs have resulted from the deregulation of the gas market in WA and the increasing availability via the Goldfields Gas Transmission pipeline that runs from the Pilbara region to Kalgoorlie.

“These low energy costs have vastly improved the economics of remote WA mines and downstream processors.

“Advances in mining and processing technologies have also facilitated relatively low-cost mining methods and ensured the viability of many of these large projects despite an often volatile price cycle.”

WA and the Northern Territory will be the guiding lights during the next three years, the report indicates.

The $4.4 billion expansion of the North West Shelf project and the $3 billion Pilbara petrochemical plant in WA will help stem a decline in the traditional powerhouses of

NSW, Victoria and Queensland.

However, report author and BIS Shrapnel senior economist Nigel Hatcher warned that if those projects did not proceed as expected, the downturn in Australia would be more severe.

Before the boom WA must sit tight through a rough patch in 2000, the report says.

“The eyes have essentially been picked out of the market in terms of the most attractive projects for private investment and the political mood is becoming less favourable,” Mr Hatcher said.

A downturn would cause infrastructure spending to drop to its lowest level in five years. This level is, however, still well above previous peaks.

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