Mining power status confirmed

THE LATEST list of major Australian minerals and energy projects confirms Western Australia’s status as the nation’s mining powerhouse.

It also has the State in prime position to seize a rich slice of the expected growth in world minerals and energy demand for the medium term.

The Australian Bureau of Agricultural and Resource Economics’ latest major project list – produced every six months – reveals there are 173 major mineral and energy projects, worth an estimated $93.63 billion, planned for Australia.

While it is recognised that not all of these projects will get off the ground, at $19.88 billion, the total value of 53 genuinely committed projects is the highest in five years.

WA has so far accounted for three of Australia’s six major mining developments to come on-line from April to October this year.

In that period in excess of $415 million was spent in WA on the completion of BHP Billiton’s Area C iron ore mine in the Pilbara, Mt Gibson’s Tallering Peak iron ore mine in the Mid West and Jubilee Mine’s Cosmos Deeps nickel mine near Leinster.

Of the 53 committed projects, 22 are located in WA – almost double the nearest State’s contribution – Queensland with 13.

An estimated $7.4 billion will be spent completing WA’s project quota.

Despite only 10 major mining projects getting off the ground in Australia this year, compared to 20 in 2002, ABARE analysts remain up beat about the outlook for the Australian minerals and energy sector.

Releasing the major projects list last week, ABARE executive director Brian Fisher said that with 28 new major projects recently added to the list – a relatively large number compared with earlier years – it was an indication of renewed investment in the mining sector.

An interesting point about the report is the fact the list only includes major products.

While most of the major developments – minimum capital expenditure of $40 million – are in the petroleum, coal, iron ore and gold industries, there are a significant number of minor expansions and projects coming on-line that do not make ABARE’s list.

Most of these are also located in WA.

Nickel is one commodity where recent gains in the price have encouraged minor expansions of existing mines or shelved projects to come back on-line as well as the planning of larger nickel projects.

However, despite much of the report being good news for the mining sector, there was also a warning.

The report says most of the expected growth implicit in ABARE’s list of planned projects is underpinned by mineral exploration expenditure of the past decade.

“The mining sector’s ability to grow and expand its contribution to the economy in the medium to long term depends “critically” on the amount of investment in minerals exploration,” the report says.

Encouragingly, Australia’s exploration expenditure rose by 13 per cent to $1.73 billion this year, representing a substantial turn around on 2002’s 11 per cent fall.

Of the increase, Petroleum exploration lead the way rising by 13 per cent to $995 million, followed by spending on exploration for gold which was up 14 per cent to $378 million while base metals exploration rose by seven per cent to $142 million.