WA’S resource sector rebound may be just around the corner.
The Federal Government has exempted Australia’s multi-billion dollar liquefied natural gas industry from national greenhouse gas policy.
This clears the way for the fourth LNG train to go online and that is a couple of projects worth about $2.5 billion.
Woodside Commonwealth approval coordinator Steve Hardy said there would also be further spending on offshore production later this decade.
“We’re targeting financial contracts sufficient to underpin the fourth LNG train,” Mr Hardy said.
If those contracts come through, work on the fourth LNG train could start next year.
LNG exports are worth $1.5 billion per year to WA. Building the fourth LNG train will expand the state’s LNG production capacity by 50 per cent.
Mr Hardy said there were plans to build another LNG train after this one soon.
Also on the books is the $5 billion Austeel steel project planned for the Pilbara.
It recently signed a gas-buying Memorandum of Understanding with the North West Shelf Gas joint venture.
Another project showing signs of life is the Kingstream slab steel project planned for Oakajee. Chase Bank has agreed to find finance for the project.
These signs all bode well because business investment in the WA economy has fallen 50 per cent since its peak in 1998.
Unlike the eastern states, where domestic consumption is big enough to fuel the economy, WA is reliant on business investment.
Chamber of Commerce and Industry senior economist Dan Engles believes unemployment will soon start rising.
“The building industry is starting to go into a slide and the resources sector is not going up,” Mr Engles said.
He said the predicted resources sector recovery had not arrived.
“All the fundamentals are in place. Industrial production is up in key markets,” Mr Engles said.
“Virtually all countries in the South East Asian region are showing positive growth. World commodities prices are up by 7 per cent to 8 per cent.”
However, Mr Engles believes the signs are not positive enough.
“Corporations have to do something to make money and one is acquisition,” he said “With the currency as low as it is, now is the time for rationalisation.”
