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Investment in Aus megaprojects to peak this year – Deloitte

31st January 2013

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) - Investment into Australia’s major resources projects was expected to peak late this year, and would likely decline thereafter, advisory firm Deloitte Access Economics said this week.

The December issue of Deloitte’s Investment Monitor noted that the total value of projects in its database had increased by some A$26.9-billion, up 2.9% from the September quarter, and up 4.5% on the previous year.

This was despite the cancellation of some projects and a number of large projects moving into the production phase. However, Deloitte noted that much of the rise in project value had been from cost revenues, including a A$9-billion blow-out from the Gorgon liquefied natural gas (LNG) project.

While there were still a significant number of mining projects in the pipeline, the report stated that there was a danger that the multibillion-dollar research projects would eventually reach completion, and would be replaced by multibillion-dollar projects in other sectors.

“Indeed, the rollercoaster of commodity prices over the past few months and concerns over cost blow-outs in major projects under way, means Australia’s resources megaprojects may soon be an endangered species,” Deloitte warned.

This year brought with it the final investment decision date for a number of large projects, the top ten of which could potentially provide a further A$126-billion boost to Australia’s investment agenda, Deloitte said.

The advisory firm noted that the mining sector would face a number of key challenges during 2013, as capacity constraints manifested in high labour and capital costs, and recent volatility in commodity prices threatened the returns on some projects.

Within the mining sector, the oil and gas industry continued to dominate the investment agenda; however, Deloitte noted that rising construction costs, including labour costs, could be taking the gloss off some potential new projects.

Six LNG projects currently under construction accounted for some A$19-billion worth of investment, with Deloitte stating that several of these would be ongoing for some time, but peak construction periods would be reached soon.

Western Australia and Queensland also continued to be the major benefactors in terms of capital investment, with a combined share of around 53% of works under way and in the pipeline.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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