PERTH (miningweekly.com) – The Western Australian economy is headed for a slowdown as the resources sector transitions from a construction to an operational phase, the latest Quarterly Economic Brief from the Chamber of Energy and Minerals of Western Australia (CME) revealed on Tuesday.

Deloitte Access Economics has projected that Western Australia’s economy would grow by 2.7% in 2014/15, with a pick-up in activity expected from 2015/16, and a forecast peak of 4.4% in 2016/17.

However, this forecast peak was downgraded from the previously expected 5.9%, owing to the sharper-than-expected contraction in commercial construction activity in the state, including resource sector-related construction.

The CME noted on Tuesday that the decline in global commodity prices gathered pace in the three months to October, with the non-rural component of the benchmark Reserve Bank of Australia Commodity Price Index falling by 8% in the quarter to reach a five-year low.

The spot price of iron-ore declined by about 15.7% compared with the previous quarter, and by nearly 40% over the year, the report noted. The nickel price was down 17.3%, while copper and gold also fell.

Only liquefied natural gas bucked the trend, up 17% over the quarter.

“Despite recent commodity prices generally declining, exploration expenditure was up in the 2014 June quarter,” said CME CEO Reg Howard-Smith.

Petroleum led the increase, with an additional A$134-million invested in exploration during the quarter, and is one of only two commodities, along with uranium, where expenditure was higher over the year, rising by A$30-million, or 3.5% from the June quarter 2013 to the June quarter 2014.

The report found that in 2013/14, the Australian iron-ore sector contributed A$19-billion of gross value add to the Australian economy, or 4.8% of total gross domestic product in Western Australia, and directly employed over 60 000 workers, representing more than 55% of the total mining sector workforce in the state.

“The growth in the iron-ore workforce is pretty spectacular, when only a decade ago the workforce was only 12 000,” said Howard-Smith. 

“It is abundantly clear the expansion of the iron-ore industry has delivered significant benefits to both the Western Australian and national economy with additional taxation and royalty revenues, job creation and direct and indirect economic activity.”