PERTH (miningweekly.com) – Investment in the Australian resources sector was expected to peak at A$85-billion in 2013, with gas attracting the most investor attention, analytical firm Wood Mackenzie said on Thursday.
Wood Mackenzie Australia upstream research head Chris Graham said the high investment levels would be sustained over the next three years, surpassing the previous three-year period.
“On the upstream side, the unprecedented level of investment over the last few years is set to continue, reaching A$48-billion in 2013 and peaking at A$50-billion in 2014. Gas expenditure will be around 50% of the total over these two years.”
After gas, spending would be highest in iron-ore and coal. In 2013, iron-ore investments would comprise just over 25% of the total, reaching a record high of A$22-billion, while coal currently ranks third, with about 10% of 2013 spending.
The group’s global metals and mining supply research head Gero Farruggio said the Australian iron-ore sector had invested heavily over the past five years, lifting Australia’s share of global seaborne trade from 35% in 2007 to 44% in 2012.
“Capital investment in the Australian iron-ore sector will reach a peak in 2013, as infrastructure construction and mine expansions are completed by the majors, and Chinese steel production growth moderates. Australia’s dominance will increase further, taking its share of global seaborne trade to over 50% by 2016, as major Pilbara-based mine and infrastructure investments come to fruition,” he added.
Farruggio noted that coal would remain subdued over the next few years, owing to the tough price environment. But the resumption of deferred projects and the development of new producing areas would keep capital spending strong through to 2017.
“This will drive an increase in coal’s proportion of overall capital spend in Australia, taking over iron-ore's position as the commodity with the second-highest investment,” he said.
Looking regionally, Wood Mackenzie noted that Western Australia and Queensland dominated, making up 83%, or A$24-billion, of total capital expenditure in 2013.
This was driven by large gas- and iron-ore projects.
The analytical firm predicted that investments in iron-ore would push resource-sector investment in Western Australia to record levels.
Committed capital spend for the seven liquefied natural gas projects that were under construction would also ensure that investment remained high for the next three years, at least, particularly in Western Australia and Queensland.
Investment in the Northern Territory would also peak over this period, primarily owing to the construction of the Ichthys oil and gas project.
“The outlook for the next three years confirms the strength of the Australian resources sector, as we see investments being made based on decisions taken during the boom years. Today's decision-makers are faced with different challenges in a changing environment. A new wave of major gas and iron-ore projects are needed to maintain these levels of investment in the longer term,” Graham concluded.