Investment into Australia’s major resources projects was expected to peak late this year, and would likely decline there- after, advisory firm Deloitte Access Economics said last 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 roller coaster of commodity prices over the past few months and concerns over cost blow-outs in major projects under way mean 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.
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 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 in investment, with Deloitte stating that sev- eral of these would be ongoing for some time, but peak construc- tion periods would be reached soon.