PERTH (miningweekly.com) - Western Australia’s Chamber of Minerals and Energy (CME) on Tuesday reported that commodity price increases, particularly for iron-ore, had seen to confidence returning to the local market.

In the latest edition of the Western Australian Resources and Economics Report, the CME noted that, at the end of the September quarter, falling commodity prices affected the overall conditions of the Western Australian economy. 

While prices in the December quarter did not return to their record highs, the industry did see an improvement in overall economic conditions.

CME CEO Reg Howard-Smith noted that during the quarter ended September, iron-ore and copper production increased; however, gold, nickel and titanium production decreased during the same period.

“The 40% increase in copper production appears most likely to be attributable to the commencement of production from Sandfire Resources’ DeGrussa copper mine. We expect to see increases in production ramping up throughout the 2013 year,” he said.

The decrease in gold and nickel production was the compound result of decreases in both volumes exported and commodity prices, while the volume of iron-ore exported increased by 2% compared with the previous quarter.

Howard-Smith noted that notwithstanding the softening of prices towards the end of last year, Western Australia and the wider economy continued to benefit from the growth in the resources sector. 

“Ongoing investment and growth is maintaining record levels of employment in Western Australia,” he added.

Western Australia enjoyed the highest year-on-year growth in employment to November 2012 in Australia, at 4.7%. The national figure for the same period was considerably more modest at just 1.1%, highlighting, once again, the contribution of Western Australia to the national economy, the report noted.

Meanwhile, the report also found that total mineral and petroleum exploration in the September quarter increased by 1.2% to A$1.24-billion.

The increase was the result of a continuing expansion in petroleum exploration, which increased by 21% from the June quarter to reach A$754-million. In contrast, mineral exploration expenditure declined by 19% from the previous quarter to A$489-million, with falls reported across all of the major minerals.

The largest decreases were recorded for copper and nickel, which decreased by 23% and 45% respectively.

The report noted that, while there could be specific reasons for each of the minerals, the likely overriding reason for the falls was the weak commodity price environment, which was likely to have been a catalyst for decisions to reduce or postpone mineral exploration expenditure.

In the six months to October, total committed capital expenditure (capex) on major projects in Western Australia increased by 4.1% to A$141-billion from the A$135-billion at the end of April 2012.

This is 4.3% lower than the historical peak of A$147-billion at the end of October 2011. Energy projects accounted for the bulk of the committed expenditure, while mineral projects accounted for 21.4% and infrastructure projects 10.5%.

The report stated that, while it appeared the peak of the capital investment expenditure in Western Australia could have passed, it did not appear from the most recent data that committed capex was falling away.