The first hint of the impact of falling commodity prices has shown up in the pipeline of projects in our resources industry.
The Australian Bureau of Agricultural And Resource Economics (ABARE)’s latest report on major minerals and energy development projects shows a 4% fall in the value of the projects since the April report, which was released in May of this year.
ABARE said yesterday that there were advanced minerals and energy projects to the value of $67.3 billion in October. In April it was $70.5 billion.
ABARE’s Acting Executive Director, Karen Schneider said that while total capital expenditure on advanced projects is 4% down from April 2008, expenditure was still relatively high at 16% above October 2007 levels.
“However, given the significant changes in the global economic outlook, there is still the chance that some projects may be deferred, modified or even cancelled. It’s too early to tell at this stage,” Ms Schneider said in a statement.
The listing of 347 major projects is detailed in the report Minerals and Energy: Major Development Projects – October 2008 listing, which includes 262 projects that are still undergoing feasibility studies. In April it was a record listing of 341 major projects, and included 244 projects which are still undergoing feasibility studies.
The $67.3 billion reflects 85 advanced projects, defined as being under construction or committed. Since April 2008, 31 new projects have been added to the list and 22 projects have been completed.
"At the end of October 2008, there were 85 projects at an advanced stage of development on ABARE’s project list".
"Projects in this category are either committed or under construction".
"This is the lowest number since October 2005 and is down from 97 in April 2008 as more projects have been completed (22 projects) than have progressed to an advanced stage (10 projects) during the past six months".
"Total capital expenditure of the 85 advanced projects at the end of October 2008 comes to $67.3 billion, a decrease of 4 per cent from April 2008, but 16 per cent higher than a year earlier."
In April, ABARE said the $70.5 billion reflected 97 advanced projects, defined as being under construction or committed to. "Since October 2007, 58 new projects have been added to the list and 22 projects have been completed."
Energy projects account for around 57%, or $38.2 billion, of the estimated capital cost of all listed major projects. Investment interest is also strong in iron ore (18%), alumina (7%) and gold (6%). The break up in project was similar to April.
Western Australia accounts for almost two-thirds of the capital expenditure on advanced projects, including six oil and gas projects (valued at $22.3 billion) and 11 iron ore projects ($12.3 billion).
In April WA accounted for three-quarters of the capital expenditure on advanced projects, including 12 petroleum projects (valued at $27.9 billion) and 10 iron ore projects ($16.5 billion).
In October, Queensland accounted for a further 18% ($12 billion) of capital expenditure on advanced projects, with more than half of this in coal mining and related infrastructure projects. In April Queensland accounted for a further 13% ($9 billion) of capital expenditure on advanced projects, with more than half of this in coal mining and infrastructure projects.
ABARE said that In the six months to October 2008, 22 major minerals and energy projects with a capital expenditure of $10.8 billion were completed.
"According to ABS survey data, new capital expenditure in the mining sector in 2007-08 was $31.1 billion. This represents an increase of 12.8 per cent from 2006-07, and is more than three times the average annual expenditure since 1980-81. The scale and pace of expenditure estimated by the ABS is consistent with recent trends shown in ABARE’s full list of development projects.
"In comparison, capital expenditure in the metals processing sector in 2007-08 is estimated to have been $3.8 billion, 19 per cent lower than 2006-07."
"In the six months ended October 2008, 22 major minerals and energy projects, with capital expenditure totalling $10.8 billion, were completed."
"Ten energy projects (including energy infrastructure projects) were completed at a total capital cost of $6.4 billion in the six months ended October 2008."
"Three of these were coal projects, at a combined capital cost of $245 million, while the other seven projects were related to petroleum which together cost $6.2 billion."
"The largest petroleum project completed was the $2.6 billion North West Shelf project extension, adding a fifth (4.2 million tonne) LNG train on the North West Shelf, Western Australia."
"This project coincided with the completion of the $1.4 billion Angel gas and condensate field north of Dampier, Western Australia."
"Both projects are joint ventures between Woodside Energy, BHP Billiton, BP, Chevron Texaco, Shell, and Japan Australia LNG."
"In the six months to October 2008, 12 metal mining projects were completed at a capital cost of $4.4 billion. The largest project was stage one of Fortescue Metals Group’s Pilbara Iron Ore project, capable of producing 45 million tonnes of iron ore annually, with further optimisation work under way to bring capacity to 55 million tonne."
"The project included a mine, port and rail infrastructure and a handling facility costing $3.1 billion to complete."
"Four gold projects, with total new capacity of more than 490 000 ounces of gold a year at a combi
