ABARE’s latest report of major minerals and energy development projects reveals that like capex generally, spending on new projects in the mineral and energy sectors is approaching record levels.
A total of 20 projects with a capital expenditure of $11.4 billion were completed in the six months to April 2010, ABARE reported.
The Bureau said that at the end of April the value of advanced minerals and energy projects was $109.6 billion, the second highest on record.
“The high level of committed capital expenditure and the significant number of projects committed to in the past six months is a reflection of expectations of growing demand for minerals and energy commodities in the medium and longer term,” ABARE said.
The $109.6 billion is spread across 75 advanced projects, defined as being ‘under construction’ or ‘committed’, of which 41 are energy projects, 28 are mineral projects and six are mineral or energy processing projects.
Energy projects account for around 73%, or $80 billion, of the estimated capital cost of all listed advanced major projects.
Iron ore projects account for a further 16%, or $17 billion.
Western Australia accounts for around 79% of the capital expenditure on advanced projects, including six oil and gas projects (valued at $64.1 billion) and 10 iron ore projects ($17 billion).
Queensland accounts for a further 10% or $11.3 billion of capital expenditure on advanced projects, with half of this in coal mining and related infrastructure projects.
ABARE said the latest list of 361 major development projects includes a record 286 projects at a less advanced stage (that is projects undergoing feasibility studies or approval processes).
In the six months to April 2010, 49 new projects were added to ABARE’s list of development projects.
"This compares with 44 projects being added in the six months to October 2009 and 11 projects being added in the six months prior to April 2009," ABARE said.
"Based on Australian Bureau of Statistics (ABS) survey data, new capital expenditure in the mining industry is estimated to be $41.3 billion in 2009-10, 6 per cent higher than in 2008-09.
"In real terms (2009-10 dollars), new capital expenditure in 2009-10 was the highest on record and more than three times the average annual expenditure over the past 30 years ($12.9 billion).
"There are indications that capital expenditure in the mining sector may increase further in 2010-11.
"Based on industry intentions surveyed by the ABS in the December quarter 2009, capital expenditure in the mining sector in 2010-11 would be around $49 billion (2009-10 dollars).
"If this expenditure is realised, this would represent a 19 per cent increase on 2009-10 expenditure."
(In yesterday’s second estimate the increase from mining could be of the order of 32% in 2011.)
"The scale and pace of expenditure estimated by the ABS is consistent with recent trends shown in ABARE’s full list of major mineral and energy development projects," The Bureau said.
"Capital expenditure in the metals products sector, which includes mineral processing activities covered in ABARE’s projects list, is estimated to be $3.1 billion in 2009-10, approximately 20 per cent lower (in real terms) than in 2008-09.
"Lower capital expenditure most likely reflects the nearing of completion of two major upgrades at the Boyne Island smelter and Kwinana titanium oxide pigment plant.
"Surveyed industry intentions indicate metal products expenditure could increase by 10 per cent to $3.4 billion (2009-10 dollars) in 2010-11."
