Even though the mining investment boom could be going a bit stale, the forecast spending for this financial year is still fantastic, over $55 billion.
The above graph colourfully illustrates this point, which was central to yesterday’s ABS figures and the overall optimism about the coming year, despite the signs of a surprising sharper than expected slowdown.
The figures support the slightly out of date numbers in last week’s half yearly report on investment in mining and energy from the Australian Bureau of Agricultural and Resource Economics.
According to ABARE a total of 72 projects were active in Australia at the end of October, with a capex figure estimated at $132.9 billion which was up 21% since the April survey.
That means there’s over two and a half years of spending in those 72 projects, at current rates contained in the ABS figures.
Based on the outcome for 2009-10, it’s actually closer to four years spending.
No wonder the RBA is concerned about the impact of the investment boom, as Governor Glenn Stevens attempted to tell the House of Reps Economics Committee in his appearance today.
Of the 72 advanced projects – under construction or committed – 26 are energy projects (dominated by LNG projects in WA and Queensland) and 25 mineral projects.
A further 15 are related infrastructure projects, such as rail and ports or gas pipelines, and six are mineral processing projects.
The increase in planned investment partly reflects the decision to proceed with the development of BG Group’s Queensland Curtis Island LNG facility and Rio Tinto’s commitment to expand its iron ore export capacity by 60 million tonnes for the next three years.
BHP Billiton revealed new spending of over $600 million on its WA iron ore business last week as well.
Western Australia accounts for around 70% of the initial capital expenditure on advanced projects, while Queensland makes up a further 21%.
ABARE said energy projects account for nearly 70%, or $92.9 billion, of the estimated capital cost of all listed advanced major projects.
Iron ore projects account for a further 13% or $16.9 billion.
Minerals and energy related infrastructure projects account for $11 billion or 8% of committed capital expenditure.
ABARE said these were "typically coal or iron ore related rail and port infrastructure projects or gas pipeline projects".
The Western Australia projects include seven oil and gas projects (valued at $65.4 billion) and nine iron ore projects ($16.9 billion).
Queensland’s list includes $27.8 billion of capital expenditure on advanced projects, with over half of this relating to BG Group’s recently committed US$15 billion LNG facility on Curtis Island near Gladstone.
The ABARE report lists a further 376 major development projects which includes 304 projects at a less advanced stage (that is projects undergoing feasibility studies or approval processes, according to ABARE).
"In the six months to October 2010, 25 projects with a combined capital cost of $8.2 billion were completed in Australia.
New capital expenditure in the mining industry was $34.8 billion in 2009–10, 8% down on the 2009 figure, according to the ABS.
ABARE said, "The fall in capital expenditure reflects some projects being suspended or delayed following commodity price falls in late 2008 and early 2009. In real terms (2010–11 dollars), new capital expenditure in 2009–10 was the second highest on record and was 2.7 times the average annual expenditure of the past 30 years ($13 billion)".
ABARE said that capital expenditure in the metal products sector, which includes mineral processing activities covered in the report’s list, was $3 billion in 2009–10, approximately 20% lower than in 2008-09.
The Bureau said total exploration expenditure declined for the first time since 2003–04.
In 2009–10, exploration expenditure in Australia’s minerals and energy sector was $5.7 billion, down 5.7% from the 2009 figures.
"Nevertheless, investment in mineral exploration remained strong, with Australia recording its third highest mineral exploration expenditure in 2009–10," the Bureau said.
"Total exploration expenditure declined for the first time since 2003–04.
"Lower exploration expenditure reflects, in part, the delaying or slowing of some exploration activity in response to lower commodity prices and cost saving measures which persisted throughout 2009."
ABARE said the fall followed lower spending on looking for energy minerals.
"In 2009–10, exploration expenditure on energy minerals declined, as lower expenditure on petroleum and uranium more than offset increased expenditure on coal.
"Petroleum exploration expenditure declined by around 8 per cent to $3.5 billion in 2009–10, although it was still the second highest recorded in Australia’s petroleum industry.
"Exploration expenditure for coal increased by 8 per cent to around $321 million in response to expectations of increasing world coal demand over the medium to longer term.
"Spending on uranium exploration decreased by 9 per cent in 2009–10, as sharp declines in uranium spot prices in recent years have resulted in some exploration activity being postponed.
"With the notable exceptions of copper and gold, expl
