The resources boom is well and truly alive, as we saw yesterday, and will have more confirmation of the size of the boom later today.
The news tells us that despite the budget cuts and other moves yesterday, the economy is going well, with the main growth driver still solid and expanding.
The OECD has forecast 4% growth next year and 3.2% in 2013, up from 1.8% in 2011.
That’s despite the federal government cutting forecast growth to 3.25% next year and 2013, down from previous forecasts of 4% and 3.75% respectively.
And the OECD forecast that capital investment would drive an 8% surge in gross capital formation in the economy in 2012, and a 6.9% one in 2013, against a 5.2% rise this year.
That means investment in resources will be the major stimulant for the economy over the next couple of years at least.
The federal government’s main resources adviser said yesterday that there was a 34% jump in committed investment in the mining industry in the six months to the end of October.
The Mining Industry Major Projects – October 2011 report, released yesterday by the Bureau of Resources and Energy Economics (BREE) revealed that a record $231.8 billion had been committed by companies of all sizes.
"The record level of committed capital expenditure will underpin growth in Australia’s mineral and energy exports over the medium and long term," according to a statement from Professor Quentin Grafton, BREE Executive Director and Chief Economist.
The $231.8 billion consists of a record 102 projects at an advanced stage of development (committed or under construction) including 40 minerals projects, 37 energy projects, 21 infrastructure projects and four mineral processing projects.
"Significant growth in coal, iron ore and gas exports are expected to occur over the medium and long term, underpinned by the capital investment that is occurring in these sectors" said Professor Grafton.
Oil and gas, iron ore and coal and associated infrastructure accounted for around 93% of the total committed capital expenditure.
The significant increase in the value of advanced projects in the six months to October 2011 reflects the final investment decision on three LNG projects – Wheatstone, APLNG (in Queensland) and Prelude which are estimated to have a collective capital cost in excess of $50 billion.
Western Australian accounts for around 64% of expenditure on advanced projects which reflects the location of the majority of Australia’s oil, gas (LNG) and iron ore projects.
Queensland accounts for a further 30% in three coal seam gas LNG projects and the development of a number of coal projects and associated infrastructure.
The Bureau said there were a further 302 projects at a less advanced stage, which are at various stages of planning prior to a final investment decision.
In the six months to October 2011, 13 projects with a combined capital cost of $9.6 billion were completed in Australia.
"Of the thirteen projects completed, four were energy projects, five were mineral mining projects, and four were infrastructure projects.
"In terms of average capital cost (in 2011-12 dollars), the cost of the completed projects was the highest on average for the previous thirteen years," the Bureau said.
The Bureau also said that In 2010–11 financial year, exploration expenditure in Australia’s minerals and energy sector totalled $6.2 billion, 9% above 2009–10’s figure.
Investment in mineral exploration remains strong, with Australia recording its second highest annual mineral exploration expenditure in 2010–11.
New capital expenditure in the mining industry totalled $51 billion in 2010-11, 28% higher than in 2009–10.
The bureau said "Capital expenditure in the metals products sector, which includes mineral processing activities covered in BREE’s projects list, totalled $3.4 billion in 2010-11.
"The increase in capital expenditure in the sector is approximately 8 per cent higher (in real terms) than in 2009-10 and follows a declining trend since 2006-07.
"Higher capital expenditure in 2010-11 most likely reflects projects under construction including the Worsley refinery Efficiency and Growth project and the Yarwun alumina refinery expansion.
"However, surveyed industry intentions indicate metal products expenditure could decrease by 41 per cent to $2.0 billion (2010-11 dollars) in 2011-12," according to BREE.
And, based on industry intentions from the June quarter 2011, Australian Bureau of Statistics survey data indicate capital expenditure in the mining sector in 2011–12 may be around $80 billion.
That figure will be updated later today with the September quarter actual and prospective capex data from the Australian Bureau of Statistics.
Of the 404 projects on BREE’s October 2011 list, 302 projects remain uncommitted, the Bureau said.
And of that group, "The capital intensive projects in the list still undergoing feasibility studies are 14 proposed LNG developments, which collectively could add over 75 million tonnes to Australia’s annual LNG production capacity in the longer term".
The Bureau said these projects include the Browse, Ichthys, Sunrise and Bonaparte projects off the coast of Western Australia and the Arrow LNG plant and the second train at the APLNG project at Gladstone in Queensland.
