Mining outlook loses sheen as investment flattens
This year’s Mining Business Outlook Report by Newport Consulting has found that mining leaders are ‘more bearish’ in their economic outlook for 2012–13 compared to the previous financial year.
The report found that the “mining industry appears to be in survival mode, with only 25 per cent of companies planning to invest in major CAPEX projects this year compared with 52 per cent last year.”
Only 20 per cent of the mining leaders interviewed for this year’s Mining Business Outlook Report are ‘very optimistic,’ compared to 57 per cent last year.
At the same time, the number of mining leaders who describe their outlook as ‘not optimistic’ has surged to 34 per cent, compared with just 13 per cent last year. Over the period from 2009–10 to 2012–13, the number of mining leaders who are ‘not optimistic’ is at a three-year high.
Key factors behind a subdued outlook for 29 per cent of respondents included rising costs of labour and energy, union activity hampering one in five projects, and cost spikes due to the carbon tax. The drop in coal and ore prices has added to the challenges.
The report highlighted the need for infrastructure to be prioritized by the government.
“The vast potential of mining projects in Queensland and Western Australia has highlighted the need for more economic and social infrastructure in these regions – from better rail, road and air links, to social assets such as housing, health care and community services. Many mining companies now invest in their own transport infrastructure, such as overland conveyors to transport their output from pit to port. Such infrastructure currently accounts for an estimated 80 per cent of capital expenditure. Our mining leaders called for more government support on this front.”
The report is available here.