Australia, an engine room of the decade-long global commodity boom, is forecasting a staggering 90 percent plunge in spending on projects, calling time on its biggest resources bonanza since the 1850s gold rush.
After a collapse in prices from oil to iron ore, the value of Australia’s approved and financed mining and energy projects is forecast fall to about A$15 billion ($12 billion) in 2017, from A$226 billion at the end of April.
Planned iron ore projects worth at least A$10 billion have been canceled since October, according to the Department of Industry and Science. Billionaire Gina Rinehart’s Roy Hill — due to ship later this year — is Australia’s last remaining mining project being developed worth A$5 billion or more.
“The value of committed projects is about to start declining substantially,” Mark Cully, the department’s chief economist, said Wednesday in a statement. “It is clear that this will not be offset by new investments coming through the pipeline.”
Waning demand growth in key markets including China, the biggest commodities consumer, and programs by miners to cut capital expenditure mean there’s a lack of projects toward the end of this decade, the department said in a report.
Australia is the world’s biggest exporter of iron ore and coal and is set to become the No.1 shipper of liquefied natural gas by the end of the decade.
It may be at least two years before producers in Australia commit to any new coal developments and longer still before iron ore suppliers contemplate new mine and infrastructure projects, according to UBS Group AG.
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