Chief Economist indicates the bottom of the mining bust – by Cole Latimer (Australian Mining – October 2, 2015)

A report from the Department of Industry Innovation and Science’s Office of the Chief Economist states the bottom of the mining bust is here.

The report outlined an overall drop of around 12 per cent in Australia’s resources export earnings year on year, noting the commodity price decline playing a large part in the overall export earnings decline.

However the Department is still positive on the industry, recognising the shift from a capital and investment heavy construction boom into a period of production.

“Australian producers were well-positioned to meet the projected growth in demand as production starts to increase following a long period of investment,” the report said.

“The Australian resources and energy sector is transitioning decisively into the production phase of the resources boom,” the Department’s Chief Economist Mark Cully added.

“Australia’s resources and energy commodities exports are projected to increase rapidly in response to a substantial increase in production capacity, particularly in LNG and iron ore.”

He went on to state, “The production phase of the boom, which is yet to peak, is expected to last a lot longer than the price and investment phases of the boom (which were eight and six years respectively). The production phase is largely underpinned by $400 billion of investment that was channelled into resources and energy projects between 2003 and 2014.”

The new report outlined positive guidance.

“Over the medium term, the outlook for the Australian resources sector is largely positive,” the report said.

“The prices of several commodities, in particular iron ore and coal, are projected to increase moderately towards the end of the outlook period. In addition, production and export volumes are projected to increase as the recent investment in the sector contributes to increased output.

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