29-11-2015, 10:47 PM
Aussie mining sector is already deeply in the news... at the worst, the well endowed resources will be buried in the ground awaiting stronger prices
Mining job losses to keep rising as prices fall
Resources industry job losses are tipped to continue to rack up over the next three years in response to the plunge in commodity prices, the slashing of growth capital expenditure and the completion of LNG export projects.
According to forecasting group BIS Shrapnel, a further 20,000 job losses in the period can be expected, coming on top of the 40,000 losses since investment peaked in 2012-13.
Resources investment fell 11 per cent from its peak to $80.3 billion in 2014-15, and is now forecast to decline almost 60 per cent further over the next three years to $33.9bn in 2017-18.
BIS Shrapnel’s Mining in Australia 2015-2030 report, released today, says the knock to investment is due mainly to the completion of LNG export projects, with further (smaller) falls in investment also expected in the coal, iron ore and gold segments.
It is not forecasting a recovery in investment until 2018-19, with a mild recovery to an estimated $42bn in 2019-20 — still only half of last year’s rate of expenditure.
Apart from the completion of the LNG projects, the plunge in growth capex by the industry is a response to the broad collapse in commodity prices, starting with coal in 2012-13, and since moving through all others.
BIS Shrapnel’s infrastructure and mining unit senior manager, Adrian Hart, warned that the bottom in commodity prices and related investment had yet to be reached.
He said the slowdown would continue to be a drag on Australian economic growth.
“While mining production will continue to rise strongly, led by new LNG exports, the facts are that this growth will be far less employment-intensive than the investment phase, albeit offering contractor opportunities for maintenance and facilities management,’’ Mr Hart said.
“Excluding oil and gas, mining investment has already halved since the peak, and we expect it to fall a further 40 per cent over the next two years — a 70 per cent decline overall from top to bottom — led by further declines in coal, iron ore and gold. Add in the sharp fall in oil and gas investment as LNG projects are completed, and the outlook is even worse,’’ he said.
Mr Hart said the falling mining investment had ramifications for the broader economy.
“Quite simply, Australia badly needs new investment drivers beyond mining to provide sustainable growth in jobs and incomes. While other tradeable sectors of the economy, such as tourism, are benefiting from the lower Australian dollar and starting to invest, the onus is also on governments to stand up and get back on the job of investing in productive public infrastructure,’’ Mr Hart said.
Despite the jobs and investment crunch in the resources industry, the heavy investment in growth projects before the prices boom began to fade away continues to push increases in production, with increases still to come over the next five years.
Gina Rinehart’s $10bn Roy Hill iron ore project is the latest example of that, with its first shipment of product to Asian customers expected next week and with a long ramp-up to full production ahead of it.
Mining job losses to keep rising as prices fall
- THE AUSTRALIAN
- NOVEMBER 30, 2015 12:00AM
- Barry Fitzgerald
[Image: barry_fitzgerald.png]
Resources Editor
Melbourne
[img=650x0]http://cdn.newsapi.com.au/image/v1/b9010c09129e4172a3002624e350947b?width=650[/img]
[*]BIS Shrapnel says 20,000 job losses in the period can be expected in the next three years.
Resources industry job losses are tipped to continue to rack up over the next three years in response to the plunge in commodity prices, the slashing of growth capital expenditure and the completion of LNG export projects.
According to forecasting group BIS Shrapnel, a further 20,000 job losses in the period can be expected, coming on top of the 40,000 losses since investment peaked in 2012-13.
Resources investment fell 11 per cent from its peak to $80.3 billion in 2014-15, and is now forecast to decline almost 60 per cent further over the next three years to $33.9bn in 2017-18.
BIS Shrapnel’s Mining in Australia 2015-2030 report, released today, says the knock to investment is due mainly to the completion of LNG export projects, with further (smaller) falls in investment also expected in the coal, iron ore and gold segments.
It is not forecasting a recovery in investment until 2018-19, with a mild recovery to an estimated $42bn in 2019-20 — still only half of last year’s rate of expenditure.
Apart from the completion of the LNG projects, the plunge in growth capex by the industry is a response to the broad collapse in commodity prices, starting with coal in 2012-13, and since moving through all others.
BIS Shrapnel’s infrastructure and mining unit senior manager, Adrian Hart, warned that the bottom in commodity prices and related investment had yet to be reached.
He said the slowdown would continue to be a drag on Australian economic growth.
“While mining production will continue to rise strongly, led by new LNG exports, the facts are that this growth will be far less employment-intensive than the investment phase, albeit offering contractor opportunities for maintenance and facilities management,’’ Mr Hart said.
“Excluding oil and gas, mining investment has already halved since the peak, and we expect it to fall a further 40 per cent over the next two years — a 70 per cent decline overall from top to bottom — led by further declines in coal, iron ore and gold. Add in the sharp fall in oil and gas investment as LNG projects are completed, and the outlook is even worse,’’ he said.
Mr Hart said the falling mining investment had ramifications for the broader economy.
“Quite simply, Australia badly needs new investment drivers beyond mining to provide sustainable growth in jobs and incomes. While other tradeable sectors of the economy, such as tourism, are benefiting from the lower Australian dollar and starting to invest, the onus is also on governments to stand up and get back on the job of investing in productive public infrastructure,’’ Mr Hart said.
Despite the jobs and investment crunch in the resources industry, the heavy investment in growth projects before the prices boom began to fade away continues to push increases in production, with increases still to come over the next five years.
Gina Rinehart’s $10bn Roy Hill iron ore project is the latest example of that, with its first shipment of product to Asian customers expected next week and with a long ramp-up to full production ahead of it.