Australia’s resources minister, Martin Ferguson, has declared the nation’s mining boom “over” after BHP Billiton, the world’s biggest miner, delayed plans to build the largest open-pit mine in the world as the global economy slows.
“You’ve got to understand, the resources boom is over. We’ve done well – A$270bn (£179bn) in investment – the envy of the world,” Mr Ferguson told ABC radio.
“It has got tougher in the last six to 12 months. Look at Europe, the state of the European and global economy. Think about the difficulties in China. The commodity price boom is over and anyone with half a brain knows that.”
Analysts have warned of growing headwinds in Australia due to the commodity slowdown, with Deutsche Bank this week saying the mining-powered economy was at risk of slipping into recession in 2013 as the value of its exports drop.
Australia’s central bank expects mining and energy-related spending to peak sometime in 2013-14, quicker than expected, due to global uncertainty.
Prime Minister Julia Gillard was questioned on Mr Ferguson’s comments in parliament, with the opposition seizing on them as proof that Canberra’s return to a budget surplus in 2013 as planned was at risk.
Ms Gillard insisted that mining would continue to buoy Australia’s economy, with projects worth hundreds of billions of dollars yet to come online, despite commodity prices appearing to have peaked.
“We will continue to see this nation earn a great deal of prosperity and wealth from exporting resources,” she told lawmakers.
“We will continue to see billions of dollars invested in our resources sector, we will continue to see the opening of new projects and we will continue to see investment decisions made.
“The mining boom, the amount we are earning from exporting mining, will be with us for a long time to come.”
The Reserve Bank of Australia predicted in its quarterly outlook on monetary policy this month that the boom would end “somewhat earlier than previously thought”. It noted that some resource companies had “adopted a more cautious approach to investment opportunities currently under consideration… given the more uncertain global outlook”.
BHP said it was reconsidering the economics of its $20bn (£12bn) expansion of the Olympic Dam mine in South Australia, as its first fall in profits in three years.
As a result, the miner will not be ready to approve the development before December 15, the deadline agreed with the South Australia state government. No major new projects will now be approved before June 2013, management said.
BHP’s chief executive Marius Kloppers gave no guarantees the flagship Olympic Dam project, dubbed “the Apollo programme of mining ventures”, would get the go ahead as the company tries to improve its numbers.
“We hope that we can come up with a less capital intensive option in a couple of years’ time, which we can approve,” he said. “Currently we don’t have a project that we can approve.”
Mr Kloppers asked to “plead the fifth” on whether Australia faces a plunge into recession as the country’s mining boom comes to an end.
But he warned that its eastern seaboard coal industry is feeling the pain from lower prices, higher operating costs, carbon taxes and increased royalties, prompting a “broad industry movement” towards cutting costs and jobs.