Activity in Australia’s mining sector will accelerate this financial year, according to forecasts by industry analysts BIS Oxford Economics.
The Mining in Australia 2017 to 2032 report says mining exploration, production, and maintenance are all expected to lift significantly through 2018.
It will track higher in subsequent years as strengthening global economic growth supports commodity prices and underwrites new investment and mining operations expenditure.
Mining production only grew 2.5% last financial year, according to ABS National Accounts data.
BIS Oxford Economics expects growth of 5.5% in 2017-18. Here are its forecasts:
“The enormous investment boom is now translating into production, particularly within oil and gas, where Australia is expected to become the leading LNG exporter by 2022,” said Rubhen Jeya, BIS Oxford Economics economist.
“Growth in mining production will be roughly double the pace of the national economy over the next five years.”
And the completion of a $200 billion wave of LNG projects over the coming year will see aggregate mining investment fall further over the next two years.
However, this masks the start of a new cycle of investment across a range of commodities including copper, gold, coal and iron ore.
The completion of the Wheatstone, Ichthys and Prelude projects will subtract a further $20 billion in mining investment over the next two years.
Excluding oil and gas, mining investment elsewhere is expected to grow at a double-digits over 2017-18 and 2018-19.
Higher prices for most commodities over the past year have already seen a turnaround in exploration activity, which is forecast to rise 8.7% in 2017-18 and nearly 40% over the next five years.
The strong turnaround in prices has boosted miners’ profitability, with maintenance activity to be the biggest winner, according to the report.
“Maintenance has taken the brunt of cost cutting efforts in recent years,” said Jeya.
“With higher utilisation across a much larger post-boom asset base, we expect maintenance activity to rise nearly 60% in real terms over the next five years, offering crucial opportunities for contractors.
“But it really is a very different story by commodity and region around Australia in this space.”