Friday, May 25, 2012

Mining boom? Not compared to what's to come

A mere shadow

All of the investment in the mining boom to date is but a shadow of what’s about to come according to the latest update by the Bureau of Resources and Energy Economics.

The analysis identifies “advanced projects” worth a jaw-dropping $260.8 billion, as well as a second category of less-advanced projects worth $242.4 billion.

The total - the investment Australia would get if all the projects came to fruition - exceeds half a trillion Australian dollars, easily a new investment milestone.

By way of comparison the Bureau totals all of the resource and energy investment to date in both of the mining booms since the turn of the century. It amounts to $138.4 billion. (That’s an inflation-adjusted figure, the dollar figure is lower.)

Like-for-like the Bureau is saying the value of projects already locked in is roughly twice everything that’s been spent in the past decade. Add in the projects that are less advanced, and it’s more than three times all that’s been spent to date - but there are good reasons not to do that, BHP and many others are having second thoughts.

The surprisingly large value of the projects at an advanced stage is matched by their surprisingly small number... A mere 98 projects account for the $260.8 billion - 39 in energy, 38 in minerals, 19 in infrastructure and two in processing. The big money is in energy projects: seven of them are liquified natural gas projects worth a combined $164 billion.

The latest addition, the Ichthys LNG project off north Western Australia will pipe gas to Darwin via a 900 kilometre underwater pipeline, the world's longest. Owned by the Tokyo-listed Inpex Corporation and the French oil and gas multinational Total, it has the potential to meet 10 per cent of Japan’s LNG needs, needs that are likely to grow as Japan turns away from nuclear power.

Western Australia accounts for half of the investment at an advanced stage. When taken together with Queensland and the Northern Territory it accounts for 94 per cent. Less than $1 billion of the investment is in NSW, less than half a billion in Victoria.

In today's Sydney Morning Herald and Age

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