Australia's mining-led construction boom will peak in 2014 with the value of planned projects already starting to contract, according to the Deloitte Access Economics September quarter Investment Monitor.
Deloitte Access Economics expects investment levels to continue to rise in the short term and then peak in 2014 as fewer projects move through planning to the construction phase.
It notes that investment in mining projects has been the “major driver of economic growth” but says that “all good things must come to an end”.
Mining investment projects currently account for nearly half (46%) of all major construction projects either under construction or mooted, with transport and storage infrastructure projects (many tied to mining projects) making up nearly a third (31%).
The report finds that the value of planned projects has fallen back slightly over the past three months by $10.6 billion to $465 billion due to a lack of new resources projects, and some project cancellations, including BHP Billiton’s $20 billion Olympic Dam mine expansion project near Roxby Downs, as well as the delaying of the Port Hedland outer-harbour port expansion project in the Pilbara region in WA.
“While the bulk of other resources projects in planning are still on the agenda, there are question marks over the scale of some potential projects, such as Fortescue’s $6.2 billion Solomon mine expansion and [Gina Rinehart’s] Hancock Prospecting’s $9.5 billion Roy Hill project," says Deloite Access Economics.
Question marks also hang over Xstrata’s possible $6 billion Wandoan coal mine in Queensland, which has been placed on hold until market conditions improve, while BHP Billiton’s plans for a $3 billion expansion of the Peak Downs coking coal prospect have been shelved.
The Investment Monitor, which tallies all private and public engineering construction, non-residential building and equipment investment projects in all Australian industries, found the value of projects increased by $6.2 billion, or 0.7% from the June quarter, and has increased by 3.7% over the past year.
As the chart below shows, the mining boom accelerated from March 2011, but has slow-down since the start of the year.
Value of definite projects by status ($billion)Click to enlarge