The return of the resources boom was again confirmed by the news yesterday that the value of mining and energy projects under development in Australia had jumped 40% from April to October this year.
More specifically, the rise can be put down to one project: the $43 billion Gorgon LNG project in Western Australia which was given the greenlight in the period.
Australian Bureau of Agricultural and Resource Economics (the federal government’s commodities forecasting group) said the value of advanced minerals and energy projects was $113 billion as at October.
“The increase in planned capital expenditure reflects expectations of growing demand for minerals and energy commodities in the medium term,” the bureau’s deputy executive director Terry Sheales said in the statement.
(See the ABARE graph above on capex).
Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell in September agreed to proceed with the Gorgon venture located off northwestern Australia.
“The record value of advanced minerals and energy projects reflects, in part, the decision to proceed with development of the A$43 billion Gorgon LNG project,” Dr Sheales said.
“It is the single largest project undertaken in Australia’s resource sector.”
Western Australia accounts for about 83% of the capital expenditure on advanced projects.
ABARE said the $112.5 billion is spread across 74 advanced projects, defined as being under construction or committed, of which 38 are energy projects, 31 are minerals projects and five are mineral processing projects.
Energy projects account for around 72%, or $81.1 billion, of the estimated capital cost of all listed advanced major projects.
Iron ore projects account for a further 15% or $16.8 billion.
Included in Western Australia’s share of 83% were eight oil and gas projects (valued at $67.2 billion) and eight iron ore projects ($16.8 billion).
ABARE said Queensland accounts for a further 8% ($9.3 billion) of capital expenditure on advanced projects, with more than half of this in coal mining and related infrastructure projects.
The ABARE list includes a total of 341 major development projects, including 267 projects at a less advanced stage, or projects undergoing feasibility studies or approval processes.
In the six months to October 2009, 44 new projects have been added to ABARE’s list of development projects.
This compares with 11 projects added in the six months to April 2009 and 31 projects being added in the six months prior to October 2008.
“The large number of new projects added to the list since April 2009 is another indication of the positive outlook for world minerals and energy commodity demand over the medium to longer term,” Dr Sheales said in the statement.
In the six months to October 2009, 15 major minerals and energy projects with a capital expenditure of $3.9 billion were completed.
ABARE said that in 2008-09, expenditure on exploration in Australia’s minerals and energy sector was $6.0 billion.
That was an increase of 10% on expenditure in 2007-08. In real terms (2008-09 dollars) exploration expenditure in 2008-09 was the highest on record and more than double the average expenditure of the past 30 years.
ABARE said the increase was the slowest rate since 2003-04.
This "slowing growth reflected a sharp decline in prices of most commodities as a result of the global economic downturn," ABARE said.
"Petroleum exploration expenditure rose by 26 per cent to $3.8 billion, the highest on record and partially reflecting high oil prices in the first quarter of the financial year.
"Coal exploration also rose, by 27 per cent to nearly $300 million. Uranium exploration expenditure declined by 20 per cent, following a doubling of expenditure in the previous financial year. This expenditure reduction is partly attributable to declining world uranium prices over this period.
"With the exception of iron ore, all other major mineral commodities experienced declining exploration expenditure in 2008-09. Exploration expenditure for iron ore was $589 million, an increase of 30 per cent.
"However, this was lower than the 52 per cent growth that occurred during 2007-08.
"Exploration expenditure on base metals (copper, silver, lead, zinc, nickel and cobalt) declined by 34 per cent in 2008-09 to around $519 million, while expenditure on gold exploration declined by 26 per cent to $438 million.
"According to the Australian Bureau of Statistics (ABS), new capital expenditure in the mining sector was $35.7 billion in 2008-09.
"This represents an increase of 30 per cent on 2007-08, and is around three and a half times the average annual real expenditure since 1980-81.
"The scale and pace of expenditure estimated by the ABS is consistent with recent trends shown in ABARE’s full list of minerals and energy development projects.
"Capital expenditure in the metals products sector, which includes the minerals processing activities covered in ABARE’s project list, was $4.5 billion in 2008-09, 18 per cent higher than expenditure in 2007-08.
"In 2008-09 dollars, this is the fourth highest annual capital expenditure recorded over the past 30 years.
"Nevertheless, ABS survey data suggest that capital expenditure in the metal products industry may fall in 2009-10 to around $3.6 billion, partially reflecting the completion o
