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Australia’s resource sector set for record investment

LNG Industry,

Resource sector investments in Australia are expected to peak in 2013 at AU$85 billion. These investments will be dominated by spending in gas, followed by iron ore and coal. The high investment levels will be sustained over the next three years, surpassing the previous three-year period.

While gas expenditure will be around 50% of the total through the next two years, spending will also be high in iron ore and coal. In 2013, iron ore investments will comprise just over 25% of the total, reaching a record high of AU$22 billion. Spending on coal is currently expected to comprise approximately 10% of 2013 spending.

Coal set to surpass iron ore

Mr Gero Farruggio, Head of Global Metals and Mining Supply Research, says, "Coal will remain subdued over the next few years due to the tough economic environment.

However, the resumption of deferred projects, and development of new production areas, will keep capital spending strong through to 2017. This will drive an increase in coal's proportion of overall capital spend in Australia, taking over iron ore's position as the commodity with the second highest investment."

The regional outlook 

Looking regionally, Western Australia (WA) and Queensland (QLD) dominate, making up 83% (AU$24 billion) of total capital expenditure in 2013. This is driven by large gas and iron ore projects.

Investments in iron ore will push resource sector investment in WA to record levels. Committed capital spend for the seven LNG projects that are under construction will ensure that investment remains high for the next three years at least, particularly in WA and QLD.

Investment in Northern Territories will also peak over this period, primarily due to construction of the Ichthys project.

Mr Graham summarises, "The outlook for the next three years confirms the strength of the Australian resource sector, as we see investments being made based on decisions taken during the boom years.

Today's decision makers are faced with different challenges in a changing environment. A new wave of major gas and iron ore projects are needed to maintain these levels of investment in the longer-term."

Adapted from press release by Samuel Dodson

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