Australia’s resources minister on Thursday declared the end of the country’s mining boom, a day after the world’s biggest miner BHP Billiton shelved two expansion plans worth at least $40 billion.
Resources and energy minister Martin Ferguson later rowed back, saying commodity prices had peaked while investments in multi-billion dollar projects would continue, especially in the energy sector.
“The resources boom is over,” resources and energy minister Martin Ferguson told Australian radio. “We’ve done well — A$270 billion ($282 billion) in investment, the envy of the world. It has got tougher in the last six to twelve months.”
Ferguson’s comments came after BHP scrapped plans for a $20 billion-plus expansion of its Olympic Dam copper mine in South Australia and a new harbour, estimated at more than $20 billion, to nearly double its iron ore exports in Western Australia.
Fuelled by Chinese-led demand for its coal, iron ore and other resources, Australia’s economy was one of the very few in the developed world to sail through the global financial crisis without sliding into recession.
But with China heading for the slowest pace of annual growth in more than a decade, investors are nervous about the near-term outlook for miners.
“We are going to have to make more tough decisions, invest in fewer projects, we are going to have to defer other things, we are going to have to stage projects,” Tom Albanese, chief executive of Rio Tinto , told a forum in Perth.
Meanwhile, analysts say the fear is premature, as energy projects will continue full steam ahead.
Finance minister Penny Wong also played down fears of a collapse in the mining boom, saying the government has factored in a peaking in Australia’s terms of trade, which measures the difference between export earnings and import costs.
“We’ve still got a long way to run when it comes to this investment boom,” Wong told Australian radio. “We’ve got over half a trillion dollars of investment, and over half of that...is at the advanced stage. So I think the ‘doom and gloom’ that some are putting about isn’t appropriate.”