Mining boom continues to slow
The drop-off in new mining projects is accelerating with new figures suggesting supply has finally caught up with demand out of China.
The Bureau of Resources and Energy Economics, in its latest compilation of projects across the country, put the value of committed works at $229 billion.
It is a $39 billion, or 14.6 per cent, fall on the number of committed projects underway at the same time last year.
Over the past six months, eight projects worth a combined value of $12.8 billion were approved. But that was not enough to offset the 21 projects worth $25.6 billion that were completed over the same period.
The bureau said it appeared supply was now matching if not exceeding demand for key commodities.
"World demand for raw materials and energy remains strong and for most commodities is still growing," it said.
"However, the global rush to capitalise on China's booming appetite for commodities has now resulted in too much supply hitting the markets and has pushed commodity prices down."
Longer term, there are bigger problems.
While there is $229 billion worth of projects underway at present, these will all be completed by 2017.
By 2018, based on projects under consideration or considered likely, that value of construction will have fallen to about $100 billion. Of that, almost two-thirds would come from projects now considered "likely".
"The current state of commodity markets is not supportive of further investment in resources and energy projects," it said.
"World demand for raw materials and energy remains strong and for most commodities is still growing. However, the global rush to capitalise on China's booming appetite for commodities has now resulted in too much supply entering markets."
The price of iron ore slipped slightly overnight and sits at $98.10 a tonne.
The bureau said despite the slowdown in construction and price the mining sector would continue to boost the overall economy.
"While the investment phase lasted for around five years the output phase will last for decades and deliver an ongoing stream of economic benefits such as employment, royalties and ongoing operating expenditure in Australia," he said.
