We’ve had the first hint of an expected fall in resource investment in the latest project statistics from the Australian Bureau of Agricultural and Resource Economics (ABARE).

The latest report on major minerals and energy development projects shows a 4% fall in the value of the projects since the April report, which was released in May of this year.

ABARE said yesterday that there were advanced minerals and energy projects to the value of $67.3 billion in October. In April it was $70.5 billion.

It’s only a small change, but with commodity prices falling sharply, there’s a small impact on the pipeline of projects in our resources industry.

A statement to the stock exchange yesterday from OZ Minerals, the merger of Oxiana and Zinifex provides a big hint that it will be postponing several projects in the new year after it confirmed that it would review all its assets and their carrying values at December 31. Any postponements or cancelations will be the first of many in early 2009.

We will get an update from the latest new private capital spending figures due out next Thursday from the Australian Bureau of Statistics.

ABARE’s Acting Executive Director, Karen Schneider said that while total capital expenditure on advanced projects is 4% down from April 2008, expenditure was still relatively high at 16% above October 2007 levels.

“However, given the significant changes in the global economic outlook, there is still the chance that some projects may be deferred, modified or even canceled. It’s too early to tell at this stage,” Ms Schneider said in a statement.

The listing of 347 major projects is detailed in the report Minerals and Energy: Major Development Projects – October 2008 listing, which includes 262 projects that are still undergoing feasibility studies. In April it was a record listing of 341 major projects, and included 244 projects which are still undergoing feasibility studies.

The $67.3 billion reflects 85 advanced projects, defined as being under construction or committed. Since April 2008, 31 new projects have been added to the list and 22 projects have been completed.

In April, ABARE said the $70.5 billion reflected 97 advanced projects, defined as being under construction or committed to. “Since October 2007, 58 new projects have been added to the list and 22 projects have been completed.”

Energy projects account for around 57%, or $38.2 billion, of the estimated capital cost of all listed major projects. Investment interest is also strong in iron ore (18%), alumina (7%) and gold (6%). The break up in project was similar to April.

Peter Fray

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