Dallas, TX -- (SBWire) -- 12/06/2011 --Australia is a leading player in many segments of the global mining industry. Owing to its substantial deposits, the country possesses an array of minerals including iron ore, nickel, bauxite, copper, gold, silver, uranium, diamonds, zinc and coal. We expect that the value of the mining sector will reach US$124bn by 2015 growing at an annual average rate of 7.8% over the forecast period, from US$87.0bn in 2010.
This growth is fairly uneven with 2011 figures relatively low because of flooding at the start of the year, before picking up as a plethora of projects, most notably by Rio Tinto, BHP Billiton and Xstrata, come online.
Iron Ore To Drive Output Growth
We forecast iron ore production output to show the greatest increase in output reaching 668mnt (million tonnes) in 2015 from 438mnt in 2010, marking an average annual growth of 8.9%. As iron ore accounts for the largest proportion of the mining sector's value by output, between 30-40%, this increase will have a significant bearing on the country's mining sector value. This growth will be driven by BHP and Rio Tinto as the former expects to increase output from 164mntpa to 220mntpa in 2014 at its operations in Western Australia, while the latter is increasing production from 156mnt to 283mnt at its Pilbara operations in 2015. We expect Australia to remain the world's largest bauxite producer with output growth averaging 7.2% per annum, reaching 99.7mnt in 2015, from 68mnt in 2010.
The vast majority of this growth is due to expansion plans at Rio Tinto's Weipa mine, the world's largest bauxite mine, which is expected to see production rise from 18mntpa to 50mntpa in 2013. In terms of coal production, we forecast output growth to average 6.5% over the forecast period, reaching 561mnt in 2015 from 412mnt in 2010. For 2011, we have revised down our forecast from 425mnt to 405mnt, marking a 1.7% decline on 2010 levels, due to the effects of flooding which halted production in much of Queensland at the start of the year.
Regulatory Environment
Australia's mining sector is one of the most business-friendly in the world, with domestic companies and overseas miners operating in the country. We expect Australia to remain a highly attractive destination for foreign investment despite the recently proposed 30% tax on mining companies' profits in coal and iron ore production. Indeed, we do not expect the proposed tax will have a significant impact on investment in the country's mining sector as these concerns are likely to be outweighed by the country's mineral wealth. Moreover, the bill could be watered down as the ruling coalition has a majority of only one seat and thus it may be difficult to push the bill through parliament without compromise. If the bill is implemented, it is expected to be come into force from July 1 2012.
Key Players
Given its vast potential and high quality of infrastructure, Australia is home to some of the biggest names in the global mining industry.
Multinationals operating in the Australian mining industry include Australian companies BHP Billiton, Newcrest Mining and large overseas miners such as Rio Tinto, Norilsk Nickel and Xstrata. On the whole, we expect Australia's mining sector to remain dominated by large miners, with the exception of coal, which could become slightly more fragmented as Hancock Coal and Waratah Coal develop the 30mntpa Alpha and 40mntpa Galilee coal mines respectively, with output expected to commence in 2013. These projects are the largest planned in the coal sector and thus the two companies will become significant coal miners.
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Australia Mining Report Q1 2012
http://www.marketreportsonline.com/143329-australia-mining-.html
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Australia Mining Report Q1 2012