The Office of the Chief Economist’s latest edition of Resources and Energy Major Projects suggests that investment in Australia’s resources projects has entered a new growth cycle.

The publication is an annual census of resources and energy projects (worth over $50 million) in the development pipeline, and explores trends in exploration and project development.

Released yesterday, it explores recent trends in exploration and project development, and estimates current and potential investment in the sector.

With 335 development projects, this year’s list shows Australia’s resources and energy investment pipeline has grown, with more projects across the early stages, from first announcements to final investment decisions (FIDs).

The report stated that the value of committed projects (those where an FID has been taken) increased over the past year, marking a turning point in the mining investment cycle.

Iron ore, coal and gas/LNG projects and related infrastructure — Australia’s three largest export commodities — account for over 80 per cent of project investment.

It also highlighted the impacts of COVID-19 creating challenging market conditions, particularly for energy commodities, with weak prices weighing on the development of coal projects and resulting in the deferral of investment decisions for several large LNG projects.

However, the report highlights emerging opportunities for Australia’s battery commodities, including nickel, lithium and cobalt. With strong investment in production and processing facilities, Australia is well positioned to take advantage of booming demand for these commodities.

Overall, the outlook for mining investment suggests that while it is unlikely that investment will return to the same levels seen last decade, there are significant opportunities emerging for Australia’s resources and energy sector.

Several significant factors have driven this growth:

• Record gold prices have seen a surge of investment in gold production, with a number of Australian mines returning to production. Some of these mines have been closed for more than 20 years. Exploration and development of new gold projects is also increasing rapidly.
• An uptake in battery technology around the world has driven greater investment in nickel, cobalt, rare earths and lithium. This has led to a surge of investment in Australia’s massive deposits, with potential for further investment in domestic processing facilities. The project listing now includes around 60 projects in the ‘battery commodity’ space, valued at over $26 billion. Many of these will involve innovative mining practices and new processing technology.

The previous commodity boom led to record levels of investment to unlock Australia’s massive commodity deposits, however, the report detailed that this investment declined sharply as projects reached completion and the commodity cycle shifted towards exports.

“It is now clear that commodity investment has turned a corner, with a new investment cycle emerging amidst a surge in technological change and shifts in the global economy,” the report told.

The report shows a 19 per cent increase in the number of resources and energy projects under development in 2020 compared to the previous year.

Minister for Resources, Water and Northern Australia Keith Pitt (pictured) said the report, compiled by the Department of Industry, Science, Energy and Resources, demonstrates Australia’s strength as an exploration and investment destination.

“The resources sector has provided the bedrock for the Australian economy through COVID and this confirmation of growing investment shows how important it will be to the Coalition Government’s COVID recovery strategy going forward,” Minister Pitt said.

“It’s been the capital investments of the past decade that supported the industry, and our economy, through 2020 and it’s good to see there’s a lot more investment on the way.

“The benefits to Australia from the investment pipeline will be significant.

“There is $39 billion in committed project investment and more than $100 billion in early stage projects that are likely to proceed.

“With strong investment in production and processing facilities, Australia is well positioned to take advantage of booming demand for these commodities. “

Minister Pitt said the outlook for resources and energy investment was good news for jobs and economic growth, particularly in regional Australia.

“Development projects build future economic activity and create new jobs. Around 20,000 construction jobs and more than 7,000 ongoing jobs are expected from the committed and recently completed projects,” Minister Pitt said.

“This investment will boost incomes and jobs in Australia’s towns and regions, and contribute to the prosperity of all Australians.”

See the report and detailed project list at www.industry.gov.au/remp

Iron ore exports reached a record high of $10.9 billion, accounting for 36 per cent of Australia’s total exports, according to figures released today by the Australian Bureau of Statistics (ABS).

Total exports increased by $1.8 billion, or 6 per cent, to $30.5 billion in October 2020.

“The primary driver for the increase in exports was an $833 million (7 per cent) increase in exports of metalliferous ores, most of which was iron ore headed for our largest trading partner, China,” said ABS Head of International Statistics, Branko Vitas.

Increases were also seen in gas, up $360 million (18 per cent) and meat, up $217 million (21 per cent). Coal also increased, driven by thermal coal, mostly used for electricity generation.

Imports increased by $2 billion, or 8 per cent, to $25.7 billion in October. The increase in the value of goods imported was driven by road vehicles, up $393 million (13 per cent), telecommunications and sound equipment, up $359 million (28 per cent) and miscellaneous manufactured articles, up $220 million (15 per cent).

“We continue to see a rise in road vehicle imports,” said Mr Vitas “and with the release of new mobile phone models, and games and gaming consoles, increases in these products have driven imports up in October”.