Australian Mine, Energy Project Spending Falls 10% as Boom Peaks

Australian Mine, Energy Project Spending Falls 10% as Boom Peaks

The value of mineral and energy projects being developed in Australia, the world’s biggest iron ore exporter, dropped 10 percent to about A$240 billion ($219 billion), reflecting the peaking of the nation’s mining boom. “This large drop in investment is the result of two records being set in the period – a record high for the value of projects being completed (A$30 billion) and the lowest value of new projects being sanctioned in the past decade (A$1.7 billion),” the Bureau of Resources and Energy Economics said today in its twice-yearly report on project investment. At April 30, the value of projects was A$268 billion.The Reserve Bank of Australia said this month that mining investment will continue to decline from the record reached in the past year and may drop more than previously anticipated. Mining companies, including BHP Billiton Ltd. (BHP) and Rio Tinto Group, are cutting staff, delaying mines and curbing takeovers as the China-led commodity boom that drove gold to iron ore prices to records begins to wane.

“Australia is now seeing a transition from the investment phase of the resources boom to the production phase,” the bureau said in a separate statement. “Forward projections indicate that investment in the resources and energy sectors is likely to decline over the medium term.”

Five projects worth a combined A$1.7 billion moved to the committed stage in the six months to October, the lowest number and value in more than a decade, it said. An additional 71 projects in the planning stages of the investment pipeline have been delayed by a year or more in the past six months, it said.

In 2015, there’s the potential for a rebound in resources and energy sector investment as there are a large number of projects that are assessed as requiring financial approval in that year, the Canberra-based bureau said.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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