Mining boom
- Thread starter daveskis
- Start date
Lowering of the overvalued AUD, increased tourism, significantly better environment for manufacturing....
In reality I suspect its just the next phase of the mining investment and projects, that we are now having more circumspect growth in this part opf the economy. We don't go from hero to zero just because the Olympic Dam project is cancelled.
In reality I suspect its just the next phase of the mining investment and projects, that we are now having more circumspect growth in this part opf the economy. We don't go from hero to zero just because the Olympic Dam project is cancelled.
Martin is the only labor front bencher I'd feed. He probably understands better than the rest of the bunch.
We will still be exporting enormous quantities of iron and coal so miners will still be working and royalties and taxes will flow. The construction industry will do it tough.
Our mining exporting has collapsed 5 times before. 3 of those 5 times Australia has recessed. Without mining we'd already be in recession.
Logically one could say if mining export income drops by 15%, it means there is a 60% chance that Australia will enter recession.
I think we sometimes forget that there's more to this country than just mining. I'd be scared if it was the only thing happening in Australia and we were depending on it.
It's about proportionality. Mining is responsible for most of the growth of the economy in the latest GDP figures. Everything else is in negative territory - so you can excuse people for thinking that mining was the only thing happening in Australia.
Yeah exactly as Aaron said...
For example Manufacturing actually contributes a much larger portion to GDP but the index last time I checked was at 48 and anything lower than 50 indicates contraction.
Mining has been the only industry that has not contracted over the last 21 years... it's kept us afloat.
For example Manufacturing actually contributes a much larger portion to GDP but the index last time I checked was at 48 and anything lower than 50 indicates contraction.
Mining has been the only industry that has not contracted over the last 21 years... it's kept us afloat.
Commsec Economist raises interesting point:
http://au.pfinance.yahoo.com/video/watch/27830586/21222854/
http://au.pfinance.yahoo.com/video/watch/27830586/21222854/
IMHO whether the boom is over depends on how you define boom.
Certainly volumes are being maintained or in the case of BHP's recent results increased but prices of some commodities have fallen. There is a lot of capital expenditure being maintained for existing projects but many new projects are on hold.
Just had a chat with my mate, director of manufacturing and mining, REED Exhibitions. They run all of Australia's biggest mining events.
While new projects are on hold there is still heaps going on and the event numbers are up 18% this year which is a good indicator that there's still plenty of action.
While new projects are on hold there is still heaps going on and the event numbers are up 18% this year which is a good indicator that there's still plenty of action.
This is all a beat up, people act like its boom or nothing. Even if the boom is over, it doesn't mean all production will cease tomorrow, the fact is we still have a huge supply of resources and the world still wants it - nothing will change that, it's just at the moment they are not prepared to pay the prices they paid a couple of years ago.
Mining isn't over, it's part of a cycle that goes up and down (like property!). If we expected it to boom forever then it wouldn't be called a boom! India will likely begin their economic rise within a decade and it will be on again.
And remember, this isn't the first time BHP have shelved their expansion plans for Olympic. It's an absolutely enormous project that has always been uncertain.
Mining isn't over, it's part of a cycle that goes up and down (like property!). If we expected it to boom forever then it wouldn't be called a boom! India will likely begin their economic rise within a decade and it will be on again.
And remember, this isn't the first time BHP have shelved their expansion plans for Olympic. It's an absolutely enormous project that has always been uncertain.
Just to bring some reality to this discussion (hubby works in a professional status in a large RIO mine) ...
The new coal contract prices are being negotiated at half previous prices.
The cost to dig, wash, transport the coal has not decreased.
The difference between cost to produce and price received is nearly dollar for dollar - very little profit.
The RIO mine he works at has just cut $200mil from the spending budget. No jobs going (yet) but all projects are cancelled - and even small items such as domestic conference travel has been cut.
All management concentration is currently on how to increase productivity and reduce production costs.
I also know a private business owner who had a lot of contract work, and a very large team of workers, with Onesteel, and RIO only 6 months ago. Now he's forced to look at options completely away from mining and steel - there is no contracting work anymore.
So it's not just a few projects being cancelled - there is massive belt tightening happening at the existing sites.
The new coal contract prices are being negotiated at half previous prices.
The cost to dig, wash, transport the coal has not decreased.
The difference between cost to produce and price received is nearly dollar for dollar - very little profit.
The RIO mine he works at has just cut $200mil from the spending budget. No jobs going (yet) but all projects are cancelled - and even small items such as domestic conference travel has been cut.
All management concentration is currently on how to increase productivity and reduce production costs.
I also know a private business owner who had a lot of contract work, and a very large team of workers, with Onesteel, and RIO only 6 months ago. Now he's forced to look at options completely away from mining and steel - there is no contracting work anymore.
So it's not just a few projects being cancelled - there is massive belt tightening happening at the existing sites.
I agree that even though the Olympic Dam project didn't go through, there are still other mining projects around Australia still going on. From a property investing perspective, this means that you can still do well with properties in mining areas, although it may require more research, bargan hunting and good negotiation to grab those in good areas.
From what I've heard
China start stockpiling early on and before contracts fall due as part of their negotiation tactics
Soooo M.Investigator can't give their onion... A couple of examples from your family and friends doesn't mean the entire industry is falling over. Everything goes in cycles, BHP still recorded a huge (better than predicted) profit that is bigger than a lot of countries entire GDP.
