In the just released Minerals Industry Survey 2004 the MCA says plant and equipment spending is forecast to rise 60% in 2004-05 to $8.2 billion after a 37% drop last year.

But spending in other key areas was expected to fall short of requirements, it said. Mineral exploration expenditure was expected to drop 29% in 2004-05 compared to last financial year, while research and development was forecast to fall 45%. In the past three years, Australia had slipped from second to fifth in the global ranking of locations for mineral exploration spending.

"If Australia is to ensure the minerals industry continues to make a lasting contribution to Australia's future progress, then this long-term transfer of purchasing power from industrialising Asia to commodity-rich Australia requires that we invest in the future of our minerals industry," the report said.

MCA chairman Greig Gailey said the industry was preparing for its "new expansion phase", buoyed by strong demand from China, Japan, Korea and India.

But looming constraints on growth threatened its export performance, he said.

"In the near term, we must tackle the growing mismatch between the mineral sector's productive capacity and inadequate public infrastructure like water, energy, ports and other transport facilities," Gailey said. "If essential infrastructure can't keep pace with production capacity, we will not fully exploit crucial market opportunities, and will inevitably lose market share to our competitors.

"Overcoming skills shortages will remain a top priority for the mineral sector, especially given the fact that direct employment in the industry grew by 12% or 5400 employees last year.

"Looking longer term, we are also concerned about the continuing shrinkage in the national minerals inventory – the industry's essential resource base."

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