The biannual Resources and Energy Major Projects report released by the Bureau of Resources and Energy Economics showed committed capital expenditure in energy and mining projects remained strong at $268 billion, down from a record $A268.4 billion in November 2012.
However, BREE said the number of projects classified at the committed stage had fallen to 73 as a result of 21 projects being completed in the period.
“The decline in the number of committed projects reflects the emerging trend for high value projects at the feasibility stage to be delayed or cancelled, while the value of committed investment has remained close to record high levels due to cost increases to several projects,” BREE executive director and chief economist Quentin Grafton said.
Of those projects still under construction, 40 are minerals projects, 18 are gas and petroleum and 15 are infrastructure.
BREE predicted that large-scale projects valued at more than $5 billion accounted for more than 80% of the $268 billion in committed investment.
In a further breakdown, BREE estimates $232 billion worth of projects are at the feasibility stage, including the Roy Hill iron ore development and three coal projects.
There are $15 billion worth of projects defined in the completed category and include Fortescue Metal Group’s Chichester Hub iron ore operation in the Pilbara.
On the exploration front, BREE’s figures showed mineral resources exploration fell in the last two quarters during a period which coincided with increased pessimism for many mineral commodities.
In a sign the tough economic climate had hit resource developments, BREE estimated that about $150 billion of high value projects had been delayed, cancelled or had re-assessed development plans in the past year.
For the first time in its report, BREE has undertaken a forward projection of committed investment in resource and energy projects, with the commodities forecaster painting a grim outlook for the next few years.
In a scenario based on projects BREE deems likely to progress, the government forecaster said committed investment had peaked and was projected to decline for the next five years as a result of few high value projects coming online.
“In 2014, the stock of committed investment in the likely scenario decreases by $8 billion then a further $63 billion in 2015,” BREE said.
“From 2017 onwards, the stock of committed investment in the mining sector is projected to revert back to levels comparable to 2007.”
Despite the projection, BREE said there remained opportunities for Australia to generate a higher level of committed investment.
“This will only be realised if many of the projects which BREE currently rate as ‘possible’ are able to progress to the committed stage over the next five years,” Grafton said.
