ABARE’s half-yearly study anticipates the projects adding significantly to the sector's production and export capacity in the short to medium term. But the significant increase in demand has pushed up labour costs as well as costs for construction materials such as diesel and steel.
As a result, some project costs have increased and some completion schedules delayed. In a small number of cases development has been deferred.
"With an exceptionally large number of minerals and energy projects currently committed or under development in the next two years, cost pressures on developments are unlikely to ease," ABARE said, adding this might mean the feasibility of many less advanced projects will need to be re-examined.
Some 21 advanced coal projects have a combined capital cost of around $A4 billion. In New South Wales these include the Ashton underground mine near Singleton in the Hunter Valley, the Austar Mine near Cessnock, the Mount Owen and Bulga expansions, and the Ulan longwall. Queensland projects include the Grasstree longwall mine in the Bowen Basin.
Expected new capital expenditure in the mining industry will rise 8.8% to $A10.1 billion this fiscal year, up from $A9.28 billion for the year ended June 30 2004, according to the forecaster. In 2006 capital spending on mining is expected to drop by about 4% to $A9.7 billion. Total spending on exploration is expected to jump 23% this fiscal year to $A2.13 billion, up from $A1.73 billion last year.
Sustaining exploration spending around the 2004-05 level was likely to be necessary to secure a sufficient resource base to enable continued sector growth over the long term, Abare said.
