Despite increased positivity in the resources sector, NAB research has forecast the current downturn to continue, with more than 50,000 jobs to be lost.
New notes from the bank stated falling mining investment will decimate the sector construction job wise.
“Our models suggest that mining investment is likely to fall by around 70 per cent from its current levels over the next three years – implying that we are currently just over halfway down the mining investment ‘cliff’,” NAB head of Australian economics Riki Polygenis said.
“We expect approximately 50,000 more mining jobs to be shed, which is expected to bottom out in the next two and a half years.”
This comes on top of an estimated 46,000 jobs lost in the 2012-13 and 2014-15 periods.
These funding predictions echo those put forward by Deloitte earlier this year.
“As funding dries up, miners are being driven out of the industry,” Deloitte UK mining leader Tim Biggs said.
“More worrisome is that no one seems to know how to solve the financing problem….how do we revive equity interest in the sector?”
Western Australia is expected to bear the brunt of these forecast job losses as investment continues its decline, followed by Queensland.
“The majority of the job losses are likely to come from WA due for a number of reasons, including that: 1) WA’s mining investment and employment cycles are currently less progressed than Queensland, 2) WA accounts for a larger share of total investment and employment in the country, and 3) the labour intensity of commodity projects in their operational phase in WA is lower than in Queensland,” the report said.
However, despite the fall in investment, the transition to a production phase will keep mining steaming ahead, with a rise in operational mining roles.
“The equilibrium level of mining employment in 2019 is likely to be higher than the pre-boom era at around 170,000 to 180,000,” Polygenis said,” reflecting the increase in operation-related employment.”
Yet, “At the same time, the larger-than-expected declines in commodity prices from their 2014 levels and the likely prolonged nature of the low commodity price environment has restricted the number of new projects announced,” she added.
“This suggests that mining investment will fall by more than otherwise would be the case.”