Eslake says we’ll never see another boom

Famed Australian economist Saul Eslake has voiced his scepticism about the possibility of another mining boom, saying there may never be another like the last.

Speaking at the International Mining and Resources Conference in Melbourne yesterday, Eslake said the downturn in commodity prices had probably not yet reached the bottom of the trough, SMH reported.

With the last boom tied the economic boom in China, Eslake told the mining business community that there was little prospect of that being repeated in the future, and that despite growth in other nations, none could match the impact of population growth in China.

"The countries that are still to develop are much smaller than China and India are, they are not, in most cases, starting from as far back on the development curve as China was in 1979 or India was in 1991, and most of them are much more self-sufficient in commodities than China or India ever were," he said.

"So it could well be, in my view, that the commodities boom Australia has just experienced in the last 12 or so years is the last of its kind in human history unless unforeseen technological developments ordain otherwise."

Eslake predicted that iron ore and coal would continue to experience further downside for the next one to two years.

"In the case of iron ore and coal in particular I don't think we have seen the bottom of prices yet even though there may be some basis for being a bit more optimistic about the outlook for base metal prices," he said.

"In the case of coal Australia is not necessarily in the most favourable position in international cost curves, and maintaining Australia's competitive position in coal and in other energy commodities, LNG among others, will be a major challenge for the boards and managements of Australian companies this year and for the forseeable future."

Phil Arnall, the new chairman of mining services firm Bradken, recently predicted the mining sector downturn was likely to last until 2018, with the company basing all planning on that outcome.

Bradken shares hit a record low on Tuesday, dropping 4.2 per cent to 91c at close of trade; 12 months ago Bradken was trading at $3.85.

 

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