The newly appointed Federal mining minster Josh Frydenberg stepped in the new role with positivity for the future.
Frydenberg was appointed last week after Malcolm Turnbull swept to power, ousting prime minister Tony Abbott, with Frydenberg replacing Ian Macfarlane.
In his new position, he has already taken an optimistic view, telling The West Australian the industry is still crucial to the nation’s economy.
“Australia and Western Australia in particular have been great beneficiaries of the decade-long super-cycle which saw record prices and record demand for our commodities,” Frydenberg said.
“Clearly with the slowdown of China we’re moving back towards normalised, cyclical patterns.
“That being said, resources and energy are absolutely central to Australia’s economic growth and prosperity today and into the future.”
He called for the industry to re-focus on improving productivity and in turn efficiency.
“I’m going to focus on how we boost productivity in our resources sector, reduce regulation, get an effective tax system and get flexibility in the workplace so we can capitalise on our natural advantages.”
While Frydenberg is optimistic, the future from financial powerhouses is mixed, with some predicting further slides, whilst other believe the that the worst is over and the bot6tom of the decline has been reached.
Citigroup has forecast a mini-meltdown ahead, predicting a major continuation of the current slump.
“Slowing growth in China, the world’s largest consumer of commodities, is the biggest contributing factor for slumping prices,” Will Yun, a commodities analyst at Hyundai Futures said.
Citigroup stated that an ongoing bearish market points to the cycle’s trough as yet to be reached.
“Across energy, industrial metals, and agricultural products markets remain oversupplied, partially because of the sluggish world economy, but largely because of the over- investment in developing new supplies in the last decade and favourable weather conditions providing bumper row crops,” the global head of Citigroup’s commodities research division, Ed Morse, said.
Morgan Stanley and Goldman Sachs are also predicting a bearish future for commodities, in direct opposition to JP Morgan research that the bottom of the decline is here.
According to JP Morgan, there is likely to be “some additional EPS cuts for miners near term, but again, not a step change”.
JP Morgan’s argument is that there is little downside left in the space as mining has been harder than sectors in recent years on the back of falling commodity prices.
Westpac has put forth research in a similar vein to JP Morgan, however they claim we are still in the midst of the super-cycle.