Report: LNG, iron and coal could see mining GDP double in next 5 years

The Reserve Bank of Australia has released research showing mining investment projections, and mining as a percentage of GDP could double in the next five years.

The report, entitled Mining Investment Beyond the Boom, suggests that mining investment will make up a larger share of Australian GDP than in the days before the boom, rising to 2.5–4 per cent compared to around two per cent before the boom. This rise will be pushed by firms looking to maintain their current levels of production capacity, referred to in the report as sustaining capex (sustaining capital expenditure).

This desire for sustained capex is in keeping with increased demand for coal, iron ore and liquefied natural gas (LNG) in particular, though the report also claims that further large-scale expansions of these three resources are not likely to increase over the next few years.

The report explained that sustaining capex for these commodities would provide a modest growth to GDP of around 0.2 per cent per annum, representing a cost of $100 billion over the next five years.

“The focus on sustaining capex is relevant as this type of expenditure is expected to make up the bulk of mining investment for the major commodities over the next few years,” said the report.

“Only a small number of new expansionary projects are expected to be undertaken in the near term given few projects have been announced in recent years and exploration activity is at a low level.”

The full report can be read here.

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