WA resources worth nearly $100 billion

New figures from the WA Department of Mines and Petroleum have highlighted the value of the state’s resources industry.

In statistics released today, the WA DMP said the industry was valued at $99.5 billion in 2014-15.

Iron ore was the highest rated commodity, worth $54 billion in sales to Western Australia.

This was despite falling Chinese demand for the metal.

“Western Australia produced 719 million tonnes of iron ore in 2014-15, a 15 per cent increase compared to the previous year, however the low iron ore price resulted in a decrease in the total value of sales,” WA DMP general manager for policy and co-ordination Richard Borozdin said.

Gold brought $9 billion worth of sales into the state, an increase of 1.5 per cent year on year.

Alumina was the third most value commodity to WA, reaching more than $5 billion in value, a 20 per cent jump compared to the previous corresponding period, which was buoyed by the weak Australian dollar.

The energy sector brought he second highest valuation to the state, worth $24 billion overall, although this was a nine per cent decrease on previous figures.

A collapsing oil price was the main driver behind this, despite no major fall in actual sales.

LNG was the most valuable petroleum product for WA, recording $13.8 billion in sales.

It is likely to become even more valuable to the region as the state sees the ramping up of floating LNG projects in the Browse Basin, following environmental approvals for new developments.

In line with the rest of the mining slump, the value of the industry dropped by 20 per cent, following the record 2013-14 period.

“The cyclical nature of commodity markets and prices means the value of the industry will always fluctuate,” Borozdin said.

“The industry has been steadily increasing in value over the last two decades and the current value is similar to what was seen between 2010-11 and 2012-13.”

However, a falling dollar is helping to offset the slump, with some pundits predicting the worst of the downturn over.

WA premier Colin Barnett has stated that mining has reached the bottom of the trough, but that the future remains difficult.

Speaking at the Africa Downunder Conference, Barnett declared the worst of the slump over despite ongoing volatility in commodity prices

"I'm either brave enough or silly enough to suggest that we've hit the bottom," Barnett  said.

"Global markets are fragile but the fact that we're seeing some greater stability in commodities, oil prices, gas prices, iron ore prices – I think we have probably hit the bottom."

Looking ahead for the state, it is seeing a period of sustained investment growth.

As of this month WA has around $171 billion worth of resources projects under construction.

“Latest investment statistics continue to show Western Australia having a very high value of resources projects under construction or in the committed stage, and a further $110 billion identified as planned or possible projects,” the DMP said.

Despite this rise, Borozdin warned off being too optimistic, as these figures will reduce over the coming months as major projects are completed.

“For example, the Roy Hill iron ore and Gorgon LNG projects are expected to be completed later this year, resulting in almost $80 billion worth of major projects dropping out of the major project figures. A further $73 billion in projects in the under construction or committed category are expected to be completed in 2016,” the WA DMP stated.

“But what this means is that as construction and expansion of these projects is completed, their contribution to the State’s economy becomes driven by their production capacity, rather than their capital expenditure,” Borozdin added.

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