The Resources and Energy Major Projects publication is an annual census of resources and energy projects in the development pipeline in Australia. The report explores recent trends in exploration and project development, and estimates current and potential investment in the sector.
This year the list includes 335 development projects. Australia’s resources and energy investment pipeline has grown, with more projects across the early stages, from first announcements to final investment decisions (FIDs). The value of committed projects (those where an FID has been taken) increased over the past year, marking a turning point in the mining investment cycle.
Iron ore, coal and gas/LNG projects and related infrastructure — Australia’s three largest export commodities — account for over 80 per cent of project investment. The impacts of COVID-19 have created challenging market conditions, particularly for energy commodities, with weak prices weighing on the development of coal projects and resulting in the deferral of investment decisions for several large LNG projects.
However, the report highlights emerging opportunities for Australia’s battery commodities, including nickel, lithium and cobalt. With strong investment in production and processing facilities, Australia is well positioned to take advantage of booming demand for these commodities.
Overall, the outlook for mining investment suggests that while it is unlikely that investment will return to the same levels seen last decade, there are significant opportunities emerging for Australia’s resources and energy sector. See the report and detailed project list at www.industry.gov.au/remp
The Office of the Chief Economist’s latest edition of Resources and Energy Major Projects, suggests that investment in Australia’s resources projects has entered a new growth cycle. The publication is an annual census of resources and energy projects (worth over $50 million) in the development pipeline, and explores trends in exploration and project development.
This year’s project list includes 335 development projects, covering more than 20 different resources and energy commodities. The report shows that projects in their early stages (from first announcements to final investment decisions) are growing, which is a positive sign for long-term investment. The value of committed projects (which are generally further along in the development cycle) has also increased by 30% over the past year.
Several significant factors have driven this growth:
- Record gold prices have seen a surge of investment in gold production, with a number of Australian mines returning to production. Some of these mines have been closed for more than 20 years. Exploration and development of new gold projects is also increasing rapidly.
- An uptake in battery technology around the world has driven greater investment in nickel, cobalt, rare earths and lithium. This has led to a surge of investment in Australia’s massive deposits, with potential for further investment in domestic processing facilities. The project listing now includes around 60 projects in the ‘battery commodity’ space, valued at over $26 billion. Many of these will involve innovative mining practices and new processing technology.
Slightly offsetting this, tough global conditions and low energy prices have weighed on the development of coal and LNG projects, with some being deferred as a result. Finance is likely to remain difficult for these projects.
The previous commodity boom led to record levels of investment to unlock Australia’s massive commodity deposits. However, this investment declined sharply as projects reached completion and the commodity cycle shifted towards exports. It is now clear that commodity investment has turned a corner, with a new investment cycle emerging amidst a surge in technological change and shifts in the global economy.
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