Mining business: The Expert

How do you envision Australia’s long-term commodity picture?
The Australian minerals industry will remain highly cyclical, but thanks to the long-term minerals- and metal-intensive growth of Asia, it will also remain along a strong upward trend.

Why might the government have so quickly declared the resources boom over?
There are many aspects to the resources boom – the boom in commodity prices, leading to a boom in investment, and then the subsequent boom in production. Probably of most interest to the Australian government is the boom in prices, as this has directly provided a boom in Australian company profits and taxes. As commodity prices have eased, the government was likely highlighting that they can’t rely on unusually high mining company profits to support their budget. However, the investment boom in the current cycle will last another one to two years, given work already under way, while the boom in production will be ongoing.

Many mining companies seem to be scaling back, but what will happen to mining investment in the long run?
Weaker commodity prices and high up-front capital costs have led companies to delay their next round of projects, but this will not last forever. Once global growth re-accelerates through the middle of the decade, demand and prices will pick up again, underwriting the next round of projects.