Mining will continue to be a strong driver of Australia’s economy over the next five years despite sharp falls in investment and construction jobs, a new report says.
A switch from the mining construction boom to a more production-focused phase will lift the sector’s share of GDP, according to forecasters.
In fact, it’s predicted the mining sector will make up 19.8 per cent of the economy by 2018, a slight increase on its current 18.7 per cent share.
BIS Shrapnel’s Adrian Hart says it’s clear the mining boom is far from over.
“With respect to he mining boom, it’s probably fair to say that this is not the beginning of the end, but the end of the beginning,” he said.
“Over the next five years the strong boost from mining production, led by LNG [liquefied natural gas] and iron ore, will more than offset the economic negatives from falling mining investment which will flow through to construction and manufacturing.”
Mining production rose 8.8 per cent last financial year to $151 billion, however investment is set to decline by 20 per cent over the next five years.
Mr Hart says miners will go to extraordinary lengths to cut higher production costs caused by lower commodity prices and a high Australian dollar.
“We expect that mining operations employment will rise only 11 per cent over the next five years, mainly in oil and gas and iron ore, whereas mining construction employment will slump 40 per cent,” he said.
BIS Shrapnel’s Mining in Australia 2013 to 2018 report also predicts exploration spending will remain strong.
There was $7.3 billion spent on exploration last financial year, triple the levels of the early to mid 2000s, and is expected to stay around this mark for the next five years.