Forecasts mount for mining decline

Resources Corner

Forecasts are mounting for the anticipated decline of Australia’s mining boom mid this year. Amid the exuberance of financial markets, Macquarie Group Limited’s (ASX:MQG) Global Head of Economics predicts risk appetite top fade while new reports have shown junior miners are feeling the pinch.  

Mining forecasts cut
 
Mining investment is projected to slip to $105.1 billion in the current financial year, down from an earlier estimate of $108.1 billion, according to Australian Bureau of Statistics data.
 
Rio Tinto Limited(ASX:RIO) has forecast an iron ore price fall of about 33 per cent over the next 18 months, predicting it will decline to just over $US100 a tonne by September 2014.
 
Tassie the mining devil
 
Tasmania has been ranked the worst state in Australia for miners to conduct business in, according to an annual survey by Canadian think-tank the Fraser Institute. Western Australia was rated the best, followed by South Australia and the Northern Territory.
 
Give the kids a go!

Funding access is considered the chief constraint to growth by mining executives in Australia, according to the Grant Thornton international mining report. According to the report, junior miners continually battle easing share prices and negligible investor interest in the funding of exploration activities.

Commentary

FNN asks Macquarie Group Limited’s (ASX:MQG) Global Head of Economics, Richard Gibbs if the appetite for risk is increasing or fading:
 
“I suspect the appetite for risk will fade somewhat because it began the year of course with a very high appetite for risk and risk taking. I’d say, a level of exuberance in terms of what can be delivered and I think as we move through the year you’re going to see that tested – in terms of what can actually be delivered in relation to those expectations.”
 
To watch more of the interview click here.
 
Offshore miners with mixed fortunes
 
Despite a near doubling in crude oil output, BHP Billiton Limited (ASX:BHP) has recorded a sharp loss at its Petrohawk Energy shale operation in the US due to tumbling natural gas prices.
 
Brazilian mining giant Vale has written down its Australian coal assets by $US1 billion, part of $US5.7 billion in impairments which dragged net earnings down by 76 per cent in 2012.

Chinese owned coal producer Yancoal Australia Limited(ASX:YAL) plans to cut costs and increase coal production after posting a 34 per cent increase in full year profit.
 
Good oil on new blood
 
Global mining giant Rio Tinto Limited ( ASX:RIO) has announced former Transurban Group
(ASX:TCL) chief executive Chris Lynch will fill the role of chief financial officer, to replace veteran Guy Elliott.
 
Gindalbie Metals Limited (ASX:GBG) chairman George Jones will step down from the top role after steering the junior miner into production at its flagship Karara project. He will be replaced by former Deloitte Perth managing partner Keith Jones.
 
Rare earths producer Lynas Corporation Limited (ASX:LYC) Executive Chairman Nick Curtis will step down on March 312013, to be replaced by Eric Noyrez. 


Joel Spreadborough