Prepared by the Bureau of Resources and Energy Economics.
The stock of investment in committed resources and energy projects remained at about $268 billion according to the report, Resources and Energy Major Projects – April 2013, released in May by the Bureau of Resources and Energy Economics (BREE).
The number of projects at the Committed Stage decreased to 73 in April 2013 as a result of 21 projects being completed in the period. Of the 73 projects still under construction, 40 are minerals projects, 18 are gas and petroleum projects, and 15 are infrastructure projects.
‘High value projects continue to be the main driver of the record high levels of committed investment in the resources and energy sectors. Mega projects valued at over $5 billion account for around 80 per cent of the $268 billion in committed investment’ said Professor Quentin Grafton, Executive Director and Chief Economist at BREE.
‘The decline in the number of committed projects reflects the emerging trend for high value projects at the Feasibility Stage to be delayed or cancelled, while the value of committed investment has remained close to record high levels due to cost increases to several key projects’.
BREE estimates that around $150 billion of high value projects have been delayed or cancelled since April 2012, while cost increases to committed projects currently account for 11 per cent of the stock of committed investment. BREE, for the first time, has undertaken a forward projection of the stock of committed investment in the resources and energy sectors.
In a scenario based on projects that BREE assess as ‘likely’ to progress, the stock of committed investment has peaked and is projected to decline over the next five years as a result of fewer high value projects progressing through the investment pipeline to offset the completion of the LNG projects that are currently under construction.
‘While BREE projects a likely decline in the stock of committed project investment, there remain opportunities for Australia to generate a higher level of committed investment’ said Professor Grafton. ‘This will only be realised if many of the projects which BREE currently rate as ‘possible’ are able to progress through to the Committed Stage over the next five years’.
Exploration
The total expenditure on mineral resources exploration decreased during the last two quarters of 2012.The decrease coincided with a period of increased pessimism on the outlook for many mineral commodities and sharp declines in some prices that occurred in the latter half of 2012. In the December quarter of 2012, expenditure on exploration at greenfield sites was $264 million. This represented a decrease of 16 per cent compared with the September quarter, and a 27 per cent decline compared with the June quarter. Total expenditure for 2012 was $1.2 billion, the same amount as in 2011.
Analysis of projects at the Publicly Announced Stage
BREE has identified 113 projects at the Publicly Announced Stage with a total investment value between $121 billion and $171 billion. This is seven more projects at the Publicly Announced Stage compared to the October 2012 report, with an increase in value of between $29 billion and $37 billion.
Iron ore projects remain the largest, by value, at the Publicly Announced Stage. There are 18 of these projects with an aggregate value of between $35 billion and $56 billion. Two iron ore projects at the Publicly Announced Stage are valued at more than $5 billion; these are the West Pilbara joint venture between Aquila Resources and AMCI ($7.4 billion) and BHP Billiton’s Jinidi project. Two iron ore projects at the Publicly Announced Stage are new to the major projects list; these are Fortescue Metals Group’s Nyidinghu project ($1.5 billion to $2.5 billion) and Macarthur Minerals’ Moonshine Magnetite project ($2.5 billion to $5 billion).
There are nineteen coal projects at the Publicly Announced Stage with a combined value of between $24 billion and $28 billion. This is six projects and around $11.3 billion higher than reported in October 2012, primarily due to several projects reverting back to the Publicly Announced Stage following announced planning delays by the respective project proponents.
These projects include Xstrata’s Wandoan mine, Rio Tinto’s Mount Pleasant project and Peabody Energy’s Wilkie Creek expansion.
MacMines Austasia’s Project China Stone mine in Queensland’s Galilee Basin is one of the highest value coal projects at the Publicly Announced Stage with a potential annual production of 45 Mt per annum.
The number of LNG, gas and petroleum projects at the Publicly Announced Stage decreased by one over the past six months with the total value of all projects at this stage decreasing by between $1.4 billion and $3.9 billion. Although four projects reverted back to the Publicly Announced Stage, including the Browse LNG project and Sunrise LNG project, these were offset by several projects progressing to Feasibility Stage and the removal from the list of the Pluto LNG Expansion (Trains 2 and 3) and Arrow LNG Expansion (Trains 3 and 4) projects.
Coal Seam Gas projects in New South Wales such as AGL’s Camden and Metgasco’s Casino projects reverted back to the Publicly Announced Stage following regulatory changes that imposed a moratorium on the development of Coal Seam Gas wells in close proximity to residential areas.
Coinciding with the pauses in development to several resources and energy projects there have been announced delays to infrastructure projects in the past six months. This has resulted in the number of infrastructure projects at the Publicly Announced Stage increasing by three and the value increasing by between $5.2 billion and $11 billion.
The joint venture to develop Anketell Point Port (Aquila Resources and Fortescue Metals Group) was the principal contributor to the increase. Fortescue Metal Group’s Nyidinghu Rail project was also added to the major projects list for the first time with an estimated value of between $500 million and $1 billion. The Oakajee Port development in Western Australia remains the largest potential infrastructure project at the Publicly Announced Stage with an estimated value exceeding $5 billion.
“MacMines Austasia’s Project China Stone mine in Queensland’s Galilee Basin is one of the highest value coal projects at the Publicly Announced Stage with a potential annual production of 45 Mt per annum.”
Source
Bureau of Resources and Energy Economics. © Commonwealth of Australia 2013. Barber, J., Shael, T., Cowling, S., Bialowas, A., Hough, O., 2013. Resources and Energy Major Projects April 2013 , Bureau of Resources and Energy Economics, Canberra, May. Special thanks to Quentin Grafton and Wayne Calder.
Add Comment