Investment in Australia's resources sector should remain strong over the next three years, according to consultancy Wood Mackenzie, which Thursday said fears of a sharp slide in spending after a 2013 peak aren't likely to be realized.
While some major companies like BHP Billiton Ltd. (BHP.AU) and Woodside Petroleum Ltd. (WPL.AU) have been shelving resource projects due to rising costs and weaker commodity prices, Wood Mackenzie said it expected committed gas projects like the US$34 billion Ichthys liquefied natural gas project in Australia's Northern Territory, and the resumption of previously deferred coal developments, to keep investment in Australia near historical highs for years to come.
The nation's central bank has steeply lowered interest rates since late 2011 to a record low 2.75%, preparing for a peak in resource investment that it expects to be accompanied by a rise in joblessness over this year and next. BHP Billiton's new Chief Executive Andrew Mackenzie this week pledged to put the brakes on investment over the next few years, responding to shareholder concern over the massive capital-spending budgets mining companies have dedicated to expanding capacity, even as commodity prices were falling.
But Wood Mackenzie said it wasn't expecting any immediate drop-off in spending by the resources industry.
"Today's decision makers are faced with different challenges in a changing environment, [but] the outlook for the next three years confirms the strength of the Australian resource sector, as we see investments being made based on decisions taken during the boom years," said Chris Graham, head of Australasia upstream research for the U.K.-based firm.
The energy and metals consultancy forecast resource sector investment here to peak in 2013 at 85 billion Australian dollars (US$84 billion), but to remain robust for a while thereafter.
"The high investment levels will be sustained over the next three years, surpassing the previous three-year period," it projected. Still, a fresh wave of major gas and iron-ore projects would be needed to sustain this level of investment beyond then, Mr. Graham said.
link http://uk.advfn.com/news/DJN/2013/article/57595926
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