OPEC, which produces a third of the world's crude oil demand estimated 2013

OPEC, which produces a third of the world's crude oil demand estimated 2013

OPEC on Tuesday slightly raised its forecast for oil demand in 2012 following a small increase in U.S. consumption and increased "dramatically" Indian demand after a massive power outage in July.

Organization of Petroleum Exporting Countries (OPEC) predicted in its latest monthly report, global oil demand in 2012 amounted to 88.74 million barrels per day (bpd), up from a previous estimate of 88.72 million barrels per harih, and higher than 87, 89 million barrels per day in 2011.

"Turbulence world economy does not slow down the oil consumption of the seasonal trend of the summer," OPEC said. "Not only did U.S. oil consumption grew slightly, but the Indian oil demand to grow dramatically."

OPEC said that demand for diesel oil India "bounce" to the level of "strong" in late July, after the flood and the death of three national electricity grid that crippled more than half of the country, affecting more than 600 million people.

In addition, the closure of most of Japan's nuclear power plants after the Fukushima disaster in March 2011 has encouraged "excessive use of crude oil and fuel oil during the summer," OPEC said.

For the 2013 OPEC, which produces a third of the world's crude oil demand estimated to be 89.55 million barrels per day, up slightly from their previous projection of 89.52 million barrels per day, but reflects a growth rate slightly weaker than in 2012.

"Economic picture is not clear (for 2013) and there are many potential uncertainties ahead," said the monthly report.

Michelle Obama Speech ....... impact on economyc , free markets

Michelle Obama Speech ....... impact on economyc , free markets

In her speech yesterday, Michelle Obama talked in personal terms about her own and President Obama’s modest upbringings. She discussed her own father’s struggles as a pump operator to put her through school and Obama’s grandmother and single mother, who suffered pay discrimination. She talked about how student loans enabled both Obamas to eventually enjoy lucrative careers.

“When it comes to rebuilding our economy, Barack is thinking about folks like my dad and like his grandmother,” Ms. Obama said.

This biographical detail has been widely interpreted as an effort to forge an emotional bond with working and middle class Americans — a reminder that the Obamas have experienced what they have, while the Romney’s haven’t.

But it’s also worth noting that the implicit biographical contrast Ms. Obama drew here is directly relevant to one of the central policy disputes of this campaign — the argument over how best to create opportunity and shared prosperity.

How should we rebuild our economy to create opportunity for those who lack it? The two candidates have starkly different answers to this question. Romney believes the best way to promote opportunity is to unshackle the free market, which will enable people to realize their potential and shower everyone with prosperity. His running mate’s fiscal vision entails deep cuts to education and financial aid for students. Romney has counseled struggling students to shop around and borrow money from their parents. Obama derides this as “you’re on your own economics” and says recent history has shown this to be a sham.

Obama, meanwhile, is arguing for a larger governmental role in facilitating opportunity, through more investment in education and financial aid and other judicious government intervention in the economy. Romney derides this as favoring government-enforced “equal outcomes” and claims Obama’s argument for government support is demeaning of individual initiative as a factor in people’s success.

Romney cites his own success as proof of what the private sector can shower on people if only we allow it to. Obama, too, has cited himself as the type of person who needed assistance in order to fully realize his potential; Ms. Obama’s speech fleshed that out last night. In other words, both cite their own successes in making the case for how to make the economy work for everyone. But the key difference is that Romney went on to enormous success after growing up amid far more comfortable circumstances than the Obamas did.

Michelle Obama’s speech wasn’t just about emotionally connecting with the middle class. It was about driving home that she and Barack have lived through some of the same life experiences as the people who are at the center of the campaign’s policy dispute over how to promote social mobility, shared prosperity, and economic security.

This isn’t to detract in any way from Romney’s achievements; he seems to be an extremely hard worker with a great deal of self-discipline. Rather, the point is that if both are going to cite their own stories as proof that their vision is the best way to promote opportunity and mobility for those who lack it, the Obamas have a far more relevant tale to tell.

Charles Krauthammer: Her whole task was to say why. And her answer was, “Why? Because essentially he's a saint.” Because of his upbringing and because of his emotions and because of his humanity. He does of this because he cares. And the brilliance of it is this: It drained Obama of any, either, ideological motivation, or any having to do with self interest or ambition, which I think is sort of a more plausible explanation.

He's a man highly who is liked and highly ideological. A man of the left who sees the role of the government as ordering, the reorderering, of society in a way to make it more just, as he understands it . And also, extremely ambitious. A self made man who makes himself out of nothing, rises out of nowhere. But all of that, in her telling, doesn’t even exist. The only reason he does what he does, he cares about women, he cares about immigrants, he cares about the poor. He cares about the unemployed. He cares, he cares, he cares.

She told the story of a Gandhi. And, you know, looking at the scene, looking at how he's conducted himself in the presidency and particularly in the campaign, with ruthlessness and determination and drive, it’s not quite a plausible story. I’m sure in the arena, it was a plausible story. I saw the tears, but I’m afraid, I thought it was a great speech, but I didn't buy a line of it.

8 Different Factors of A Valuation model for Gold Mining Stocks

8 Different Factors of A Valuation model for Gold Mining Stocks

Gold mining stocks can be very profitable especially during secular bull markets but this asset class is by nature very volatile. Gold mining stocks have different characteristics from general equities and traditional measures such as P/E ratios don’t do well in assessing the true value of the company. Other factors such as company cost, production rates, and development trends are more important. Bud Conrad at Casey Research has created a model of how to analyze gold mining stocks based on 8 different factors:

Proven and Probable Reserves – Total amount the mine is expected to produce.

Cash Cost per Ounce – The cost per ounce the company expects to pay for labor, equipment, etc to take the reserves out of the ground and to the market place.

Mine Asset Value – The difference of the price of gold today and the production cost per ounce multiplied by total reserves.

Debt – Total debt of the mine. Mines are very expensive and most borrow to start production.

Hedge Liability – An obligation the mine has to deliver gold at a future price that is below the market price.

Mine Asset Value – The Mine Asset value minus Debt and minus Hedge Liability.

Market Cap – The total amount of shares outstanding multiplied by its share price.


The purpose of Bud Conrad’s model is to compare the gold reserves in the ground to the stock price to see whether the price is low enough to be attractive. The table below compares the value of different gold mining companies. The far right column shows the valuation ratio. A ratio of 1.0 indicates that a company’s stock may be expensive compared to its assets and a value of closer to zero indicates a bargain. 

The valuation provides a basic guide line of value but it will change as conditions change. The valuation of certain stocks will change more or less from company to company depending on the change in price of gold and the company stock

Risk Factor of Gold Mining Stocks

Risk Factor of Gold Mining Stocks

Here are five factors suggested by Casey Research to consider before buying gold mining companies:

Cash flow – Does the company have strong cash flow and cash reserves?

Income generation – Does the company have good income from producing gold out of the earth and what is the cash cost per ounce?

The quantity of proven or measured reserves in the ground – How much of the gold in the ground has a 90% chance of recovery?

Little or no hedging – How much hedging is the company involved in? Some companies hedge to raise capital but this often proven to be a bad long term strategy.

Low debt levels – Nothing gets a company in more trouble than too much debt.

Junior and Senior Mining Gold Companies

Junior gold mining stocks offer more upside potential but they are also more risky. Unless you are really an expert in the mining industry it is suggested that a portfolio only include about 5-10% of junior mining companies. A safer bet is to add physical gold and senior mining companies. 

Junior mining companies are characterized as small scale production mine with revenue or an exploration company with no revenue. Exploration companies have more risk because they quickly burn through a lot of cash trying to discover large gold deposits. Senior gold mining companies are less risky as they sit on vast reserves and have developed mines with a steady revenue stream.

However, junior exploration companies are a major source of new supply. They find new attractive land, determine whether a property is economically viable, and bring mines into production. They are critical for finding new discoveries and offer more growth potential.

Gold Bullion Several Different Ways of Buying Gold.

Gold Bullion Several Different Ways of Buying Gold.

Gold Bullion is valuable precious metal - namely gold or silver. It comes in two main forms :- Gold bullion bars, and Gold bullion coins. What makes it gold bullion is simply that its value derives entirely from its precious metal content.

Unlike jewelry, or numismatic coins, gold bullion has no artistic component in its value. Some people do not understand why without that artistic component a relatively useless material like gold should have such a high value. To understand that you need to understand gold's monetary role.
If you want to buy some gold bullion these days it is relatively easy to do so. Learn how.

Gold Eagle

Gold bullion coins trade quite close to the world gold price, but you will still pay a premium of perhaps 4% when you buy in quantity, and usually 8% when you buy smaller amounts. You should expect to suffer a similar 4-8% discount when you sell gold bullion coins back to the dealers too.

Bullion bars come in many sizes. Bought from private suppliers for private possession you will usually pay dealing costs similar to those for bullion coins.

Gold bullion bars can weigh anything from a few grams upwards. 1kg and 100 oz (~3kg) bars are sometimes accepted by participants in professional bullion markets in Zurich and New York - though under strict controls to ensure bullion integrity. There is usually a premium on those locations, because London is the world's main physical bullion marketplace.

In London the market deals in the London Good Delivery gold bullion bar. These gold bars are what most people think of as bullion.


This London Good Delivery bar of bullion weighs 400 troy ounces - about 12.4 kilograms - and is about eleven inches long. It is stamped on the top (the bigger face) with the manufacturer's name, the weight, and the assayed purity.

This bullion is commodity gold, and is handled as such in the vaults where the bars are stored. They don't have the idealized super-smooth finish you sometimes see in photographs of mock bullion. The bullion is so soft that the bars are frequently scratched on their faces, and flattened on their edges and corners. Also you can see the finish is slightly dented where the bars have been stacked up on top of one another.

Neverthless, the London Good Delivery bar is the most important bullion product in the world. Loco London (meaning the physical bullion bars will be passed from seller to buyer in London) is the de-facto standard for bullion spot trading all around the world.

All bullion delivered against a London spot market trade (i) must be at least 99.5% pure, (ii) must come in bars of a standard shape weighing about 400 oz (iii) must have been accurately assayed so that he exact gold content of the bar is known (weight and purity are stamped on the bar) (iv) must have been manufactured by one of a listed group of refiners, and (iv) in almost all cases are only accepted from one of a very small number of accredited bullion vaults/couriers.

London Good Delivery bullion is the cheapest form of gold to deal and own, and it fetches the best prices when it is sold. But bullion in this form is not very accessible to private buyers. The reasons are (i) that the bars - being so big - are expensive, and (ii) that the bullion vaults where they must be kept do not deal with the public.

But fortunately if you do want to own bullion as an investment, whether in London, New York or Zurich, you can now access professional market London good delivery bullion through BullionVault.

If you are keen on buying some bullion gold you might like to continue your research by examining advantages and disadvantages of several different ways of buying gold.

Oil prices re-enter the 'danger zone' 2012-2013:... John Kemp

Oil prices re-enter the 'danger zone' 2012-2013:... John Kemp

This analysis is fairly crude and little more than a restatement of the familiar view that growth slows when the cost of oil in consuming countries (the 'oil burden') climbs much above 4 percent of GDP. 

It uses Brent rather than U.S. crude prices (also known as WTI) because seaborne, internationally traded Brent drives the cost of gasoline in the United States and around the world.

Rising oil prices boost input costs and squeeze incomes for firms and households, as well as heightening uncertainty and deterring spending on big ticket items. 

The impact is rarely immediate. It takes time for the full impact of rising prices to be realised by consumers and businesses - several tank refills and months worth of operating costs before they appreciate the full hit.
While the analysis is simple, it helps pinpoint the threshold at which high prices start to have an adverse impact on economic growth. 

Some analysts prefer to express oil's impact in terms of the rate of change rather than an outright price level. University of California Professor James Hamilton has famously analysed slowdowns caused when oil prices surge above the previous peak set over the last one to three years. 

On almost any timescale, current prices do not qualify as a Hamiltonian oil shock because Brent still remains below the record closing high set in July 2008 ($146) as well as more recent peaks in April 2011 ($127) and March 2012 ($126)
Leading oil analysts usually downplay the tension between high oil prices and GDP growth. Oil prices are framed as an investable 'asset class' and a source of increased earnings for oil exploration and production companies rather than an input cost for other businesses and burden on consumers. More often high prices are framed as a consequence of strong demand and a healthy economy. 

The framework is intended to convey the idea that it is possible to have high oil prices and strong growth. In practice, that looks difficult. In the past, the International Energy Agency (IEA) and others have identified $100 as the threshold above which prices enter the 'danger zone,' which looks about right. 

It is important not to be too doctrinaire about the threshold concept. The U.S. and other economies do not suddenly come to a juddering halt when prices rise from $99 to $101. But the further prices rise above $100 and the longer they remain there, the bigger the hit to the economy, all other things being equal. 

One of the unfortunate side effects of quantitative easing (QE) is that investors tend to respond by bidding up oil prices - undercutting some of the stimulus intended by policymakers. In the United States, both the first round of QE in 2010/11 and the second round launched in 2011 were associated with temporary oil price increases.
Even so, there is compelling evidence that prices above $100 have been associated with a loss of economic momentum. It suggests the Hamiltonian focus on rates of change should be supplemented with an emphasis on absolute price levels.

At least in the current environment, it seems the major industrial economies struggle when prices rise much above $100. It is no accident that Saudi Arabia identified $100 as its target price earlier this year. 

Coal Price Outlook Seen For 2013-2014

outlook for premium low-vol coking coal is to be expected with price projections revised downward by 10% to $213/mt FOB Australia for 2013 and 5% to $205/mt FOB for 2014 due to supply growing faster than demand, a Commonwealth Bank research report released Wednesday said.

Previous forecasts for the next two years had been at $237/mt FOB and $216/mt FOB.
This compares with current spot prices of $222.50/mt FOB, according to Platts data.

Demand will fall in the next two years, with global steel mills growing at a "more moderate pace than we had expected," the report said.

The exceptions were China and India which would continue to support global coking coal demand due to limited domestic availability, the report said.

China's steel industry, in particular, was "more resilient than rest of the world" with output at the end of 2012 expected to be "some 2-4% higher than in 2011," based on forecasts by Commonwealth Bank.
The global market for liquefied natural gas (LNG) is expected to be balanced in 2012 and 213, with supply and demand seen around 326 billion cubic metres (bcm) and 350 bcm respectively, BarCap said in its Global Energy Outlook. 

In global coal trading, BarCap said that 2012's import demands of 837 million tonnes would be met by available exports of 843 million tonnes, while 2013 would see import needs of 849 million tonnes met by 850 million tonnes ready for export. 

'European natural gas demand continues to suffer from the weak economy and a poor competitive position against coal, with LNG cargoes being diverted to the higher priced Asian natural gas markets,' BarCap said.
'Coal pricing remains subdued, with weaker demand growth from Chinese steel and power producers, coupled with healthy supply increments from traditional exporters and the U.S., leaving the seaborne market well supplied.' 

The healthy coal exports mean that BarCap expects prices to drop, with API2 (European) prices to average $94 per tonne in 2012, and $92 a tonne in 2013.

The bank's lower price expectations were based on coking coal supply, which was "growing faster than demand," the report said. In particular, this medium- term supply growth "should be dominated by Australia, Mongolia, Mozambique and China's Shanxi province."

Lachlan Shaw, the author of the report, told Platts Thursday that his forecast for the price in the fourth quarter was that it might be around $215-220/mt FOB Australia. Much hinged on the BMA strike situation, Shaw said, "the big watch point for coking coal is supply." 

South African API4 prices were expected to fall from an average of $95 to $94 a tonne between 2012 and 2013, while Australian Newcastle coal prices would see a an annual average decline from $99 a tonne to $97 per tonne. 

Despite healthy coal demand in Europe and Asia, BarCap said that 'the story of the market has been supply, with most exporters able to increase production and U.S. volumes becoming more available

Coals Prices Markets World 2013

Coals Prices Markets World 2013

The World Coal Association does not provide information on coal pricing. We are unable to supply pricing information, market forecasts or advice on where to buy and sell coal because of our ‘Competition and Compliance’ guidelines. Please direct enquiries on these areas to the companies and organisations listed at the bottom of this page. WCA will not respond to any enquires on these areas.

Coal prices have historically been lower and more stable than oil and gas prices. Coal is likely to remain the most affordable fuel for power generation in many developing and industrialised countries for decades.

In countries with energy intensive industries, the impact of fuel and electricity price increases is compounded. High prices can lead to a loss of competitive advantage and in prolonged cases, loss of the industry altogether.

Countries with access to indigenous energy supplies, or to affordable fuels from a well-supplied world market, can avoid many of these negative impacts, enabling further economic development and growth.

"Coal News and Markets Report" summarizes spot coal prices by coal commodity regions (i.e., Central Appalachia (CAP), Northern Appalachia (NAP), Illinois Basin (ILB), Powder River Basin (PRB), and Uinta Basin (UIB)) in the United States. 

The report includes data on average weekly coal commodity spot prices, total monthly coal production, eastern monthly coal production, and average cost of metallurgical coal at coke plants and export docks. The historical data for coal commodity spot market prices are proprietary and not available for public release.


  • American Coal Council - fact sheet
  • The Coal Resource
  • The Global Coal Market 
  • Average weekly coal commodity spot prices
    (dollars per short ton)

    12,500 Btu,
    1.2 SO2
    13,000 Btu,
    <3.0 SO2
    Illinois Basin
    11,800 Btu,
    5.0 SO2
    River Basin
    8,800 Btu,
    0.8 SO2
    Uinta Basin
    11,700 Btu,
    0.8 SO2
    27-July-12 $61.50 $65.10 $47.75 $8.50 $35.60
    03-August-12 $61.50 $65.10 $46.00 $8.50 $35.60
    10-August-12 $59.90 $65.10 $47.75 $8.50 $35.60
    17-August-12 $63.10 $65.10 $47.75 $8.50 $35.60
    24-August-12 $63.10 $65.10 $47.75 $9.40 $35.60
    Source: With permission, SNL Energy
    Note: Coal prices shown are for a relatively high-Btu coal selected in each region, for delivery in the "prompt quarter." The prompt quarter is the quarter following the current quarter. For example, from January through March, the 2nd quarter is the prompt quarter. Starting on April 1, July through September define the prompt quarter. The historical data file of spot prices is proprietary and cannot be released by EIA; see SNL Energy.

California earthquake will impact silver and gold prices down in American markets

California earthquake will impact silver and gold prices down in American markets

Imperial County declared a local emergency on Wednesday as officials tallied damage from the swarm of earthquakes that continued Thursday.

There were more quakes overnight, but they were significantly smaller than the ones felt on Sunday when the swarm began.

The Imperial County Board of Supervisors declared the emergency after getting more information about damage. According to the Imperial Valley Press, 19 mobile homes have been red-tagged, several buildings -- including a school auditorium -- have been closed because of damage and water pipes broke. There has been no total damage estimate.

Scientists say the reason is not fully understood, but there is a clue: Earthquake faults work much differently south of the Salton Sea than they do closer to Los Angeles.
Take, for instance, the San Andreas fault as it runs through Los Angeles County. It’s a fault where, generally speaking, two plates of the Earth’s crust are grinding past each other. The Pacific plate is moving to the northwest, while the North American plate is pushing to the southeast. 

South of the Salton Sea, the fault dynamic changes. The Pacific and North American plates start to pull away from each other, Cochran told The Times from her Pasadena office. (That movement is what created the Gulf of California, which separates Baja California from the rest of Mexico.)
So Imperial County is caught between these two types of faults in what is called the Brawley Seismic Zone, which can lead to an earthquake swarm, Cochran said.

The  last major swarm was in 2005, Cochran said, when the largest magnitude was a 5.1. The largest swarm before last weekend's occurred in 1981, when the biggest quake topped out at 5.8. Before that, there were swarms in the 1960s and 1970s. 
Crews will have a better idea of the total damage caused by the quakes in the coming days, said Maria Peinado, a spokeswoman for the Imperial County Public Health Department, but so far the list of affected structures includes about 20 mobile homes shifted from their foundations. The earthquakes also caused "cosmetic" damage to at least three buildings dating to the 1930s in downtown Brawley, said Capt. Jesse Zendejas of the Brawley Fire Department. 

A few displaced residents spent Sunday night at an American Red Cross shelter at the Imperial Valley College gymnasium, Peinado said. 

The total damage caused by the quakes in the coming days will impact to gold and silvers prices go down ,because the markets action will trouble, and trends selling the gold on market will up on trading its just prediction but not false reallity thanks

Silver World Prices Markets Prediction 2013-2015

Silver World Prices Markets Prediction 2013-2015

With Comex increasing margin requirements for a second time so quickly, King World News interviewed James Turk today out of Spain.  Turk commented, “This may explain why Comex is raising margins a second time so quickly, they aim to put more pressure on the buyers.  Obviously the Comex is trying to put more pressure on market participants by forcing them to liquidate their longs.”

says James Tur

“Eric, here we are at $25.50 which is the price that was identified by your London source last week.  So they painted the tape, but the Comex open interest shows that they haven’t driven out any buyers which is very surprising.  Normally you would expect to see some longs liquidating on any pullback like the one that we have seen over the past few days, but that hasn’t happened this time around.

The buying pressure in the physical market remains, we are starting to see the industrial buyers coming back in to secure supply.  My guess Eric is that the industrial users will be there on any price dip like we have had at present.  Up to this point we haven’t seen the boomerang effect that I have been anticipating but I am still expecting a sharp snap back in prices.

As we pointed out in the piece which had Mark Lundeen’s illustration in it, gold is dramatically undervalued and this can only result in much, much higher prices over time.  I would just add that I expect the gold/silver ratio to decline over time to under 20 to 1, so silver will be exploding along with the price of gold.

As you know Eric I have been projecting gold to hit $8,000 by 2013 to 2015, so that would equate to silver hitting $400, and that is well within the realm of possibility as silver reverts back to its historical mean.”

This is what happens in bull markets, prices climb to levels that previously seemed unimaginable.

Turk and others call out a silver price because of the historic ratio gold and silver has had at 16 to 1. BIG PROBLEM- when the ratio was 16 to 1 there was never the largest illegal futers short mess there is now.Silver has the largest naked short position of ANY commodity in the history of the world. 

Silver was not needed to manufacture thousands of products needed to make our 2010 lifestyle like it is today with medical, photography, and electronics. 

 Silver was not consumed to the point that all large stockpiles were consumed because a 30 year manipulation made silver unprofitable to mine. Silver will over shoot its historical ratio with gold UNTIL more silver comes to market and this will take years. Gold and silver will hit a 1 to 1 ratio. 

Industrial users are going to panic buy, investors are going to panic buy.. 99% of the worlds population has no idea about what is going on in the silver market.

 When the manipulation is broken and should be soon, silver will skrocket. Its like holding a beachball below the surface of the ocean to 1000 feet. 

what happens when you release that beachball? the reaction to the manipulation and physical shortage caused by that manipulation will over react.

You will see a 1 to 1 ratio between gold and silver.
I don't think it will take 2 years to get there.

Iron ore Would Rise by more than 50 million tonnes in China 2012 - 2013

Iron ore Would Rise by more than 50 million tonnes in  China 2012 - 2013

Demand for iron ore, a key steelmaking ingredient, has slumped as a sluggish global economy has forced steel mills around the world to cut production. In China, the world's top steelmaker, many plants have halted fresh purchases on poor demand for the metal, falling steel prices and swelling inventories.

A further drop in demand, along with new mine supplies, could push the current three-year low iron ore prices lower still in coming months, threatening profits at mining giants Rio Tinto and Vale.
"Along with slowing industrialisation, urbanisation and infrastructure investment, China's steel demand growth has been falling," Mr Zhang said.
"Average annual growth for China's steel demand between 2011 and 2015 was seen at 4.2 per cent, but whether we can reach that growth is now a question," Mr Zhang added.

China's January-July crude steel production grew just 2.1 per cent to 419.5 million tonnes from year earlier, compared with 10.3 per cent growth in the same period last year.

Mr Zhang said China's steel output would reach a maximum of 700 million tonnes over the next 15 years before starting to fall.

China steel futures hit a record low of 3327 yuan ($515) per tonne on Wednesday, dogged by weakening demand that has pushed down the price of raw material iron ore to levels last seen in 2009.

The sustained drop in Chinese steel prices, which has been on a downtrend since April, has curbed the country's appetite for iron ore, with the price of benchmark 62-per cent grade at $US90.30 per tonne on Wednesday, according to data provider Steel Index.

Global demand for iron ore will not grow and could even drop in the second half of 2012 compared with the first six months, with supply also rising, a senior official at China's Baoshan Iron and Steel has said.
Global seaborne supply of iron ore would rise by more than 50 million tonnes in the second half from the first half, Zhang Dianbo, head of purchasing at Baosteel, China's biggest listed steelmaker, told an industry conference. ... READ MORE RESOURCES

Planned Business Capital Spending for 2012 - 2013 Rose to a Records

Planned Business Capital Spending for 2012 - 2013 Rose to a Records

Sharp price falls in key commodities including iron ore and coal, combined with well-publicised delays to some proposed mining projects from miners including BHP Billiton, have led to talk the resource boom was dead and buried.

Most industry participants have poured cold water on such predictions, arguing the rapid and prolonged urbanisation of China in particular will continue to drive strong demand for industrial minerals.

Drilling contractor Boart Longyear bore the brunt of investor concerns - its shares dived by more than a third today after it slashed its full-year profit forecast, blaming an expected slowdown in global mining activity.
"Uncertainties ... are driving our mining customers to be more cautious with their capital," Boart Longyear chief executive Craig Kipp said.

Data released by the government on Thursday appeared to support those views.
Led by the resources sector, planned business capital spending for 2012-13 rose to a record $181.5 billion equal to no less than 13 per cent of Australia's $1.4 trillion annual gross domestic product (GDP). Capex growth of 3.4 per cent in the second quarter topped forecasts.
"The mining boom is not over," said Stephen Walters, chief economist at JPMorgan. "We've had some commodity price weakness so the price side of the boom is weakening but the investment side still looks very solid."
Still, the upward revision to the investment pipeline was less than earlier revisions, pointing to a slowing in the red-hot pace of spending that prompted some caution from economists for the longer-term outlook.
"At the start of mining booms you get surprised by how strong capex plans are and in the end, you get surprised by how quickly they go down," said Matthew Johnson, interest rate strategist at UBS. "The risk is they keep dropping but it's too early to tell."

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