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