Australian Resources Minister Martin Ferguson yesterday declared the nation’s mining boom “over” after BHP Billiton delayed a major project as China’s easing and European woes hit commodity prices.
“You’ve got to understand, the resources boom is over. We’ve done well — A$270 billion [US$283.6 billion] in investment — the envy of the world,” Ferguson told Australian Broadcasting Corp radio.
“It has got tougher in the last six to 12 months. Look at Europe, the state of the European and global economy. Think about the difficulties in China,” he said. “The commodity price boom is over and anyone with half a brain knows that.”
Analysts have warned of growing headwinds in Australia due to the commodity slowdown, with Deutsche Bank this week saying the mining-powered economy was at risk of slipping into recession next year as the value of its exports tanks.
Australian Prime Minister Julia Gillard was grilled on Ferguson’s comments in parliament, with the opposition seizing on them as proof that Canberra’s return to a budget surplus next year as planned was at risk.
However, Gillard insisted that mining would continue to buoy Australia’s economy, with projects worth hundreds of billions of dollars yet to come online, despite commodity prices appearing to have peaked.
“We will continue to see this nation earn a great deal of prosperity and wealth from exporting resources,” she told lawmakers.
“We will continue to see billions of dollars invested in our resources sector, we will continue to see the opening of new projects and we will continue to see investment decisions made,” she said. “The mining boom, the amount we are earning from exporting mining, will be with us for a long time to come.”
BHP, the world’s largest miner, said on Wednesday it would delay and explore a “less capital-intensive design” for the A$20 billion Olympic Dam copper and uranium mine as it reported its first profit slump in three years.
Cooling in China, whose economy grew 7.6 percent in the second quarter of this year, its slowest pace in more than three years, and ongoing turbulence in Europe saw BHP’s annual profit dive 35 percent to US$15.42 billion.
Ferguson’s remarks echo warnings from Australia’s central bank that the once-in-a-century mining boom which helped the resources-rich nation stave off recession during the global downturn was nearing its peak.
The Reserve Bank of Australia (RBA) predicted in its quarterly outlook on monetary policy this month that the boom would end “somewhat earlier than previously thought,” putting it at “sometime in 2013-14.”
The RBA said some resource companies had “adopted a more cautious approach to investment opportunities currently under consideration ... given the more uncertain global outlook.”