Mining prospects still very bright: Swan
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CANBERRA, Nov 28 AAP
November 28 2012, 6:29PM
Treasurer Wayne Swan has played up the prospects for Australia's resources industry with new investment figures showing activity in the sector is robust, even though commodity prices have come off the boil.
A semi-annual report from the Bureau of Resources and Energy Economics (BREE) released on Wednesday shows a record $268.4 billion of resource and energy projects have been locked, while an additional $13.2 billion of projects had reached the committed stage.
The record total investment in the six months to October consists of 87 projects that have reached the final investment decision stage and include 51 minerals projects, 18 gas and petroleum projects and 18 infrastructure projects.
"This project pipeline has not been immune from what's occurred with the terms of trade and what has occurred in terms of international (commodity) prices," Mr Swan told parliament.
"What it says is the prospects for our resources sector are indeed very bright."
Mr Swan said even on the most conservative estimate provided by BREE, the total potential investment in the sector sat at a mammoth $650 billion.
The Organisation for Economic Cooperation and Development in its latest Economic Outlook released in Paris on Tuesday expected mining investment in Australia to continue to expand "vigorously" in 2013 in view of announced plans.
Resource Minister Martin Ferguson said the BREE report confirmed the resources industry had many years of impressive activity ahead of it.
"To put Australia's investment in oil and gas in perspective, the total committed expenditure on these projects is comparable to the cost of the Apollo Moon program in today's prices," he said in a statement.
Even so, Mr Ferguson said the resources sector was entering a "challenging phase".
"In the face of lower commodity prices, the delivery of this pipeline of projects is contingent on keeping production costs down, providing access to skilled labour and increasing our productivity and efficiency," he said.
These reports coincided with a key component towards next week's national accounts, which showed engineering construction work - such as mines and roads - completed in the September quarter grew by 3.8 per cent to $32 billion, to be 13.9 per cent higher than a year earlier.
Overall construction in the quarter grew by a slightly smaller than expected 1.7 per cent, although the June quarter outcome was was revised up to a rise of 0.9 per cent from a previously reported 0.2 per cent decline.
Non-residential building work remained weak, down 4.5 per cent in the quarter, but residential building construction grew by a modest 0.6 per cent, the first positive contribution since the March quarter 2011.
Macquarie Research economist Gabby Hajj said this may mark the 'turning point' in housing activity the economy has been hoping for, but was still 3.7 per cent lower than a year ago.
"The pick-up in residential building activity is certainly a welcome development and may provide some evidence that lower interest rates have started to flow through to the real economy," he said in a client note.
The other side of the investment story will come on Thursday when September quarter private capital expenditure data are released, which also includes planned investment.
By Colin Brinsden, AAP Economics Correspondent