A new report has revealed that investment in mining projects in Australia is at its lowest level in ten years.
The Resources and Energy Major Projects: October 2014 report by the Bureau of Resources and Energy Economics (BREE) stated that just three projects worth $597m have received a final investment decision and moved to the committed phase in the six-month period up to October.
Overall, five resources and energy projects worth a combined $1.2bn have been completed in Australia in the past six months.
There were 44 projects at the committed stage as of October this year with a combined value of $228bn, compared with 48 projects valued at $229bn in the previous six months.
Owing to a global oversupply and the US moving to cheaper shale gas, metallurgical coal and thermal coal prices in Australia are said to be the lowest in more than half a decade.
LNG projects account for around 87% of the value of committed work and continue to drive resource and energy investment in Australia.
BREE deputy executive director Wayne Calder said: “Declining commodity prices have continued to weigh on investment decisions with many developers revisiting project feasibility studies amid weaker than expected prices.
“The renewed industry-wide focus on improving productivity and lowering costs has extended to new projects. Developers are reassessing their plans and considering less capital-intensive options to improve the economics of their projects.”
Investment in the Australian resources and energy sector is projected to moderate in the medium-term, once the large LNG projects are completed.
There are projects currently progressing through the development pipeline however they are unlikely to be of a sufficient scale to offset the investment associated with conclusion of the ‘mega’ LNG projects.