Despite the expected impact of the $23 per tonne carbon tax announced recently by the federal government, there are few signs of any apparent slowdown with regard to construction activity in the mining and resources sector.
In the year to March 2011, the Construction Forecasting Council expects the value of work done in the sector to grow by a modest 4.99% to $30.875 billion. At this level, activity will have more than quadrupled from levels seen as recently as financial year 2004/15 ($6.970 billion).
Beyond that, however, the forecaster expects activity to surge to $40.598 billion before peaking at $50.891 billion in 2013/14 as projects like the $35 billion Australia Pacific LNG Project kick into gear (see chart).
The CFC is not alone. Participants in the most recent Construction Outlook survey, released last month by Australian Industry Group and the Australian Constructors Association, expect activity on mining and mineral processing plants to grow by around fifteen percent in both 2011 and 2012. Work on oil and gas processing facilities is expected to grow by 17.7% in 2011 and 21.1% in 2012.
Underpinning such bullish expectations are ever increasing capital expenditure plans and a huge pipeline of projects. According to the Minerals and Energy: major development projects – April 2011 listing, published by Australian Bureau of Agricultural and Resource Economics (ABARE) in May, there are currently ninety-four projects in advanced stage planning with a combined capital expenditure value of $173.5 million. Not only is this a record, it represents an increase of thirty-one percent against the previous listing for October 2010 (which, in itself was a record).
Significant Statewide Developments
According to CFC forecasts:
• Western Australia continues to lead the way.
Thanks to persistent troubles with the Oakajee Port and Rail Project, growth in activity is set to remain modest this year. Beyond that, however, activity in the state is expected to grow from $17.147 billion this year to $23.362 billion in 2012/13 before surging to $33.618 billion the following year as work gets going on the Scaddan Energy Joint Venture Coal Project in Esperance ($21 billion).
• After a quiet year in 2011, activity in Queensland is set to take off in mid 2012 once work on the Australia Pacific kicks off. The value of work is expected to increase from $7.254 billion this year to $9.5 billion in 2012/13 and $10.751 billion in 2013/14.
Along with Australia Pacific, activity in the state will be supported by work on other multi-billion dollar projects such as the Curtis Island LNG Project and the China First Coal Project.
• Activity in South Australia is set to grow from $618.1 million last year to $1.090 billion in 2012/13. Much in this state, however, depends on the fete of the proposed Olympic Dam Expansion Project.
• In Northern Territory, the value of work is set to more than triple this year from $516.9 million to $1.777 billion on the way to reaching $2.928 billion by 2014/15. Much of this growth is expected to be driven by work on onshore processing facilities in Darwin associated with the $25 billion Ichthys LNG Project.
• Helped along by the $6 billion Loy Yang Coldry Plant Project and the Monash Energy Coal Gasification & Liquids Project (both in Traralgon), activity in Victoria is set to more than double from $863.6 million to $1.940 billion this year on the way to peaking at $2.035 billion in 2012/13.
• New South Wales is the one state which is not expected to share in the anticipated boom. Activity in the state is set to fall from $3.016 billion in 2010 to $1.868 billion this year on the way to bottoming out at $1.244 billion in 2013/14.