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||Australia Mining Investment Drops
The amount of money invested in Australia's resources industry continued to fall as large projects were completed and mining companies reduced spending.
Money committed by mining and energy companies such as BHP Billiton and Rio Tinto to start or expand projects fell to 229 billion Australian dollars (US$212 billion) in the six months through April from A$268 billion a year earlier, the Bureau of Resources and Energy Economics said Wednesday. For the six months through October, the figure was A$240 billion.
The amount fell mainly because more than A$25 billion in minerals-and-energy developments were completed, the agency said. New projects weren't sufficient to fill the void.
The transition of new projects to the output phase is likely to increase exports of coal, iron ore and other commodities, which resource-rich Australia ships to China, Japan and elsewhere. But it also could weigh on prices as increased supplies enter the global market.
Australian resources companies approved the construction of eight new projects at a combined value of A$12.8 billion, in the latest six months. A year earlier, 21 projects were approved for more than double that amount.
BHP has said that its capital and exploration expenditures will fall 25% globally in the fiscal year through June and again in fiscal 2015, from $21.7 billion in fiscal 2013. The company has pushed on with expansion of operations, however, including iron-ore mining in Western Australia.
Rio Tinto, which also is ramping up iron-ore production in Australia, cut its world-wide capital spending 26% last year to $12.9 billion.
BHP declined to comment on Wednesday's report, and Rio Tinto couldn't be reached.
Of the new projects approved by companies in the latest six months, the largest by far was Hancock Prospecting Pty. Ltd.'s A$10.7 billion Roy Hill iron-ore development in Western Australia.
Resources investment in Australia has jumped over the past several years, boosting the value of projects under construction by nearly 10 times in the past decade. Mining-industry capital spending has increased to 60% of total annual private-sector capital spending from about 20%.
The explosive growth of investment in the resources industry has helped cement the country's position as the world's largest exporter of iron ore and a significant producer of other commodities, such as coal and natural gas.
But mining companies recently have trimmed their spending sharply, shelved some expansion projects and closed older or poorer-performing mines.
"While the investment cycle has peaked, Australia is now moving into a period of significant increases in the production of resources and energy commodities," said Wayne Calder, the bureau's deputy executive director.
In the past year, production capacity for iron ore rose by 215 million metric tons, and for coal increased 43 million tons, Mr. Calder said. More than 1,100 petajoules of natural-gas production capacity was added during the same period.