Australian Mining Industry Outlook – Market Opportunities and Entry Strategies Analyses by InfinitiResearch

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									                            Australian Mining Industry
                            Outlook – Market Opportunities
                            and Entry Strategies, Analyses
                            and Forecasts to 2016

                            Industry Forecast Report


BRICdata
John Carpenter House
                            Reference code: MN0040MR
7 Carmelite Street
                            Published: March 2012
London EC4Y 0BS
United Kingdom
Tel: +44 (0) 20 7936 6400
Fax: +44 (0) 20 7336 6813



www.bricdata.com




                                                       www.bricdata.com
EXECUTIVE SUMMARY



1 Executive Summary
Australia is one of the leading producers of several minerals within the global mining industry. Australia possesses
substantial deposits of a variety of minerals, including iron ore, nickel, bauxite, copper, gold, silver, uranium, diamonds,
zinc and coal. BRICdata expects that the volume of minerals produced from the Australian mining industry will increase
from 994.7 million tons in 2011 to 1.4 billion tons in 2016, at a compound annual growth rate (CAGR) of 7.41% over the
forecast period (2012–2016). This growth will be influenced by the relatively low value of mining in 2011, since flooding in
the country postponed mining activities. However, the growth in mining production volume will also benefit from the
completion of new mining projects across the country, most notably projects by Rio Tinto, BHP Billiton and Xstrata.
Iron ore and bauxite production volume growth
Australia‘s iron ore production output is expected to record the highest growth rate, at a CAGR of 8.96% over the forecast
period, with the country‘s iron ore production increasing from 465 million in 2011 to 706.9 million tons in 2016. Since iron
ore accounts for the largest proportion of around 35% of the mining industry's output value, this rising iron ore production
volume will have a positive impact on the Australian mining industry value. The growth in iron ore production will be driven
by the mining project expansion activities of BHP Billiton and Rio Tinto. BHP Billiton is expected to increase its iron ore
output in its Western Australian operations from 164 million tons per annum (mtpa) to 220mtpa in 2014. Meanwhile, Rio
Tinto is anticipated to increase its production in its Pilbara operations from 156mtpa to 283mtpa in 2015.
BRICdata also expects that Australia will remain the world's largest bauxite producer by recording average annual output
growth rates of 7.2% over the forecast period, to increase output from 68mtpa in 2010 to 99.7mtpa in 2016. The vast
majority of this growth is due to expansion plans at Rio Tinto's Weipa mine, the world's largest bauxite mine, which is
expected to increase production volume from 18mtpa to 50mtpa in 2013.
Changing coal dynamics
Australia‘s coal production output is expected to record average annual growth rates of 6.5% over the forecast period,
from 405mtpa in 2011 to 561mtpa in 2016. The BRICdata forecast for coal production in Australia was revised down from
425mtpa to 405mtpa in 2011, due to the effects of flooding which postponed mining production in Queensland at the start
of the year. BRICdata expects there will be significant changes in the global coal production dynamics over the forecast
period, which could have a substantial impact on global shipping and infrastructure. It is anticipated that Australia‘s coal
exports to China and India will reduce over the forecast period, as Indonesia plans to increase its domestic coal
consumption and Australia's taxes on carbon emissions and coal mining profits are likely to deter investment. Meanwhile,
Australia‘s coal imports are expected to be replaced by the increased coal production in Southern Africa and the US.
Several coal production projects have been announced in Mozambique and South Africa, and the vast majority of coal
produced in these products will be exported as there is currently little demand for coal in the local region.
Changing regulatory environment
Australia's mining industry is one of the most attractive for investments in the world, and there are both domestic and
foreign mining companies operating in the country. Australia is expected to remain a highly attractive destination for
foreign investment, despite the proposed 40% tax on mining companies' profits in coal and iron ore production. The
proposed tax is not expected to have a significant impact on investments in the Australian mining industry, as investors
concerns regarding the tax are expected to be outweighed by the country's large mineral wealth. Moreover, the proposed
tax could be reduced as the ruling coalition only has a one seat majority, and it may be difficult to get the bill passed
through parliament without compromise. If the bill is implemented, it is expected to become effective from July 2012.
Investments announced despite proposed tax on mining
The proposed 40% tax on mining company profits has not significantly affected investments in the Australian mining
industry, since several new coal and iron ore mining projects were announced in the country after the tax was first
proposed. Xstrata and CBH Resources plan to add another 14mtpa to their coal product by 2013, while Rio Tinto and
Fortescue Metals have announced large-scale plans to increase their iron ore output by a total of 150mtpa by 2015. Since
the announcement of the new tax, Rio Tinto has proceeded with investments worth US$8.0 billion in new Australian
mining projects, and Xstrata has committed US$3.0 billion in new coal mine investments. As such, the tax rise has not yet
significantly deterred investment in the Australian mining industry.




 Australian Mining Industry Outlook – Market Opportunities and Entry Strategies, Analyses and
                                                                                                                      Page 2
 Forecasts to 2016

© BRICdata. This product is licensed and is not to be photocopied                                      Published: March 2012
EXECUTIVE SUMMARY



Competitive landscape
Due to its strong growth potential and high-quality infrastructure, Australia contains some of the leading companies within
the global mining industry. The multinationals operating in the Australian mining industry include Australian companies,
such as BHP Billiton and Newcrest Mining, and large foreign mining companies, such as Rio Tinto, Norilsk Nickel and
Xstrata. It is expected that Australia's mining industry will remain dominated by large miners, with the exception of coal,
which could become slightly more fragmented as Hancock Coal develops a 30mtpa Alpha coal mine project and Waratah
Coal develops a 40mtpa Galilee coal mine. These mines will begin to produce coal output from 2013. These projects are
the largest planned in the country‘s coal production, which will enable the two companies to become significant coal
miners in Australia over the forecast period.




 Australian Mining Industry Outlook – Market Opportunities and Entry Strategies, Analyses and
                                                                                                                     Page 3
 Forecasts to 2016

© BRICdata. This product is licensed and is not to be photocopied                                     Published: March 2012
TABLE OF CONTENTS



TABLE OF CONTENTS
1         Executive Summary ......................................................................................................................... 2
2         Mining Industry Outlook in Australia............................................................................................... 9
2.1       Mining Industry Market Size and Growth Potential .............................................................................. 9
2.2       Market Share and Production Trend Analysis by Mining Category .................................................... 10
3         Mining Industry Key Trends, Growth Drivers and Challenges ..................................................... 15
3.1       Key Trends and Growth Drivers........................................................................................................ 15
3.2       End User Market Dynamics .............................................................................................................. 18
3.3       Macroeconomic Drivers .................................................................................................................... 21
3.6       Challenges ....................................................................................................................................... 26
4         Mining Equipment Market Size and Growth Potential .................................................................. 27
5         Regulatory Framework................................................................................................................... 28
5.1       Regulation of Foreign Investments ................................................................................................... 28
5.2       Organization Health and Safety (OHS) Standards ............................................................................ 29
5.3       Market Entry Route .......................................................................................................................... 29
6         Bench
								
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