Following the significant fall in both revenue and exports in 2014 and 2015, Australia’s mining sector is poised to recover in 2015 and 2016, says IBISWorld.
According to an IBISWorld report, commodity prices are expected to rebound throughout 2015 and 2016 – sector-wide revenue is forecast to grow by 8.6 per cent, with iron ore and oil and gas underpinning the recovery.
IBISWorld senior industry analyst Spencer Little said: “Key commodity prices are set to rebound, while additional capacity in several key industries is also expected to come online in 2015/2016.”
Following consecutive years of iron ore price depreciation – prices declined over 34.6 per cent in 2014/2015 – IBISWorld said prices will strengthen in Australian dollar terms.
IBISWorld said growth – expected at 12.8 per cent – is likely to be driven by expansion projects and industry investment.
“Additional capacity in the oil and gas extraction industry is projected to come on line in 2015/2016, including some of the first east coast LNG export facilities,” said Mr Little.
“These gas projects are expected to contribute significantly to capital expenditure in the mining division in 2015/2016 and also drive strong export growth.”
The demand for uranium will improve, with growth predicted to increase by 4.5 per cent in 2015/2016, the report found.
“The continued depreciation of the Australian dollar is expected to contribute to uranium revenue and export growth,” Mr Little said.
The expansion of nuclear generation facilities in China, India and South Korea, in addition to the falling Australian dollar, will fuel demand.
“Australia’s total uranium production and export volumes are likely to rise due to new mine developments and several expansion projects,” said Mr Little.
While IBISWorld is optimistic toward the recovery of the mining industry, the black and brown coal sector will struggle to recover.
“Unlike black coal miners, brown coal miners have been unable to develop export markets,” said Mr Little.
Weak demand for the resource is expected to continue throughout 2015/2016, causing a further fall in revenue, according to the research firm.
However, declines in the sector will be offset by stronger performance in alternate industries.
Economists agree that the Reserve Bank is likely to remain in inflation fighting mode until December. ...