The latest Quarterly Economic Brief from the Chamber of Energy and Minerals of Western Australia (CME) highlights the mixed fortunes facing the Western Australian resources sector.
“While the increased production of major commodities tells a positive story, exploration expenditure has continued its downward spiral,” said CME Chief Executive, Reg Howard-Smith.
The report, produced by CME in conjunction with Deloitte Access Economics, shows in the December quarter total resources exploration spending fell 14.5 per cent (18.1 per cent decline in seasonally adjusted terms). This represents a 30 per cent decline on the previous year.
“With exploration expenditure falling in Western Australia, CME is hopeful that recently announced government programs and funding will help to halt this downward trend,” said Mr Howard-Smith.
“Over the past fortnight, CME has welcomed both the WA and Federal Government efforts to boost exploration in their respective budgets,” said Mr Howard-Smith.
The 2014-15 State Budget includes continuation of funding for the Exploration Incentive Scheme, including the successful Co-Funded Drilling Program. And this week, the Federal Treasurer Joe Hockey announced funding for the Exploration Development Incentive.
“Industry hopes these initiatives, along with positive price signals and a continued focus on reducing costs, will assist WA to attract a new wave of investment in the resources sector,” said Mr Howard-Smith.
The Quarterly Economic Brief outlines how, for the most part, commodity production and exports figures are continuing to tell a positive story.
Iron-ore production has again surpassed all previous records, rising 6 per cent in the December quarter as investment in major capacity expansion and construction projects come online.
WA export earnings have been experienced solid grow with our biggest trading partners and this is likely to increase with the resource policy changes in Indonesia.
Other key highlights from this quarter:
- As construction spending weakens, the State’s economic growth over the short to medium term is expected to soften and briefly drop below the national average growth to 1.6% over 2014-15.
- Petroleum exploration and iron ore exploration fell $75 million and $47 million over the quarter, respectively.
The new Quarterly Economic Brief includes a commodity analysis of alumina, providing an overview of the status of supply and demand market dynamics and WA’s position in the world market.
The report also features an interview with Dianmin Chen, the Managing Director at Norton Gold Fields Limited. Dianmin discusses the enablers for improved production growth and productivity in a pivotal year for the company, despite being faced by the challenges of ore grade and market conditions.
