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Mining and Petroleum Investment and Exploration Review 2015-16

Investment activity

Western Australia has again led mining investment in Australia, attracting 65 per cent of the nation’s total mining investment in 2015.

Investment activity

Western Australia has again led mining investment in Australia, attracting 66 per cent of the nation’s total mining investment in 2015-16.

According to Australian Bureau of Statistics (ABS), a total of $35 billion was invested in Western Australia’s mining industry in 2015-16.  Western Australia proved to be the investment destination of choice, increasing its share of national expenditure from 60 per cent in 2014-15 to 66 per cent in 2015-16.  Over the period, total national investment fell by 29 per cent, compared to a 23 per cent decline in Western Australian investment.  

In 2015-16, new capital expenditure in Western Australia by mining, manufacturing and other selected industries decreased by 22 per cent to just over $43 billion.  The State accounted for 34 per cent of Australia’s $1.27 billion total1

[1] It is important to note that the figures reported above by the ABS do not capture all mining investment.  The ABS uses classifications specified in the 2006 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC) (ABS catalogue number 1292.0).  Accordingly, mining is broadly defined as the extraction of minerals occurring naturally as solids such as coal and ores, liquids such as crude petroleum and natural gas.  Downstream mining activities such as smelting of minerals or ores (other than preliminary smelting of gold) or refining are classified as manufacturing activities under the ANZSIC.  Products such as coke and alumina are also included in the ANZSIC manufacturing category.

Major Projects

In monitoring resource investment activity in Western Australia, the Department of Mines and Petroleum also collects information on mineral and petroleum projects to estimate actual and possible investment.  Where possible, information is collated relating to expected capital expenditure, project timing and employment during both the construction and operation phases.

Mineral and petroleum projects are categorised as follows:

  • Projects under construction - those actually under construction at the time of updating the estimates of total capital expenditure.
  • Committed projects - have company commitment including a final investment decision (FID) but are waiting for approvals to proceed with construction.
  • Planned projects - those undergoing advanced feasibility studies including definitive and bankable feasibility studies.  For oil and gas projects, the planning phase typically involves detailed engineering design which is also referred to as Front End Engineering and Design (FEED).
  • Possible Projects comprise those raising capital and not yet as advanced as those projects conducting definitive and bankable feasibility studies.

A summary of total capital expenditure by commodity is provided in the table below[1]. It should be noted that investment in a number of the projects is publicly reported in US dollar terms and the data may therefore vary over time in line with movements in the US/A$ exchange rate.

Sector Commodity CAPEX (A$ million)
Committed/
under construction
Planned/
possible
Minerals Gold 0 1,177
Iron Ore 2,260 10,907
Nickel, Copper and Zinc 443 3,664
Other Minerals and Infrastructure 0 9,618
Sub-total Minerals 2,703 25,366
Petroleum Crude Oil and Condensate 2,608 0
Gas 2,745 1,200
LNG 88,862 19,500
Pipelines and Infrastructure 0 0
Sub-total Petroleum 94,215 20,700
Total forecast investment 96,918 46,066

[1] Information is obtained from various sources including the Office of the Chief Economist’s list of major mineral and energy projects, Deloitte Access Economics’ Investment Monitor, EnergyQuest, REPS’ Major WA Projects Listing, on-line company research consultancy systems, media announcements and company websites. 

As of September 2016, Western Australia had an estimated $97 billion worth of resource projects under construction or in the committed stage of development.  This value is up on March 2016 figures following:

  • Hammersley Iron’s approval to develop the Oxbow iron ore deposit ($247 million);
  • Rio Tinto and Rob River’s JV announcing its $120 million iron ore project;
  • Rio Tinto’s $338 million Silvergrass project moving from the planned to the committed stage; and
  • Woodside’s approval to develop its $1.9 billion Greater Enfield project.

A total of $46 billion has been identified as planned or possible projects in coming years.

The value of investment in major projects is expected to drop in 2017 as projects under construction stage of development are completed.  This includes the expected completion of the Inpex’s Ichthys and Chevron’s Wheatstone projects which together are valued at around US$63 billion.

 

Exploration activity

Exploration activity

Australia attracted a total of $1.4 billion in mineral exploration activity in 2015-16.  Western Australian accounted for just over 61 per cent of this expenditure with $871 million.

Petroleum Exploration

National petroleum exploration was down significantly in 2015-16, falling from $3.8 billion in 2014-15 to $1.8 billion.  Western Australia’s petroleum sector exploration spend was down, from $2.1 billion in 2014-15 to $1.3 billion in 2015-16.

Despite this fall, Western Australia’s share of national petroleum expenditure increased significantly from 55 per cent to 73 per cent.

Mining and Petroleum Investment update (September 2015) (DOCX 40 kb)