Morgan BellIBISWorld Predicts Slowing of Mining in 2008
January 29th 2007 11:27
Will our mining boom last forever? When will it stop? If you have a guess, read along.
The news today, 29 January 2007, is that “research house IBISWorld says the mining sector will account for eight of this year's top-10 fastest growing industries because of global demand for Australian commodities.”
“But miners will start to go off the boil in 2008.”
“"As China finalises its preparations for the 2008 Olympics, its current insatiable drive for development should ease slightly," IBIS general manager Australia, Jason Baker, said.”
“"We're not suggesting the mining sector will struggle after this year, just that revenues will probably stabilise around their current record levels.”
“"At worst, we might see a slight decrease in revenue, but nothing too significant."”
“Industries associated with metal and petroleum mining and refining and oil and gas extraction make up eight of this year's projected top-10 fastest growers with copper mining the highest at No. 2.”
This news was published in the online version of The Age and was sourced from AAP.
The problem with any mining boom, to be a bit sarcastic, is just to guess when it starts, so that we can buy, and when it ends, so that we sell before that.
Another aspect of mining is that, though in boom times prices increase, in, let’s say, regular times, producers compete by reducing prices which has the pernicious effect of reducing margins and profits and requiring capital improvements to increase efficiency of operations.
If someone is looking for a stable cash flow and a nicely growing business I do not know why he would choose mining.
Its interesting though, that China as a customer changes a bit the outlook for mining in Australia due to its continuing growth and prosperity. Every year 100 million people in China leave the countryside and move to a city where, as a rule, they find employment in China’s export oriented manufactures.
These employed people demand housing, cars, motorcycles, buses, roads, airports, sea ports, food products, education, entertainment and who knows what else, and all that means that their growth story is far from over. This in turn means the Australian mining boom is also far from over, as I see it.
It was said recently by an authority that, even if the China boom falls from its 10 per cent grow rate to a more reasonable 8 per cent, that, given the sheer size of China, means our mining boom would still have a basis to continue.
End
The news today, 29 January 2007, is that “research house IBISWorld says the mining sector will account for eight of this year's top-10 fastest growing industries because of global demand for Australian commodities.”
“But miners will start to go off the boil in 2008.”
“"As China finalises its preparations for the 2008 Olympics, its current insatiable drive for development should ease slightly," IBIS general manager Australia, Jason Baker, said.”
“"We're not suggesting the mining sector will struggle after this year, just that revenues will probably stabilise around their current record levels.”
“"At worst, we might see a slight decrease in revenue, but nothing too significant."”
“Industries associated with metal and petroleum mining and refining and oil and gas extraction make up eight of this year's projected top-10 fastest growers with copper mining the highest at No. 2.”
This news was published in the online version of The Age and was sourced from AAP.
The problem with any mining boom, to be a bit sarcastic, is just to guess when it starts, so that we can buy, and when it ends, so that we sell before that.
Another aspect of mining is that, though in boom times prices increase, in, let’s say, regular times, producers compete by reducing prices which has the pernicious effect of reducing margins and profits and requiring capital improvements to increase efficiency of operations.
If someone is looking for a stable cash flow and a nicely growing business I do not know why he would choose mining.
Its interesting though, that China as a customer changes a bit the outlook for mining in Australia due to its continuing growth and prosperity. Every year 100 million people in China leave the countryside and move to a city where, as a rule, they find employment in China’s export oriented manufactures.
These employed people demand housing, cars, motorcycles, buses, roads, airports, sea ports, food products, education, entertainment and who knows what else, and all that means that their growth story is far from over. This in turn means the Australian mining boom is also far from over, as I see it.
It was said recently by an authority that, even if the China boom falls from its 10 per cent grow rate to a more reasonable 8 per cent, that, given the sheer size of China, means our mining boom would still have a basis to continue.
End
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