Sydney, Australia — MININGREVIEW.COM — 28 May 2009 – Capital spending by the Australian mining industry fell 1.2% in the first quarter of 2009, with companies trimming their development plans in response to deteriorating demand for raw materials as the world slid into recession.
Australia’s official statistics bureau revealed here that capital spending in the sector fell to US$6.68 billion (R60 billion) in the March quarter. This was far less than an overall drop of 8.9 % in capital spending in Australia in the March quarter, compared with the December quarter.
Analysts said companies such as iron ore miner Fortescue Mining Limited and Australia’s leading gold miner, Newcrest Mining Limited, were continuing to expand operations in response to strong demand for their products.
“No doubt with China expected to ramp up growth in coming years the mining sector will continue to see strong investment," said CommSec economist Savanth Sebastian.
Fortescue chief executive Andrew Forrest said his firm was looking at expanding production to 95 million tonnes of iron ore per year from a targeted 26 million tonnes in 2008/09, possibly as early as 2011.“It’s showing really good signs that it could absorb that in the next few years,” said Forrest at a finance conference here.
Earlier this week the world’s second largest iron ore miner, Rio Tinto, said it was keeping its major iron ore growth projects in Australia ticking over so they could be brought back into full development when the recovery was sustained.
Newcrest Mining is continuing to expand its gold production as the precious metal’s price eyes the $1 000 level.
The statistics bureau also gave a new estimate for total mining capital expenditure for the 12 months to 30June 2009 of A$35.92 billion, down from the last published quarterly estimate of A$38.2 billion.