By: Ben LaceyThe Australian mining industry is expected to be the next big growth driver in Australia in the next five years, with a mining boom expected to fuel a strong growth in the mining industry in the years ahead.
Key points:In a new study, Australian mining companies are projected to have an increased turnover of $6.5 billion this year, or 12 per cent more than in 2017As mining companies take on more risk, they are more likely to go publicWhile there are many sectors in Australia that are facing tough times, it seems mining companies could be among the worst affected as the downturn is forecast to last longer than the previous five years.
In a research paper published by investment bank Lazard, analyst and analyst of Australia and NZ, Chris Bowers, found the mining and mining related industries are projected by Lazard to have $6 billion in 2017, an increase of 12 per, per cent on 2017.
“The mining sector has an increasing chance of experiencing a long-term downturn, and while this might be a natural thing, the risk is growing.
The mining sector is the biggest contributor to mining and related industries in Australia, accounting for nearly 10 per cent of total industry turnover in 2017,” he wrote.”
In addition, mining companies have an increasing propensity to go into private equity, which may further impact the future growth of the sector, as private equity funds are increasingly investing in the sector.”
Lazard noted the mining sector had been experiencing the worst downturn in Australian mining history, which saw $3.5 trillion worth of assets sold off in a span of five years from 2008 to 2017.
Lazard said that the mining, mining related and related services sectors would continue to experience a long downturn, with an estimated $3 billion in sales of goods and services for the sector over the next three years.
“This is partly due to the high cost of mining, which will likely continue to be a significant contributor to sales of services, and partly due the ongoing financial challenges that the sector faces,” Mr Bowers wrote.
In his report, Mr Bower wrote that mining was projected to increase by 8 per cent next year, but with the Australian mining and processing industry facing a downturn, the increase could be as much as 12 per per cent.
“As more companies are forced to sell assets, and as the value of mining assets declines, there will be more risk in going public,” he said.
“While the risk of going public is increasing, it will likely be short lived as mining companies will likely need to take greater risks in order to increase profits, as they will need to increase their share of the market to make a profit.”
The mining industry has experienced a decline in revenues since the early 2000s, with the total value of the industry declining by over $300 billion between 2009 and 2017.
However, it is predicted that the downturn in revenue and revenue growth will be reversed by 2018 as the mining companies expand into other industries.
“I expect the mining revenue growth to accelerate from 2018 onwards, but as a result, the mining related industry will experience a decline,” Mr Lacey wrote.
Lazar’s report is expected in early 2018.
Topics:mining-industry,mining-environmental-issues,business-economics-and-finance,australia,nsw,aestoria-4000,lincoln-2250,vicTopics:government-and/or-politics,business/business-administration,business,mining,aussie-mining-peg,goldfields-4870,caldera-4840,lizard-2422,melbourne-3000,vicFirst posted February 26, 2018 10:58:51Contact Ben LacerdaMore stories from Victoria