Yes, the world prices of commodities may have already peaked, but this does not correlate to a corresponding mining boom deceleration for Australia.
While it is true that prices of iron ore, for instance, one of Australia's major exports, have bottomed down to below $US120 a tonne for the first time in eight months, largely spurred by the continued weakened appetite of one of its major trading partners, China, it is still far too remote to assume that Australia's mining boom is already close to saturation point.
Indeed, Australia is far dependent on China and its demands for commodities for its relative economic growth. It maybe that China is slowing down, from the previous years' levels of 9 or 10 per cent, but its growth rate is still seen to register above 8 per cent in 2012 and 2013.
With still a positive growth rate projection, Australia is still sure to be able to post positive growth rate as well. Australia is expected to post an economic growth of 3.3 per cent through 2012 and 3.5 per cent in 2013, according to HSBC Australia.
And this will mainly come from an Australian mining boom.
"It's still the case that mining investment is going to be a key contributor to GDP growth this year and next year," Paul Bloxham, chief economist of HSBC Australia, said in a note released Friday. "True, commodity prices have peaked, but there is still substantial investment yet to be completed."
"We're past the point where commodity prices have continued to give the economy a free kick and boost incomes but we still have a couple more stages to come from the mining story."
What's more, Australia still has a lot of mining projects in the pipeline, such as the $43 billion Gorgon Gas project in Western Australia, for instance.
"The mining boom is not over," he said. "Gross domestic product growth will get roughly as much support from the export ramp-up as it has done from the investment ramp-up in recent years."
Should there be any fall off in mining investment, these will be sustained by growth in material exports. Australia's economy, from one largely fueled and sustained by resource investments, will switch to being sustained and anchored by materials exports.
"There will be an offset. As the construction phase winds down, the export phase should ramp up. And imports of capital goods tied in with mining capital expenditure should fall," Michael Blythe, chief economist at Commonwealth Bank, said in the Business Spectator.
To contact the editor, e-mail: