There appears to be some truth to warnings from industry experts that the mining boom is headed for a slowdown. One evidence is that a new report released on Tuesday found that only one-fourth of Australian mining firms plan to invest in major projects in .the next 12 months.
The figure is more than half down from the 52 per cent in 2011. Besides the lack of plans to engage in major capital spending, the Mining Business Outlook report said only 20 per cent of mining leaders were very optimistic and over one-third were not optimistic.
The reversal of outlook is apparent compared to 57 per cent who were very optimistic in 2011 and only 13 per cent who were not optimistic for the same period.
David Hand, author of the report compiled by Newport Consulting, explained the change in outlook to the belief that commodity prices could possibly not remain high enough for future investments to pay off.
However, he said mining firms would not cancel projects they have committed to but may hold off expansion plans as was announced Monday by BHP Billiton for its Olympic Dam expansion.
Last week, Deloitte Access Economics warned that 2014 would likely be the peak of Australia's mining boom amid reports that price of thermal coal in the international market dipped to $90 and iron ore to $118 per tonne.
Besides the lower prices, other factors cited for the likely decline in the mining industry are the strong Australian dollar, unionism and the carbon tax.
Besides BHP, Ivanhoe Australia also announced on Monday that it reduced exploration spending by $15 million as part of the miner's restructuring process which includes cutting 50 jobs.
The changes in Ivanhoe, known for its appetite for exploration, is due to Rio Tinto's acquisition of majority control of Ivanhoe Australia, including a change in officials. Among them were Canadian mining magnate Robert Friedland who is no longer the chairman of Ivanhoe Australia and Peter Reeve who is no longer the chief executive.
The firm said in a statement that its geological teams are evaluating all collected data to a new exploration focus, which is to concentrate on copper and gold extraction in regions close to its existing mines in Queensland.
Rio Tinto took over majority stake in Ivanhoe Australia in January 2012. Rio paid $935 million for 133.6 million shares of Ivanhoe Mines Limited through a shareholder rights offering.
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