1. bree.gov.au Major Mining Projects and Investment Presented at the ‘State of the Nation’ 19 June 2012 Professor Quentin Grafton Executive Director/Chief Economist Bureau of Resources and Energy Economics (BREE)

2. bree.gov.au Overview The Mining Boom – Price and Volume Trends Major Mining Projects – Trends and Prospects

3. bree.gov.au The Boom: Price & Volume Trends

4. bree.gov.au Metal Prices: Past Trends

5. bree.gov.au Commodity Prices: Past Trends & Projections

6. bree.gov.au Commodity Production: Past Trends

7. bree.gov.au Commodity Production: Past Trends & Projections

8. bree.gov.au Key Messages Overall commodity prices have peaked (2011) and likely to moderate over the next five years and beyond. Price reductions likely to be more substantial in period 2020 and beyond due to large supply responses from Australian competitors. Australian export values are projected to increase in medium term, but underpinned by higher volumes

9. bree.gov.au Major Mining Projects: Trends

10. bree.gov.au Value of Advanced Mineral and Energy projects ($2011-2012)

11. bree.gov.au Mining Capital Expenditure Capital expenditures in mining industry totalled about $50 billion in 2010-11 ─ highest ever, 30% higher than in 2009-10 and about three times greater than annual average over past 30 years. Based on industry intensions canvassed in December quarter 2011 expected to exceed $80 billion in 2011-12.

12. bree.gov.au Number of Advanced Mineral & Energy Projects

13. bree.gov.au Completed Major Mining Projects ($2011- 12)

14. bree.gov.au Australian private minerals exploration expenditure ($2011-12)

15. bree.gov.au Value of advanced projects by commodity 2002 v 2012

16. bree.gov.au Value of advanced projects by state 2002 v 2012

17. bree.gov.au Prospects: Value of Advanced Projects if no new projects were announced

18. bree.gov.au Prospects: Number of Advanced Projects if no new projects were announced

19. bree.gov.au Less advanced mineral and energy projects

20. bree.gov.au Value of advanced and less advanced projects Dec 2002 – April 2012

21. bree.gov.au Number of advanced and less advanced projects Dec 2002 – April 2012

22. bree.gov.au Factors Affecting Investment Factors common to investment decision across the economy: –Macroeconomic conditions (interest rates, exchange rate, etc.) –Government policies Factors specific to the mining sector or commodity: –probability of discovering an economic mineral deposit or extending the resource base of a known deposit; –current and expected future prices; –mining and processing technologies; and –input costs

23. bree.gov.au Key Messages Advanced projects, exploration expenditures and mining capital expenditure are at historic highs. High levels of investment (real $) will last for next few years given the time it will take for some very large projects to reach completion. Over the longer term high levels of investment unlikely to be maintained if resource commodity prices continue to moderate.

24. bree.gov.au Thank You quentin.grafton@bree.gov.au