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    Australian Mining Industry

    Outlook Market Opportunities

    and Entry Strategies, Analyses

    and Forecasts to 2016

    Industry Forecast Report

    Reference code: MN0040MR

    Published: March 2012

    BRICdata

    John Carpenter House

    7 Carmelite Street

    London EC4Y 0BS

    United Kingdom

    Tel: +44 (0) 20 7936 6400

    Fax: +44 (0) 20 7336 6813

    www.bricdata.com

  • EXECUTIVE SUMMARY

    Australian Mining Industry Outlook Market Opportunities and Entry Strategies, Analyses and

    Forecasts to 2016 Page 2

    BRICdata. This product is licensed and is not to be photocopied Published: March 2012

    1 Executive Summary

    Australia is one of the leading producers of several minerals within the global mining industry. Australia possesses

    substantial deposits of a variety of minerals, including iron ore, nickel, bauxite, copper, gold, silver, uranium, diamonds,

    zinc and coal. BRICdata expects that the volume of minerals produced from the Australian mining industry will increase

    from XXX.X million tons in 2011 to X.X billion tons in 2016, at a compound annual growth rate (CAGR) of X.XX% over the

    forecast period (20122016). This growth will be influenced by the relatively low value of mining in 2011, since flooding in

    the country postponed mining activities. However, the growth in mining production volume will also benefit from the

    completion of new mining projects across the country, most notably projects by Rio Tinto, BHP Billiton and Xstrata.

    Iron ore and bauxite production volume growth

    Australias iron ore production output is expected to record the highest growth rate, at a CAGR of X.XX% over the forecast

    period, with the countrys iron ore production increasing from XXX million in 2011 to XXX.X million tons in 2016. Since iron

    ore accounts for the largest proportion of around XX% of the mining industry's output value, this rising iron ore production

    volume will have a positive impact on the Australian mining industry value. The growth in iron ore production will be driven

    by the mining project expansion activities of BHP Billiton and Rio Tinto. BHP Billiton is expected to increase its iron ore

    output in its Western Australian operations from XXX million tons per annum (mtpa) to XXXmtpa in 2014. Meanwhile, Rio

    Tinto is anticipated to increase its production in its Pilbara operations from XXXmtpa to XXXmtpa in 2015.

    BRICdata also expects that Australia will remain the world's largest bauxite producer by recording average annual output

    growth rates of X.X% over the forecast period, to increase output from XXmtpa in 2010 to 99.7mtpa in 2016. The vast

    majority of this growth is due to expansion plans at Rio Tinto's Weipa mine, the world's largest bauxite mine, which is

    expected to increase production volume from XXmtpa to XXmtpa in 2013.

    Changing coal dynamics

    Australias coal production output is expected to record average annual growth rates of X.X% over the forecast period,

    from XXXmtpa in 2011 to XXXmtpa in 2016. The BRICdata forecast for coal production in Australia was revised down

    from XXXmtpa to XXXmtpa in 2011, due to the effects of flooding which postponed mining production in Queensland at

    the start of the year. BRICdata expects there will be significant changes in the global coal production dynamics over the

    forecast period, which could have a substantial impact on global shipping and infrastructure. It is anticipated that

    Australias coal exports to China and India will reduce over the forecast period, as Indonesia plans to increase its domestic

    coal consumption and Australia's taxes on carbon emissions and coal mining profits are likely to deter investment.

    Meanwhile, Australias coal imports are expected to be replaced by the increased coal production in Southern Africa and

    the US. Several coal production projects have been announced in Mozambique and South Africa, and the vast majority of

    coal produced in these products will be exported as there is currently little demand for coal in the local region.

    Changing regulatory environment

    Australia's mining industry is one of the most attractive for investments in the world, and there are both domestic and

    foreign mining companies operating in the country. Australia is expected to remain a highly attractive destination for

    foreign investment, despite the proposed XX% tax on mining companies' profits in coal and iron ore production. The

    proposed tax is not expected to have a significant impact on investments in the Australian mining industry, as investors

    concerns regarding the tax are expected to be outweighed by the country's large mineral wealth. Moreover, the proposed

    tax could be reduced as the ruling coalition only has a one seat majority, and it may be difficult to get the bill passed

    through parliament without compromise. If the bill is implemented, it is expected to become effective from July 2012.

    Investments announced despite proposed tax on mining

    The proposed XX% tax on mining company profits has not significantly affected investments in the Australian mining

    industry, since several new coal and iron ore mining projects were announced in the country after the tax was first

    proposed. Xstrata and CBH Resources plan to add another XXmtpa to their coal product by 2013, while Rio Tinto and

    Fortescue Metals have announced large-scale plans to increase their iron ore output by a total of XXXmtpa by 2015. Since

    the announcement of the new tax, Rio Tinto has proceeded with investments worth US$X.X billion in new Australian

    mining projects, and Xstrata has committed US$X.X billion in new coal mine investments. As such, the tax rise has not yet

    significantly deterred investment in the Australian mining industry.

  • EXECUTIVE SUMMARY

    Australian Mining Industry Outlook Market Opportunities and Entry Strategies, Analyses and

    Forecasts to 2016 Page 3

    BRICdata. This product is licensed and is not to be photocopied Published: March 2012

    Competitive landscape

    Due to its strong growth potential and high-quality infrastructure, Australia contains some of the leading companies within

    the global mining industry. The multinationals operating in the Australian mining industry include Australian companies,

    such as BHP Billiton and Newcrest Mining, and large foreign mining companies, such as Rio Tinto, Norilsk Nickel and

    Xstrata. It is expected that Australia's mining industry will remain dominated by large miners, with the exception of coal,

    which could become slightly more fragmented as Hancock Coal develops a XXmtpa Alpha coal mine project and Waratah

    Coal develops a XXmtpa Galilee coal mine. These mines will begin to produce coal output from 2013. These projects are

    the largest planned in the countrys coal production, which will enable the two companies to become significant coal

    miners in Australia over the forecast period.

  • TABLE OF CONTENTS

    Australian Mining Industry Outlook Market Opportunities and Entry Strategies, Analyses and

    Forecasts to 2016 Page 4

    BRICdata. This product is licensed and is not to be photocopied Published: March 2012

    TABLE OF CONTENTS

    1 Executive Summary ......................................................................................................................... 2 2 Mining Industry Outlook in Australia............................................................................................... 9

    2.1 Mining Industry Market Size and Growth Potential .............................................................................. 9

    2.2 Market Share and Production Trend Analysis by Mining Category .................................................... 10

    3 Mining Industry Key Trends, Growth Drivers and Challenges ..................................................... 15

    3.1 Key Trends and Growth Drivers ........................................................................................................ 15

    3.2 End User Market Dynamics .............................................................................................................. 18

    3.3 Macroeconomic Drivers .................................................................................................................... 21

    3.6 Challenges ....................................................................................................................................... 26

    4 Mining Equipment Market Size and Growth Potential .................................................................. 27 5 Regulatory Framework ................................................................................................................... 28

    5.1 Regulation of Foreign Investments ................................................................................................... 28

    5.2 Organization Health and Safety (OHS) Standards ............................................................................ 29

    5.3 Market Entry Route .......................................................................................................................... 29

    6 Benchmarking with Key Global Markets ....................................................................................... 31

    6.1 Copper ...........................................................................................................................................