Australia Mining Report

Executive Summary
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Australia Mining Report

Table of contents
BMI Industry View
SWOT

Published Date: 01 Apr 2014

7
9

Industry Forecast

11

Coal: Dimmer Prospects On Mounting Challenges

11

Table: Australia: Largest Thermal Coal Projects

15

Table: Australia - Largest Metallurgical Coal Projects

16

Table: Australia - Coal Production Forecasts

17

Lead: Growth To Rebound On Magellan's Restart

17

Table: Australia - Key Lead Projects

18

Table: Australia - Lead Production Forecasts

20

Nickel: Production To Press On Despite Price Weakness

20

Table: Australia - Largest Nickel Projects

21

Table: Australia - Nickel Production Forecasts

23

Copper: Enthusiasm Wanes On Market Uncertainty

23

Table: Australia - Largest Copper Projects

23

Table: Australia: Copper Production Forecasts

27

Iron Ore: High Grade Ores To Drive Production

27

Table: Australia - Largest Iron Ore Projects

30

Table: Australia - Iron Ore Production Forecasts

31

Gold: Global Share To Decline

31

Table: Australia - Largest Gold Mining Projects

34

Table: Australia - Gold Production Forecasts

34

Bauxite: Rio Tinto To Drive Growth

34

Table: Australia - Largest Bauxite Projects

36

Table: Australia - Bauxite Production Forecasts

37

Zinc: Output To Decline From 2016

37

Table: Australia - Largest Zinc Projects

38

Table: Australia - Zinc Production Forecasts

39

Tin: Brighter Outlook In Store

40

Table: Australia - Tin Production Forecasts

43

Industry Risk Reward Ratings

44

Risk/Reward Ratings

44

Table: Asia Mining Risk/Reward Ratings

44

Market Overview

50

Table: Australia - Select Key Mining Projects

51

Table: Australia - Mining Industry Value And Production

52

Regulatory Development

54

Table: Australia - Mineral Taxation

54

Table: Australia - Key Legislative Changes

56

Commodities Forecast

57

Commodity Strategy - Monthly Metals Update

57

Iron Ore

58

Steel

60

Aluminium

61

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Copper

62

Lead

63

Nickel

64

Tin

65

Zinc

66

Table: Select Commodities - Performance And BMI Forecasts

66

Table: BMI Commodity Strategy Table

67

Competitive Landscape

68

Table: Financial Data For Key Mining Firms Listed In Australia

69

Company Profile

70

BHP Billiton

70

Table: Table: BHP Billiton - Key Financial Data

73

Rio Tinto

75

Minmetals Resources

80

Table: Table: Minmetals Resources - Key Financial Data

83

Xstrata

85

Table: Xstrata - Key Financial Data

88

Regional Overview

90

Asia Overview

90

Table: Table: Asia - Key Legislative Changes

93

Global Industry Overview

97

Global Mining Outlook

97

97

Table: Recent Tax Increases

97

98

99

100

101

103

103

Methodology

105

Risk/Reward Ratings Methodology

105

Table: Mining Business Environment Indicators

106

Table: Weighting Of Components

107

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Australia Mining Report

Published Date: 01 Apr 2014

BMI View: With China's economy on course for a rude slowdown over the coming years, Australia's mining sect or is
set to suffer the painful spillover effects of a sharp investment slowdown. Already, the mining sector is feeling the
crunch of plummeting commodity prices as a string of miners scale back their ambitions and slam the brakes on
investment. W e forecast Australia's mining sector value to reach US$187bn by 2018 , growing at an annual average
rate of 4.0 % over our forecast period. This contrasts wit h an average growth rate of 21.7 % per annum over the past
decade.
Australia has been among the biggest beneficiaries from the China-led commodities boom over the past
decade, attracting huge amounts of investment into the minerals space. Driven by China's voracious appetite
for key commodities such as coal and iron ore, the value of Australia's mining industry had increased by more
than six-fold from US$24bn in 2003 to US$147bn in 2012. As a result, this has seen the sector's share of GDP
rising from 4.5% to 9.6% over the same period. However, we believe the boom years in the mining industry is
over. With China's economy on course for a rude slowdown over the coming years, Australia's mining sector is
set to suffer the painful spillover effects of a sharp investment slowdown.
Boom Is Over
Australia - Mining Industry Value

We believe Australia will be the biggest loser from the mineral imports shift in China ( see 'Minerals Import
Squeeze: Bittersweet Outcomes', July 17 , 2013). The latter commands a prominent role in Australia's exports of
key commodities including coal and iron ore. Already, the mining sector is feeling the crunch of plummeting
commodity prices as a string of miners scale back their ambitions and slam the brakes on investment. The
rising tide of economic nationalism, declining labour productivity and aggressive minimum wage legislation will
compound the challenges in the mining industry, amplifying the downshift in Australia's economy going
forward ( see 'Tough Times Ahead, What Can Replace The Mining Boom', May 03 , 2013). We expect the value of
Australia's mining sector to reach US$187bn by 2018, growing at an annual average rate of 4.0% over our
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forecast period. This contrasts with an average growth rate of 21.7% per annum over the past decade.
Heavy Chinese Exposure
Australia - Exports of Iron Ore (LHS) & Coal (RHS) By Country

Despite the fading of the mining boom, Australia will remain a leading player in many segments of the global
mining industry given its rich deposits of minerals including iron ore, nickel, bauxite, copper, gold, uranium,
diamonds, zinc and coal. Moreover, Australia's mining sector is one of the most business-friendly in the world,
with domestic companies and overseas miners operating in the country. We expect Australia to remain a
highly attractive destination for foreign investment, despite the introduction of a 30% super profits tax on coal
and iron ore miners on July 2012. The proposed tax will not significantly affect the country's mining sector as
these concerns are likely to be outweighed by Australia's rich mineral wealth.
Key Players
Given its vast potential and high quality of infrastructure, Australia is home to some of the biggest players in
the global mining industry. Multinationals operating in the Australian mining industry include Australian
companies BHP Billiton and Newcrest Mining and large overseas miners such as Rio Tinto, Norilsk Nickel and
Xstrata. We believe the mining industry is set to witness a wave of consolidation activity over the coming
quarters as a growing number of miners come under pressure from weakening mineral prices.

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+44 (0) 20 7246 1374

Australia Mining Report

Published Date: 01 Apr 2014

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+44 (0) 20 7246 1374

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