BIS Shrapnel is out today warning of a 40% slump in mining investment: the biggest decline on record. From The ABC:
BIS Shrapnel has released the findings of its Mining in Australia 2014-2029 report which points to a 40 per cent collapse in investment in the sector over four years.
“Already we’re seeing a substantial slump take place in iron ore and coal investment around the country but now with the LNG investment boom about to end we’re about to see the biggest slump ever in mining investment,” spokesman Adrian Hart said.
He said the current slump had barely begun.
“If anything we see investment continuing to fall right through to about 2017 before stabilising,” he said.
While I share BIS’ sentiment, these forecasts are still far too optimistic. As shown by the below spactacular chart from Gerard Minack, mining investment rose from around 1.5% of GDP pre-boom to a peak of nearly 8%:
Assuming that mining investment falls to its long-run average, this would imply a decline of some 75%, with the risk of even bigger falls if investment over-shoots to the downside, as is commonplace after booms.
