Bell Potter’s resources analyst, Giuliano Sala Tenna, last night appeared on ABC’s The Business to discuss the outlook for commodities and mining investment. Salna Tenna provides a fairly benign outlook, arguing:
- Big iron ore capital expenditure (capex) projects are coming to an end, with Roy Hill’s $10 billion project likely to be the last. H&H is of the view that Roy Hill remains under a cloud.
- But it’s not all doom and gloom, with lots of big projects underway, especially in the LNG space, that will see elevated levels of capex for a number of years to come. H&H disagrees again, expecting things to get much worse before they improve.
- Beyond LNG, there’s the possibility of big capex in uranium, although it will depend on a wide range of factors.
- Gold is looking weak, having just experienced its worst quarterly performance in 50 years.
- Fortescue has become more resilient and can now survive at an iron ore price of around $US75/tonne. H&H sees this as highly questionable, depending upon estimates of much of their costs are priced in AUD.
In short, H&H doesn’t agree with Bell Potter on the commodities outlook!
The two videos below from the BBC looking at the Australian commodity boom are also worth checking out.
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The first video takes a look inside one of the world’s biggest iron ore mine – Mount Whaleback in Western Australia – whereas the second looks at Port Hedland and how it has been shaped by the commodity super cycle and how it could fare as the boom unwinds.
