Australia Mining Report Q4 2011

Business Monitor International's (BMI) Australia Mining Report (Q4 2011) provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Australia's mining industry.

Australia is a leading player in many segments of the global mining industry. Owing to its substantial deposits, the country possesses an array of minerals including iron ore, nickel, bauxite, copper, gold, silver, uranium, diamonds, zinc and coal. BMI expects that the value of the mining sector will reach US$124bn by 2015 growing at an annual average rate of 7.8% over the forecast period, from US$87.0bn in 2010. This growth is fairly uneven with 2011 figures relatively low because of flooding at the start of the year, before picking up as a plethora of projects, most notably by Rio Tinto, BHP Billiton and Xstrata, come online.

BMI forecasts iron ore production output to show the greatest increase in output reaching 630mnt (million tonnes) in 2015 from 438mnt in 2010, marking an average annual growth of 7.6%. As iron ore accounts for the largest proportion of the mining sector's value by output, between 30-40%, this increase will have a significant bearing on the country's mining sector value. This growth will be driven by BHP and Rio Tinto as the former expects to increase output from 164 to 220mntpa in 2014 at its operations in Western Australia, while the latter is increasing production from 156mnt to 283mnt at its Pilbara operations in 2015. BMI expects Australia to remain the world's largest bauxite producer with output growth averaging 9.7% per annum, reaching 107mnt in 2015, from 68mnt in 2010.

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 see production rise from 18mntpa to 50mntpa in 2013. In terms of coal production, BMI forecasts output growth to average 6.5% over the forecast period, reaching 561mnt in 2015 from 412mnt in 2010. For 2011, BMI has revised down its forecast from 425mnt to 405mnt, marking a 1.7% decline on 2010 levels, due to the effects of flooding which halted production in much of Queensland at the start of the year.

Regulatory Environment Australia's mining sector is one of the most business-friendly in the world, with domestic companies and overseas miners operating in the country. BMI expects Australia to remain a highly attractive destination for foreign investment despite the recently proposed 30% tax on mining companies' profits in coal and iron ore production. Indeed, BMI does not expect the proposed tax will have a significant impact on investment in the country's mining sector as these concerns are likely to be outweighed by the country's mineral wealth. Moreover, the bill could be watered down as the ruling coalition has a majority of only one seat and thus it may be difficult to push the bill through parliament without compromise. If the bill is implemented, it is expected to come into force from July 1 2012.

Given its vast potential and high quality of infrastructure, Australia is home to some of the biggest names in the global mining industry. Multinationals operating in the Australian mining industry include Australian companies BHP Billiton, Newcrest Mining and large overseas miners such as Rio Tinto, Norilsk Nickel and Xstrata. On the whole, BMI expects Australia's mining sector to remain dominated by large miners, with the exception of coal, which could become slightly more fragmented as Hancock Coal and Waratah Coal develop the 30mntpa Alpha and 40mntpa Galilee coal mines respectively, with output expected to commence in 2013. These projects are the largest planned in the coal sector and thus the two companies will become significant coal miners.

Executive Summary

SWOT Analysis
Australia Political SWOT
Australia Economic SWOT
Australia Business Environment SWOT

Global Mining Outlook
Rising Taxes Unlikely To Deter Investment
Table: Recent Tax Increases
Table: H111 Results
Table: Other Developments

Industry Trends and Developments
Table: Largest Expansion Plans
Table: Mining Sector Forecasts - Value & Output, 2008-2015
Coal: Production To Bounce Back Following Floods
Table: Coal Projects
Table: Australia Coal Production, 2008-2015
Nickel: Expansions To Drive Output Growth Table: Main Expansion Plans
Table: Nickel Output, 2008-2015
Uranium: BHP To Drive Rapid Output Growth
Table: Key Projects
Table: Production Forecast, 2008-2015
Bauxite: Weipa Expansion To Drive Output Past 100mntpa in 2014
Table: Main Expansion Plans
Table: Bauxite Production, 2008-2015
Iron Ore: Sector To Recover Quickly From Floods
Table: Key Projects
Table: Iron Ore Production, 2008-2015
Copper: Taxes Will Not Impact Strong Sector Growth
Table: Several Key Copper Expansion Projects
Table: Australia Copper Production, 2008-2015
Zinc: New Projects To Outweigh Century Close
Table: Main Projects
Table: Zinc Production Forecast, 2008-2015

Regulatory Development

Business Environment Analysis
Table: Asia Business Environment Ratings

Competitive Landscape
Table: 2010 Financial Results

Company Profile
BHP Billiton
Xstrata
OZ Minerals
Rio Tinto

- BHP Billiton
- Xstrata
- OZ Minerals
- Rio Tinto

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