Experts say 2016 the year mining industry recovered

Coal

Economists and other experts say the uptick in Australia's mining marks a turnaround in fortunes.

Prominent economists and other experts have suggested 2016 is the year Australia’s mining industry began to recover following the most recent downturn.

Capital investment is on the increase, commodity prices are on the rise and there are signs that non-mining infrastructure investment is improving. It’s a welcome change to the doom and gloom we’ve been hearing over recent years — especially when the Australian economy relies so heavily on the sector.

Earlier this month Business Insider quoted National Australia Bank’s markets division chief economist Ivan Colhoun as saying he thinks the downturn is nearing its end and included several charts to back up his claims.

Here’s just one of Colhoun’s charts, showing the increase in confidence in the mining sector.

Please enter an image description.

Uptick in recruiting, too

Colhoun’s claim of improved confidence is mirrored by signs of an increase in hiring in the sector.

“These trends suggest the bottom of the mining cycle is more clearly upon us, which should increasingly lessen the drag on the economy from this source as we move into 2017,” Colhoun told Business Insider.

The same week, the ABC reported that the turnaround has global investors “on the hunt for junior Australian miners and explorers with attractive prospects”.

The article quotes Orlee Werthheim, a business development manager for the global mining sector.

“At the beginning of the year, most of the financing was for advanced projects, but for the past number of months we’ve been seeing that trickle down to the junior companies.

“Particularly in the precious metals’ space, gold and silver and as well, in lithium”.

China and Japan leading coal demand

Experts say the uptick in the industry is being led by structural reform in China, which is working to reduce overcapacity in its coal supply. As a result, coal prices have risen more than 150 per cent this year. There has also been a surge in demand from Japan.

 

That has led to a boost in confidence and positivity in Australia’s coal industry. As the ABC reported, it’s fantastic news for coal mining communities, like Collinsville in Queensland and Muswellbrook in New South Wales where there is widespread hope their major industry will return.

Central Queensland University professor of economics John Rolfe told the ABC: “We are seeing across all the commodities a fairly sustained rise since the beginning of the year.

It really does start to seem as though there is hope for a gradual recovery”.

Sorry, no categories found