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Australia’s mining boom may end earlier than previously anticipated budget advisory group Deloitte Access Economics said Tuesday (subs. required).
In its December 2012 quarter Business Outlook Deloitte says the mega-mining construction projects, which accounted for much of Australia’s production growth in recent years, will peak later this year despite government spending cuts making it harder to find a new driver of economic growth.
Last year Deloitte Access Economics said Australia’s mining boom would come to an end within the next two years, but today’s release seems to indicate the end is just around the corner.
‘‘The strongest contributor to Australian growth will peak, so the rest of the economy needs to fill a potential pothole,’’ Deloitte said.
Rather than financing “speculative long-term projects,” says the report, Australian resources companies should adopt a “quality over quantity” attitude and decide which projects are most worth their time and funding.
“Mining companies can no longer lay claim to a deep portfolio of expansion projects when only a percentage of them are viable,” said Deloitte.
“Instead, companies must narrow the focus to those projects capable of delivering a demonstrable return on capital,” it added.
The firm added a lower Australian dollar is needed to ease pressure on the manufacturing, tourism and international education sectors, but so far that hasn’t happened.
Deloitte Access Economics is Australia’s main private-sector budget forecaster.
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