The Chamber of Minerals and Energy of Western Australia (CME) has found that while the state continues to reap the benefits of the ongoing mining boom,  global uncertainty around the Greek debt crisis and the possibility of a slowdown in China has affected the production of key commodities, translating into a contraction of business confidence.

 

These factors were reviewed in the June edition of the WA Resources and Economics Report, which was published by the CMA in conjunction with KPMG.

 

CME Chief Executive Reg Howard-Smith said while continuing to be the powerhouse of the nation, the WA resources sector was facing some challenges. 


“Over the March quarter WA has seen decreases in production of several commodities, particularly iron ore largely due to cyclonic weather shutting port operations,” Mr Howard-Smith said. 


“Continued speculation on what impact the Greek debt crisis will have on Australia has hit the market pretty hard and particularly affected small and mid-tier miners who are susceptible to these types of jitters. 


“With this uncertainty, it’s not the ideal time to throw in some new taxes but that’s the reality with the implementation of the Minerals Resource Rent Tax and Carbon Tax now in effect. 


“China is expected to remain a big consumer of Australia’s mining exports and a good indicator of that is the monthly crude steel production in China to May this year being higher than the same period in 2011. 

 

Other key findings in the June 2012 WA Resources and Economic Report: 

  • The March quarter is relatively quieter for mineral and petroleum exploration owing to seasonal factors amongst others and as a result, recorded a 23 per cent drop from the previous quarter to $883million 
  • New minerals projects added to the Bureau of Resource and Energy Economics advanced project list include Rio Tinto’s Nammuldi mine expansion, Atlas Iron’s Horizon 1 growth project and Wesfarmers’ ammonium nitrate plant expansion 
  • Total market capitalisation of WA resource companies at end May 2012 was $92.8billion, a decrease of 21 per cent from end of February 2012 reflecting renewed market concern about the Greek debt crisis and possible China slowdown 
  • Australia’s terms of trade continued to decline, falling 4.3 per cent partially caused by a weakening in the price of exports due to slowing demand 

 

The June 2012 WA Resources and Economics Report is available here