Australia Mining Report Q3 2016 - New Study Released

Gold, copper and bauxite will emerge as the Australian mining industry's production growth bright spots during 2016-2020. Iron ore and coal output growth will slow more markedly due to continued price weakness.

Although Australia will remain one of the world's largest mineral producers, growth will slow across the board due to continued mineral price weakness. The Australian mining sector will be particularly affected by China's economic slowdown, as the country accounts for almost 80.0% of the country's iron ore exports. We expect Australia's mining industry value to fall to USD94bn in 2016, down from USD106bn in 2015. We forecast Australia's mining industry value growth to pick up hereafter, reaching USD112.6bn in 2020. The potential return of La Nina this year poses downside risks to coal and iron ore production forecasts.

Latest Developments & Structural Trends

We forecast iron ore production in Australia to register average annual growth of 2.0% during 2016-2020 compared to 10.7% during 2011-2015.This is due to mothballing of mines from junior miners as iron ore prices remain weak as we believe that majors will stick to their production growth targets to crowd out high cost producers. Beyond 2016, iron ore production will start to slow from 4.9% in 2016 to -1.3% in 2020 on the back of low prices. We expect Australia to remain the top global producer of iron ore, with production increasing from 754 million tonnes (mnt) in 2016 to 792mnt by 2020. Australia's share of global output will average 25.5% during this period.

Full Report Details at
- http://www.fastmr.com/prod/1191608_australia_mining_report_q3.aspx?afid=301

Australian bauxite production will grow over the next few years due to the expansion of Rio Tinto's Weipa mine and the Amrun project that was approved in November 2015. Rio Tinto's Weipa project will double the mine's production capacity by 2019, reaching 50.0mnt per annum, while the Amrun project will see an extra 10.0mnt per annum from the Queensland mine reaching a total of 22.8mnt per annum by 2019. The Indonesian export ban and Malaysia's moratorium on bauxite mining will benefit Australia's bauxite sector by shifting investment to Australia. While bauxite accounts for only 4.7% of Australian mining value, the country is the global top producer, providing about 31.1% of global supply in 2016. Bauxite production will increase by an average of 9.1% per year by 2020, reaching 122.3mnt in 2020 from 82.4mnt in 2016. This is compared to the 3.3% annual average growth during 2011-2015.

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