Issue link: https://viewer.e-digitaleditions.com/i/142338
moneytalks Data mining money, mining and how industry changes can affect you. WORDS: LESLEY PARKER Working in the mining industry, what issues should you be keeping an eye on? It's a timely question, with all the chatter recently about whether or not the mining boom is over. The talk arose because China went through a bit of a slowdown late last year, and it's China that's soaking up our commodities – such as iron ore. China needs them to build infrastructure such as bridges and roads as its economy develops and people move in increasing numbers from the countryside into the cities. Last year's slowdown was in fact just a turn in the normal economic cycle, and China picked up again. But staying on top of news about this key nation's economy is a good idea. When China turned down, so did iron-ore prices, due to less demand at the time for the same – or a growing supply of – such commodities. The balance between supply and demand typically determines price, and price is what determines whether or not it makes sense for a mining company to dig something out of the ground. The higher the price of the ore to be mined, the more likely it is that a resource project will go ahead; the lower the price, the more likely it is that a mining project will be delayed. Commodity prices are expected to swing about in coming months. You can keep an eye on them via the Reserve Bank of Australia's monthly commodity price index. People also talk about mining investment 'peaking'– what's really happening here? A lot of big projects are already underway, so the other question on many people's minds is just how many more projects will go ahead, especially with commodity prices not likely to go much higher, having trebled in the past decade. The federal government's Bureau of Resources and Energy Economics (BREE) says there are 87 resource projects, to the value of $268 billion, that could be considered 'committed'. But the reality is they won't all go ahead at the same time. To put that number in context, a record $82 billion was spent on mining projects in 2011–12. Then there are 170 other projects, worth $292 billion, at what's called the 'feasibility' stage, in which companies are sufficiently interested that they will typically spend some money investigating whether to proceed. Of course, some of those feasibility studies will show it's not worth going ahead because it's too expensive to extract the materials or because prices aren't high enough. Then there's up to $133 billion in what BREE classifies as 'publicly announced' projects. These fall into the basket of 'it sounds like a good idea, but we won't spend any money on it yet' – so these plans should be taken with a pinch of salt for now. In the meantime, keep an eye out for news of the Australian Bureau of Statistics' monthly capital expenditure survey. LESLEY PARKER is a personal finance and consumer affairs journalist whose work appears regularly in the Money section of the Sydney Morning Herald and THE Age newspapers, along with business magazines. You can follow her on @consumed_au. 41