Confidence in South Australia is down, but with resources announcements and other major projects totaling $94 billion, it may be a consideration for opportunistic investors.
Olympic Dam responsibility is being transferred to another branch of BHP to further position the open pit expansion as part of their long-term strategy, after investors were left waiting earlier in the year.
The responsibility for the project is being moved over to the Base Metals Customer Sector Group. This should “consolidate the management of the next phase of studies … and position Olympic Dam to support BHP Billiton’s long-term copper strategy,” a release from BHP stated.
This follows the August announcements that BHP would be investigating an alternative, less capital-intensive design of the open pit expansion, after previous plans to approve the expansion.
The previous multi-billion dollar plan is now listed at a substantially reduced $650 million in the South Australian Major Developments Directory 2012/2013.
CEO of Positive Real Estate, Sam Saggers, told Smart Property Investment that “There is no doubt the Olympic Dam project will proceed. It has been shelved for now, however the project is too important to the local SA economy not proceed at some point into the future.”
At the moment, Mr Saggers said that there have been tough decisions made based on global economics, with global trade and commodity pricing holding the project back.
“For property investors, the shine has come out of the SA market,” he said, “[However] news of the Olympic Dam slowdown is only partly to blame.
“The South Australian economy has an inter dependency on the Victorian economy, which is also underperforming at the moment, and is part of why sentiment is still low.
“Unemployment is rising in Adelaide and South Australia and industries are still doing it tough, it has the worst unemployment figures other than Tasmania, these two states are the only two in Australia with a negative unemployment trend. Most property markets don't perform when unemployment rates are rising.”
Opportunistic investors may, however, look to the SA market now it’s down on its luck, “But they need to be prepared to make their money buying well, rather than being reliant upon a market place which isn't too friendly at the moment.”
There are still eight projects of over $2 billion listed, four of which are in the minerals/resources industry.
The largest project listed, a $10 billion sales gas, ethane, crude oil and gas liquids project, is in the Cooper Basin. It is currently “in progress and ongoing”.
Premier Jay Weatherill said the mineral and energy resources in South Australia are “world-class” and the future is still bright.
“Since the first release of this Directory in 2004/2005, the estimated value of minerals and petroleum projects in our investment pipeline has increased from $4.4 billion to over $30 billion this year,” said Mr Weatherill.