"Don't panic" about mining industry: BIS Shrapnel

By Reporter 28 August 2012 | 1 minute read

Investors need to stop panicking about the future of mining investment with growth still ahead, according to one research house.

The economy is set to grow by more than three per cent per year for the next few years, underpinned by mining investment, according to forecaster BIS Shrapnel.

The best advice for those watching the market at the moment is “Don’t panic,” said BIS Shrapnel’s chief economist, Frank Gelber.

“Mining investment will continue to grow, albeit more slowly, for a few years yet,” said Dr Gelber, explaining that now investors have noted the mining boom will not ‘last forever’ they may overreact pessimistically.

Currently, he forecasts that mining investment is tipped to peak in 2014 before declining, but non-mining investment will then stabilise and smooth the transition.

The building industry will be one to step up and assist this transition, as will telecommunications.

The housing market will be stimulated on the back of population growth, stock shortages and lower interest rates, even if businesses do not appear to be investing enough.

However, despite any weakening currently being seen in mining investment, it “remains extremely profitable, with strong production in prospect.

“The current media discussion is about mining investment, which is stimulating investment-related activity in design, construction, equipment and business services, and adding significantly to our capacity to produce commodities,” he said.

“On our forecast of continued high commodity prices, the Australian dollar will remain high for a few more years yet. This will keep pressure on other trade-exposed industries that are already suffering from structural change.”

"Don't panic" about mining industry: BIS Shrapnel
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