Construction on new mines might
be slowing, but operation in
existing mines is not.
Resources and Energy Minister Martin Ferguson declared yesterday that Australia's much publicised mining boom, which preserved the country's economy while much of the world slid into recession, is 'over', but is that fair? And what does it mean for people wanting to move to Australia?
Hundreds of thousands of Brits have chosen to move to Australia over the years in search of better opportunity, few have been disappointed and never has that statement been fairer than in the middle of the resources boom which saw even truck drivers commanding six figure salaries.
But now Minister Ferguson has said the boom is 'over' so will that mean Australia will now join the Western World in an economic slump? Will opportunities become thin on the ground? Is it still worth the move?
'Doom and gloom': the end of the mining boom
"The resource boom is over," declared Minister Ferguson yesterday. "We've done well - AU$270 billion [£177 billion] in investment, the envy of the world."
The minister's statement comes in the wake of mining giant BHP Billiton scrapping its plans for two projects worth more than AU$50 billion (£33 billion), a copper mine in South Australia and an expansion of an existing iron ore mine in Western Australia, citing increased development costs, a high Australian dollar and falling commodity prices.
Following BHP's announcement, the Sydney Morning Herald declared 'The bubble has burst'.
Another Australian mining giant, Rio Tinto, said it would also be scaling back its operations due to the slowdown.
"We are going to have to make more tough decisions, invest in fewer projects, we are going to have to defer other things, we are going to have to stage projects," said Rio Tinto Chief Executive Tom Alabanese.
What are the facts?
Despite the cancellation of the mining projects and predictions of slowdowns, many are refusing to panic just yet.
Finance Minister Penny Wong said government predictions have factored in the predicted slowdown for some time.
"We've still got a long way to run when it comes to this investment boom," said Minister Wong.
"We've got over half a trillion dollars of investment, and over half of that is at the advanced stage.
"So I think the 'doom and gloom' that some are putting about isn't appropriate."
The minister's dismissal of dire predictions holds considerable weight; there are currently 10 large scale resource projects under construction in the country according to Deloitte, out of which seven remain on track with customers locked in.
National Australia Bank agree with the minister, stating in their official prediction that the boom will not peak until next year or the year.
When will the mining boom end? What will happen when it does?
Deloitte's Chris Richardson says booms are nothing new and this one still has plenty of time left given the developments in Asia:
"By the standards of booms, this one is already pretty old and will go for some time given the sheer size of the seismic shift under way in places like China and India, with people moving off farms and into factories."
Many of the dire predictions are based on the fact that China's economy, which has fuelled Australia's success, is predicted to stabilise after years of unprecedented growth but Saul Eslake, chief economist at Bank of America Merrill Lynch (Australia), says the Chinese economy's growth might be slowing, but it won't stop for a long time yet:
"The history of Japan and Korea tells us that the intensity of demand for commodities falls away once a country reaches per capita income somewhere between US$18,000 and US$25,000 (£11,000-£16,000). In China, I think that's about a decade away."
Studies by two industry bodies published earlier this week reported that while construction and expansion of new and existing projects may begin to slow, current mines will continue to operate and the focus of the resources industry will simply transition to maintaining.
Are skilled workers still needed in Australia?
Workers' unions have consistently stated their opposition to the use of foreign labour on one of the country's biggest assets, claiming that Australian labour should be used first to benefit from the boom.
However, independent studies have consistently argued that the location of the majority of the projects mean Australian labour is difficult to tempt away from the cities in the east, and this unlikely to change when expansion slows.
Mining magnate Gina Rinehart was granted the first Enterprise Migration Agreement (EMA) in May which allowed the world's richest woman to bring in over 1,700 foreign workers for her multi-billion dollar Roy Hill project and Immigration Minister Chris Bowen confirmed earlier this month plenty more EMA deals were in the pipeline.
Western Australian Representative Gary Gray added this week that between six and 12 new EMAs had been applied for to help with the continuing shortage of labour.
"We do have to accept that we've got to get our projects built on time and on budget, and that requires labour force certainty," said Mr Gray.
"We need to supplement our skilled workforce with a skilled migration program that's absolutely, totally sensitive to market conditions."
Leonie Cotton, casework department manager at the Australian Visa Bureau, says the mining boom's progress is only incidental to the opportunity on offer in Australia:
"Australia is roughly the size of Europe but has less than half the population of the UK and while it's true that the mining boom has needed to rely on foreign labour to allow it to expand, Australia has always needed skilled foreign labour to supplement its workforce.
"Boom times are nothing new, and by definition end. But when it does Australia will still need workers in the IT, healthcare, construction and plenty of other industries as well as engineers and miners for its resources sector."
- Dominic Ladden-Powell is the Online Editor for the Australian Visa Bureau.
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