SYDNEY, Nov. 5 (UPI) -- Australia's mining sector is expected to suffer from China's economic downturn, says a new report.
"With China's economy on course for a rude slowdown over the coming years," says the report, released Monday by London-based research consultants Business Monitor, "Australia's mining sector is set to suffer the painful spillover effects of a sharp investment slowdown."
The report notes that Australia has been among the biggest beneficiaries from the China-led commodities boom over the past decade.
The value of the Australia's mining industry had increased more than six-fold from $24 billion in 2003 to $147 billion in 2012, boosted by a sharp rise in the value of Australia's mineral exports, particularly iron ore and coal.
Related
While Business Monitor predicts the value of Australia's mining sector to reach $181 billion by 2017, the average annual growth rate is expected to be 4.3 percent through 2017, compared with an average growth rate of 23.3 percent per year over the past decade.
"Already, the mining sector is feeling the crunch of plummeting commodity prices as a string of miners scale back their ambitions and slam the brakes on investment," Business Monitor said.
The report cites "the rising tide of economic nationalism, declining labor productivity and aggressive minimum wage legislation" as factors "amplifying the downshift" in Australia's resource economy.
However, the report says Australia's mining sector is one of the most business-friendly in the world and Business Monitor expects it to continue to be a highly attractive destination for foreign investment.
Yet the report says the mineral export boom is now over, and "Australia will be the biggest loser from the mineral imports shift in China."
But the head of state-owned Aluminum Corp. of China, known as Chinalco, sought to reassure Australian miners that their country's mining boom still has decades to run, boosted by China's urbanization, the Sydney Morning Herald reported Monday.
Speaking at a Melbourne Mining Club event in Beijing, Chinalco's Xiong Weiping said, ''It's worth mentioning that China will enter a key stage of accelerating industrialization and urbanization in the next 10 years and even longer, when the demand for mineral resources will continue to be strong."
About 52 percent of Chinese people now live in urban areas, and that rate had been increasing about one percent each year, he added.
Typically, a boost in urbanization is a positive sign for iron ore exporters, suggesting continuing demand for steel ingredients to build apartment buildings, railways and bridges.
''Based on this speed, urbanization will continue to boost China's domestic demand for at least 30 years before it reaches the rate of 80 per cent,'' Xiong said.
