Mining Boom Mark II set to drive growth

Growth led by the resources sector

Australia is facing the largest mining investment boom in its history, driven by ongoing strong demand for Australia's non‑rural commodities from emerging Asia.

Investment in the resources sector will drive above‑trend GDP growth in the period ahead, generating strong jobs growth, increasing our export capacity and supporting national incomes.

The high terms of trade are underpinning record investment intentions in the resources sector.

The mining industry is planning to invest $76 billion in 2011‑12 — around eight times the annual level before Mining Boom Mark I, which will boost Australia's export capacity.

This investment surge will ramp up further in coming years, led by very large projects in the liquefied natural gas (LNG) sector. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimates a total pipeline of resources investment of over $380 billion.

Broader benefits of the boom

Increased export volumes and high commodity prices will lead to increased national incomes. Over the next two years, income

from non‑rural commodity exports is forecast to increase by around 15 per cent to $203 billion.

Increased activity will also boost employment, with the unemployment rate expected to decline further — reaching 4½ per cent by the June quarter of 2013.

Boom pressures

The mining boom will inevitably see the re‑emergence of capacity constraints, particularly skill shortages, leading to increased wage and price pressures.

This, along with a high exchange rate, will put‑pressure on those sectors not directly linked to the mining boom.