Interpac Business and Migration Solutions Melbourne Australia

(November 19, 2010)

PLANNED mining and energy investment has soared to a record $132.9 billion.

The value of projects under development hit the new high last month, a 21 per cent increase since April, according to figures from the Australian Bureau of Agricultural and Resource Economics.

Annual resources investment is tipped to surge another 50 per cent in years to come.

The figures, published yesterday, showed 72 mining and energy projects under development at the end of last month.

BG Group's approval of a $US15 billion ($A15.3 billion) gas export plant in Queensland and iron ore expansion plans by Rio Tinto in Western Australia helped drive the bumper result.

In the mining industry, ABARE said capital spending was expected to top $54.8 billion this financial year, a 58 per cent increase on 2009-10 levels.

The increase in resources investment is expected to continue as companies make final decisions on a host of potential projects, most of which are in Queensland and Western Australia.

Resources Minister Martin Ferguson said the figures showed the resources industry was going from strength to strength. "I expect this trend to continue with more key projects potentially coming on line in the near future,'' he said.

ANZ forecast that annual spending on major projects in energy, mining and infrastructure will almost double from about $50 billion this year to more than $90 billion in 2014.

While this is fuelling economic growth rates above long-term averages, it is also putting pressure on interest rates.

Reserve Bank deputy governor Ric Battellino said that after growing without interruption for 20 years, the economy could not grow much faster without raising the risk of inflation.

''With a large amount of money continuing to flow into the country over the next couple of years as a result of the resources boom, the challenge will be to manage the economy in a way that keeps economic growth on a sustainable path, with inflation contained. This is what the bank is trying to do,'' he said.

To this end, economists believe this will prompt the Reserve to raise official interest rates by another percentage point over the next year.

(Source:theage.com.au)