Australian resource investment rises in 2021

Market: Coal, Coking coal, Hydrogen, Metals, Natural gas
19/12/21

Investment in committed resource and energy projects in Australia rose in the 12 months to the end of October from a year earlier, led by increased investment in iron ore and upstream oil and gas that reflect a catch-up on projects deferred from 2020 because of the impact of the initial spread of the Covid-19 pandemic.

The value of committed projects rose to A$54bn ($38.7bn) for the period from [A$39bn] (https://direct.argusmedia.com/newsandanalysis/article/2162301) a year earlier, according to Australia's Office of the Chief Economist (OCE).

The outlook for resources and energy investment suggests that 2021 represented significant growth in the resources investment cycle. The rise in resource investment was driven by iron ore, upstream and battery metals projects.

More than A$11bn had been committed to oil and gas/LNG projects in the 12 months to 31 October. Most of this is attributed to two projects that reached a final investment decision in 2021, the Barossa backfill gas project and the Jansz-lo compression project for the 15.6mn t/yr Gorgon LNG offshore Western Australia (WA).

The report does not include the largest upstream venture to be sanctioned in Australia in around a decade, the $12bn Scarborough gas project, as it was given the go-ahead after the OCE report was concluded.

The value of projects completed in the 12 months to 31 October rose to A$10.1bn from A$2.3bn a year earlier. A total of 15 resource and energy major projects were completed in the period with completed iron ore projects dominating. This was because of the completion of the A$4.6bn South Flank iron ore mine, the Eliwana iron ore mine and the commissioning of the

West Angelas Deposits C & D expansion project.

The investment report now includes hydrogen, ammonia and carbon capture and storage projects, which account for A$185bn worth of investment, which are largely at the publicly announced phase of the investment cycle and not in the feasibility or committed stage. The inclusion of hydrogen has pushed the total value of potential resource and energy projects to more than A$536bn at the end of October from A$372bn 12 months earlier.

Developments in battery technology and expectations of growing electric vehicle manufacturing, continue to spur investment in Australia's nickel, cobalt, rare earths and lithium resources with 60 possible projects with a combined value of around A$29bn,. A number of development projects are investing in processing facilities to produce battery cathode precursors in the form of lithium hydroxide.

Around 20pc of projects at the feasible stage are driven by demand for commodities used in rechargeable batteries, the OCE said. The largest proportion of projects at the feasibility stage are in WA, including a number of prospective nickel-cobalt projects.

By Kevin Morrison

Australia resource/energy investment plans at 31 October 2021										(A$bn)
	No. of projects	Value A$bn	Projects in feasibility	Value A$bn	Committed projects	Value A$bn	Completed projects	Value A$bn	Total projects	Value A$bn

Coal	23	21-25+	37	45-51+	8	3.7	1	2.0	69	72-82+
Hydrogen	11	127-133+	6	6-52+	1	0.5			21	135-185+
Iron ore	12	8-10+	12	16-22+	6	11.0	4	6.4	34	41-50+
LNG, gas, petroleum	14	26-29+	15	65-71+	13	23.0	3	0.7	45	115-123+
Critical minerals	10	2.6-5.3+	19	6-10+	9	4.4	2	0.3	40	13-20+
Total	113	203-229+	160	163-243+	79	54.0	15	10.1	367	434-536+
Investment plans at 31 October 2020
Coal	21	17-20	45	57-65	6	3.4	1	0.9	72	77-89
iron ore	15	14-18	12	19-25	4	7.5	1	0.1	32	41-51
LNG, gas, petroleum	14	33-48	19	77-83	10	20.0	1	0.8	44	130-152
Total	106	88-119	168	175-211	54	39.0	8	2.2	335	300-372
Source: OCE

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