PERTH (miningweekly.com) – Investment in Australia’s resources sector was entering a downturn as Australia shifted into the production phase of the commodity investment cycle, the Bureau of Resources and Energy Economics (Bree) reported this week.

In its latest major projects update, Bree noted that over the past six months, some 21 projects worth a combined value of A$25.6-billion were completed. At the end of April this year, there were 48 projects at the committed stage, with a combined value of A$229-billion, compared with the 63 projects with a combined value of A$240-billion six months earlier.

Bree noted that while the number of completed projects contributed to this decline, it was partially offset by the approval of the A$10.7-billion Roy Hill iron-ore project, in Western Australia.

Current market conditions were not supportive of progressing new projects, which resulted in the delay of a number of projects in the investment pipeline, Bree stated.

The number of projects at the publicly announced stage was 14 lower at the end of April, compared with the end of October last year, while the number of feasibility stage projects was down 18 in the same period.

Exploration expenditure on mineral deposits was also down substantially in 2013, and at A$2.5-billion was 31% lower than in 2012.

“While the investment cycle has peaked, Australia is now moving into a period of significant increases in the production of resources and energy commodities,” said Bree deputy executive director Wayne Calder.

“In the past year alone there have been large increases in production capacity including 215-million tonnes of iron-ore, 43-million tonnes of coal and more than 1 100 PJ of gas,” Calder added.

Forward projections indicate that investment in the resources and energy sectors was likely to exhibit some weakness in the short term. However, Calder said that there remained an opportunity to sustain higher levels of investment should projects at earlier stages of development proceed through the pipeline.

“It is clear the commodity price cycle is in a downturn. This is not unexpected given the scale of the global commodity supply response. Future investment prospects are driven by commodity prices, but also by factors such as exchange rates, urbanisation in Asia and rising incomes.

“There are still good prospects for exports based on the long-term trajectory of economic growth throughout Asia.”