Australia's Economy Slows as Commodity Prices Weaken Mining Industry

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Researched by Industrial Info Resources (Perth, Australia)--A general overview of Australia's economic climate continues to show that the economy is slowing. With various projects being temporarily placed on hold, or facing the possibility of being sold off, companies continue to proceed with project justification of their portfolios, with an ongoing threat of reducing activity and financial stability. Compounding the economic volatility is the weakening Australian dollar, lower commodity prices and the slowdown of the export market.

In the commodities market, prices of gold and copper have indicated a slowdown over the past several months and help to explain the decisions that companies are making. Gold prices hit a two-and-a-half-year low of about US$1,230 an ounce this week, and continue to fluctuate with an awe of uncertainty. Copper prices were as low as AU$3.035 per pound, which is a level not seen since 2011. Iron ore prices also continue to hover around AU$100 to $120 per tonne as China, one of the largest consumers of Australia's iron ore, struggles for momentum throughout the remainder of 2013.

Industrial Info continues to track many companies during this volatile period of uncertainty. One example is Newcrest Mining Limited, which holds several projects in New South Wales: Cadia Hill Gold/Copper Mine and Processing, Orange Gold Mine, Ridgeway Gold/Copper Mine and Processing, and the Papua New Guinea Project of Lihir Island Gold Mine. The company recently reported one of the biggest write-downs in gold history at about AUD$6 billion (about US$5.5 billion), which is now under review by the company for future policy and procedures, as well as the Australian Securities and Investment Commission.

This example forms the picture of hardship that many companies are facing with cost-cutting activities, such as employee layoffs and a strict review of the 2014 budget. As a management strategy, companies such as Newcrest, like many others, have announced that they plan to continue to cut costs from their 2014 budget by postponing activities of all operations that have higher costs of production, increasing the use of already-mined materials, and drastically reducing their exploration activities.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.