Australia's March quarter national accounts showed capitalised spending within the resources industry of $98.9 billion over the previous 12 months taking the...

John Robertson

PortfolioDirect

Australia's March quarter national accounts showed capitalised spending within the resources industry of $98.9 billion over the previous 12 months taking the total industry capital spending over the prior 15 years to $549.1 billion. Separately, the Australian Bureau of Statistics has also reported that mining industry profits before tax for the 12 months was $57.5 billon, representing only a modest return on the investments that have been made. The chart shows the return on the industry's trailing 15 year investment spending since 1986. The industry will cut back on spending as it attempts to stabilise the return on investment. Even with an immediate halving in capital spending, resource industry profits (i.e. volumes in the absence of any rise in commodity prices) would have to grow by at least 10% a year for the industry to stabilise the rate of return on the capital employed.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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