The Australian mining industry spent more on exploration and development in the last five years than in the 40 years before that. The most recent national accounts data from the Australian Bureau of Statistics (ABS) reinforce the evidence that Australia's mining industry has become an inefficient user of capital. Spending on exploration and development activities by the mining industry in 2014 amounted to $90.1 billion, according to the ABS, down from a peak of $103.3 billion over the four quarters to March 2013. Spending is lower but still very high. Profits, meanwhile, have slumped from $78.2 billion in the year to September 2011 to $39.1 billion in 2014, based on the way in which the ABS reports pre-tax profits for the industry. The profits now required to validate the investment already undertaken need to at least double and keep increasing. These statistics are suggestive of the sector, taken as a whole, not doing enough to attract day to day investment interest. More on the statistics and outlook for the sector here: (VIEW LINK).


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James Marlay

Staggering numbers...