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Mr Ferguson says Australia must curb costs to Lure Energy Projects
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Tuesday, 20 Nov 2012
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Bloomberg cited Mr Martin Ferguson minister of Resources and Energy as saying that Australia needs to reduce project development costs in the mining industry to keep attracting investment as the cushion provided by high commodity prices diminishes.

Mr Ferguson in an interview with the Australian Broadcasting Corporation inside Business program said that “All of us have to be conscious about better managing these projects so as to continue the pipeline of investment. When you’ve got very high iron ore or coal prices, well you can afford to have a bit of fat in the system, have a few over runs, but the world’s completely changed.”

Australia’s economy grew 2% in the 6 months through June, the fastest H1 expansion in 5 years, on the strength of resource industry investment and consumer spending.

Estimates of a AUD 230 billion pipeline of future projects are being reviewed as plunging iron ore prices prompted mining companies, including BHP Billiton Ltd and Fortescue Metals Group Ltd, to put off projects.

According to data compiled by The Steel Index Ltd, iron ore fell 37% between December 30th and September 6th to its lowest price in almost 3 years. Prices have since rebounded, trimming the year’s loss to about 11%.

The state government said that BHP, the world’s biggest miner, in August delayed USD 68 billion of projects. Last week it agreed on a 4 year extension to develop its Olympic Dam copper and aluminum mine in South Australia because it faced unforeseen economic circumstances preventing it from moving forward as planned.

Fortescue in September deferred development of its Kings deposit and completion of a fourth berth at its Herb Elliott Port. It subsequently said it may resume the iron ore project in stages before year end as prices recover.

Source - Bloomberg

(www.steelguru.com)

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