Ms Gina Rinehart's Roy Hill iron ore mine and Xstrata's Wandoan coal project may be the next victims of a fading resources boom, after BHP Billiton scrapped its AUD 20 billion Olympic Dam expansion.

The economics of Roy Hill, in Western Australia, were said to rest on a USD 100 a tonne average iron ore price over the next decade, but analysts told The Australian Financial Review those assumptions were looking shaky.

Iron ore crashed to AUD 99.60 a tonne, lows that have not been seen since the global financial crisis and there are fears prices will fall further as the global economic malaise continues.

Those price moves threaten to derail Ms Rinehart's talks with international creditors, who would need to pitch in at least AUD 4 billion for Roy Hill to go ahead.

As for Wandoan, analysts told the AFR Xstrata was increasingly unlikely to green light the mine given increased production costs in Australia and ongoing weakness in thermal coal markets, where prices were hovering around USD 85 a tonne.

The news capped off a week in which politicians and other officials disagreed over the state of the long running commodity expansion that has powered Australia's economy.

Federal resources minister Mr Martin Ferguson led with comments that suggested the boom had already ended.

Others, including Federal Treasurer Mr Wayne Swan, brushed aside those concerns by pointing out there was still about AUD 270 billion of projects left in the investment pipeline.

Meanwhile, Reserve Bank of Australia governor Mr Glenn Stevens said investment in resources would probably peak in a year or two.

Source - Business Spectator

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