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FEATURE ARTICLE: MINING AND NON–MINING INVESTMENT
The contribution of mining investment to Gross Domestic Product (GDP) grew dramatically from 1.2% in September 2000 to 7.9% in June 2012. There are two significant periods of growth in mining investment shown in Graph 1. The first between December 2004 and December 2008 where the level of mining investment more than tripled from $3,962m to $14,146m. The second between March 2010 and the peak of mining investment at $29,774m in December 2012. Average compound growth in this period was 8.5% per quarter. At its peak, mining investment was still smaller than non-mining investment. Mining investment has since fallen to $18,215m in September 2015. It now contributes only 4.5% to GDP, half the contribution of non-mining investment (9.7%).
Although the growth in non-mining investment has not been as dramatic as mining, non-mining continues to be stable, with its contribution to GDP ranging between 9.0% and 13.2% in the past fifteen years. Between September 2000 and September 2008 the level of non-mining investment almost doubled from $21,947m to $38,466m. The compound quarterly growth in non-mining investment over this period was 1.8%. This was similar to that of the general economy with 1.9% growth in GDP over the same period. Both non-mining and mining investment fell around the time of the global financial crisis, but have since recovered. Non-mining investment has grown steadily, although more slowly, since June 2010, recording a compound increase of 0.7% per quarter to $39,453m in September 2015. Growth in non-mining investment over this period again aligned similarly to the general economy with 0.9% growth in GDP.
While mining investment has fallen significantly in the last three years, there has not been a complimentary significant increase in the growth in non-mining investment. Private non-mining investment during this time has continued to rise but at a rate similar to its long run average.
INDUSTRY CONTRIBUTIONS TO NON-MINING
Non-mining consists of all industries other than mining as specified in Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0). Some of the industries in non-mining may have secondary activities that relate to mining, however these have not been separately identified. Although the ABS is unable to further disaggregate non-mining into its separate industries on a quarterly basis, it is published annually in Australian System of National Accounts (cat. no. 5204.0). Graph 2 shows the largest contributors to non-mining investment on an annual basis and how their contributions have changed over the past thirty years.
The changing composition of the non-mining industry is reflected by the varying industry shares. Agriculture, forestry and fishing was the largest contributor to non-mining investment in 1984-85 representing 22.2%. This was overtaken by Manufacturing which was the largest contributor in both 1994-95 and 2004-05 at 23.8% and 19.6% respectively. These industry shares have fallen considerably over the past thirty years with both industries representing just over 10.5% of non-mining investment in 2014-15. Rental, hiring and real estate services is now the largest contributor to non-mining investment representing 15.0% in 2014-15. This is more than double the contribution of Rental, hiring and real estate services in 1994-95 (7.1%). Although the contribution of the Financial and insurance services and Construction industries to Gross value added have increased in the past thirty years, their contribution to non-mining investment has remained relatively stable.
SUBDIVISION CONTRIBUTIONS TO MINING
On a quarterly basis mining investment can be separated into its ANZSIC subdivisions; Coal Mining; Oil and gas extraction; Metal ore mining; and Other mining. As shown in Graph 3, different subdivisions have contributed to the growth over the past ten years.
Oil and gas extraction has been the largest contributor to mining investment over the last five years. Oil and gas extraction peaked in December 2013 at $18,273m in original current price terms with several large liquified natural gas mines under construction. Investment in Oil and gas extraction has fallen in recent quarters as some of these projects near completion or are completed and no new projects have taken their place. While the growth between December 2004 and December 2008 was driven equally by Metal ore mining contributing 2.9% and Oil and gas extraction contributing 2.8% to the 8.3% compound quarterly growth. Investment between March 2010 and December 2012 was predominately Oil and gas extraction which contributed 4.6% to the 8.5% compound quarterly growth. Investment by the Metal ore mining and Coal mining subdivisions both reached their peaks in June 2012 at $10,221m and $4,431m respectively, but have also fallen since then as large iron ore and coal mine construction projects are completed. Other mining peaked in September 2007 at $3,407m, but has also fallen in recent quarters driven by a slow down in mineral and petroleum exploration.
APPENDIX 1: METHODOLOGY
Private business investment includes Gross fixed capital formation on Non-dwelling construction, Machinery and equipment, Cultivated biological resources and Intellectual property products by the private sectors.
Quarterly mining investment has been calculated by interpolating and extrapolating annual data as published in Australian System of National Accounts (cat. no. 5204.0) using various indicator series. Quarterly non-mining has been calculated as the residual of total investment less what has been allocated to mining.
The Engineering Construction Survey (ECS) as published in Engineering Construction Activity (cat. no. 8762.0) is the main indicator series for mining non-dwelling construction. This survey provides the value of work done by the private sector for the private sector for heavy industry including the following commodities; oil and gas, coal and other minerals. These estimates are adjusted for progressive change of ownership of structures to be imported as described in Feature Article: Mining Investment in ABS Publications.
Capital expenditure by the Mining industry on equipment, plant and machinery from the Survey of New Capital Expenditure as published in Private New Capital Expenditure and Expected Expenditure (cat. no. 5625.0) is the main indicator series for mining machinery and equipment. Quarterly estimates of Mineral and petroleum exploration were obtained from the ABS publication Mineral and Petroleum Exploration (cat. no. 8412.0). Other components of mining investment were linearly interpolated on a quarterly basis.
Mining subdivision estimates were derived using unpublished data from the Survey of New Capital Expenditure as published in Private New Capital Expenditure and Expected Expenditure (cat. no. 5625.0) and the Survey of Research and Experimental Development as published in Research and Experimental Development, Businesses (cat. no. 8104.0).
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