Australia weathered the global economic crises without going into recession. While some economic activity was constrained, other sectors continued to grow, chief amongst them being engineering construction, which according to economic forecaster BIS Shrapnel, “is the largest component of Australia’s building and construction market, with around $75 billion in work done, undertaken in 2008/09 across transport, utilities, mining and heavy industry sectors”.
One third of which ($25 Billion) is mining and heavy engineering construction, which is an area that has been an attractive market for New Zealand heavy engineering companies.
The report produced by BIS Shrapnel examines the driving forces behind engineering construction activity in each sector, including market conditions, status of major projects and Government funding levels. It looks at Mining and Heavy Industry Construction for the period 2009/10 – 2023/24. Forecasts are provided for the mining and heavy industry construction segment, by state.
Categories covered are:
• Oil, gas & other hydrocarbons
• Bauxite, alumina & aluminium
• Coal & coal handling
• Other minerals
• Other heavy industries
Following some significant growth generated by a solid pipeline of activities, BIS Shrapnel predicts that the next financial year will see a 3% downturn in construction which they attribute to the completion of several major projects. However, they also see a return to double digit growth the following year which is excellent news for New Zealand businesses selling into that market.
The Australian Journal of Mining quotes Adrian Hart, Senior Manager for BIS Shrapnel’s Infrastructure and Mining Unit, as saying, “Despite further robust growth in oil and gas construction, led by the Gorgon LNG project, the completion of major alumina refineries, and iron ore and coal projects, as well as a slump in other mineral commencements through 2009 will drive a fall in work done in the coming year.”
He went on to say that, “By 2012/13, we expect the next round of projects will be well underway across iron ore, coal and oil and gas. By the middle of the decade, this is expected to be joined by an upswing in base metals investment.”
A positive outlook from 2010 on for heavy engineering demand in Australia is great news for New Zealand heavy engineering companies, especially those who have established a good reputation for value, quality and delivery during the recent high growth period. Australia is New Zealand’s largest trading partner and according to the Closer Economic Relationship agreement, New Zealand content is considered as local content on many projects, which is one advantage that New Zealand companies have in selling to the Australian market.
If BIS Shrapnel are correct with their forecast, next year’s minor slump which is the first decline since 2004 is nothing to panic about as it will be followed by continuing positive growth in the sector, which we can all look forward to over the next decade.
