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Broad based recovery in resources sector expected to peak in 2025/26
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Total resources construction has experienced a decline of around 50%, in real terms, over four years to June 2022. Notably, oil and gas construction saw a substantial decrease of 82% during this period and coal construction experienced a 15% drop. However, a positive shift has now commenced with resources construction, beginning an upturn in 2022/23 with an expected peak in 2025/26.
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Renewed broad based strength in Gas/LNG, along with coal, iron ore, critical minerals and various heavy industrial processing sectors, will lift total resources construction through to a peak in 2025/26.
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Australia's critical mineral construction has witnessed robust growth, with the value of activity estimated to have more than tripled between 2019/20 and 2022/23. The value of construction is expected to peak in 2023/24 around $4.2 billion before maintaining a historically above average value of $3,3 billion over the next decade (in constant 2021/22 prices).
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Over 2023, the prices of select critical minerals have collapsed off the back of less than forecast demand for electric vehicles and abundant supply coming online. This includes lithium falling 80%, nickel 43% and cobalt 41%. Although there has been a recovery in the first quarter of 2024, greatly reduced prices are disincentivising further investment, limiting growth in the sector compared to what was seen between 2020 and 2023.
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Australia's strategic position in the critical minerals market offers untapped potential, with a large identified resource base and the desire for countries to diversify global supply chains. The Australian government is seeking to capitalise on this opportunity, allocating billions in assistance to expedite the exploration and mining of critical minerals.
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A potential area for future growth in resources construction is hydrogen gas development. There are a multitude of possible use cases for hydrogen and, as such, it is garnering interest from many industries. Currently, most hydrogen related projects are in preliminary feasibility studies or engineering design studies with a tiny fraction building small scale proof of concept plants. If hydrogen is proven commercially we expect commencement of large scale projects in the 2030s. We are tracking $27 billion worth of possible hydrogen projects in our database.
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Our most recent reports:
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Australian Construction Cost Trends
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This report examines the outlook for construction costs, in detail be sector and type of input.
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Australian Construction Projects Database
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This latest list of projects corresponds with our fully revised set of forecasts published in November 2023.
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Australian Regional Construction Outlook
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Our latest regional forecasts for residential building and construction have just been released.
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Australian Construction Materials Forecasts
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Our latest forecasts assess the implications for construction materials demand of the current outlook for building and construction.
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Australian Road and Bridge Works
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This report examines the strength and composition of the current upturn, and determines the likely timing of the peak, and subsequent decline.
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