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Critical minerals construction surges as oil, gas and coal decline
Solid upturn in Australia's resources construction forecast for next few years
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Total resources construction has experienced a decline of over 50%, in real terms, over the past five years, reaching its lowest point for 16 years in calendar 2022. Notably, oil and gas construction has seen a substantial decrease of 85% during this period. And Coal construction has experienced a 40% drop over the past three years. However, a positive shift is now expected, as resources construction is anticipated to rebound in 2023/24, with an expected peak in 2024/25.
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While the shares of total resource construction attributable to oil, gas and coal are in decline, increasing demand for other minerals, particularly critical minerals, is expected to play a role in driving higher construction levels through to 2024/25.
Australia's critical mineral construction is witnessing robust growth, with the value of activity estimated to have more than tripled between 2019/20 and 2022/23. Even further growth is now expected, with the value of construction expected to reach around $5.2 billion per year in 2023/24 and 2024/25 (in constant prices 2020/21).
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Australia's critical mineral construction is witnessing robust growth, with the value of activity estimated to have more than tripled between 2019/20 and 2022/23. Even further growth is now expected, with the value of construction expected to reach around $5.2 billion per year in 2023/24 and 2024/25 (in constant prices 2020/21).
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Western Australia stands out as a prominent contributor, with an anticipated work value of $4 billion in 2023/24. The demand for critical minerals such as lithium, cobalt, nickel, and rare earth elements continues to rise, driven by renewable energy and electric vehicle technologies, where these minerals are essential for high-performance batteries and advanced electronic components.
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Australia's strategic position in the critical minerals market offers untapped potential and an opportunity to diversify global supply chains. Geopolitical shifts, and the COVID-19 pandemic, have highlighted the need for investment in alternative source countries, with the United States actively promoting diversification.
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The future for Australian coal construction is significantly less promising. The substantial, three-year decline has been due to weaker demand and growing environmental headwinds. Climate policies in Australia, including the Safeguard Mechanism and closure of coal powered electricity, combine with similar policies around the globe and increasing reluctance of banks to provide financing. The impact will mainly be on thermal coal, while metallurgical coal will not face the same pressures, and is, in fact, set to experience a modest upturn over the next three years.
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Our most recent reports:
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Australian Construction Outlook - Non-Residential Building
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This report examines the current downturn underway in the non-residential building sector, describes its causes and forecasts the timing of the coming recovery, by sector and state.
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Alternative Construction Market Segmentation
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This new data set provides a more meaningful picture of the construction upturn, by mining sub-segments and types of infrastructure investment.
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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 2021.
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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 Outlook - Resources
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Our new report examines the likely duration, speed and composition of the upturn currently getting underway in Australia's resources construction sector.
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