Australia Government Says Attracting New Mining Investment Will Be Challenging

   By Enda Curran 
 

SYDNEY--Attracting new investment into Australia's mining sector is going to be challenging, Resources Minister Martin Ferguson warned Wednesday after BHP Billiton Ltd. (BHP) scaled back plans for a massive mine expansion and said it won't approve any new projects until at least mid-2013.

The remarks by the government minister backs up recent commentary from the central bank and market analysts that Australia's once-in-a-century mining boom is quickly cooling amid falling prices for iron ore, coal and other key commodities.

One of the main defences in Australia's economic arsenal has been a promise by business to invest hundreds of billions of Australian dollars in new mining sector projects over coming years.

The bulk of that planned spending should still be secure but getting new projects off the ground will be tougher, Mr. Ferguson said.

"In terms of new investment, it is going to be challenging for a variety of reasons for some time to come," he told reporters in Canberra.

BHP said it will scale back a planned expansion of its Olympic Dam copper and uranium mine and defer development of a Queensland coal deposit as it moves to conserve cash due to weaker demand for commodities from China, Australia's biggest trading partner.

Some industry leaders have criticised the ruling Labor government for introducing new mining and carbon taxes which they say fuel regulatory uncertainty and could act as a brake on investment plans.

Mr. Ferguson rejected those claims and said the government had done everything it could to promote BHP's proposed spending in South Australia.

"This was always the project that was always going to be hard to get because of the capital-intensive nature," Mr. Ferguson said. "This is clearly a commercial decision by the BHP Billiton board," he added.

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