Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

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"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

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Friday, 16 August 2013

Is the Aussie mining boom over?

A very interesting read from Politifact here.

The mining boom is transitioning, from construction to production - and the revenues are starting to pour in to the country.

"Western Australia’s economy from 2013-14 is forecast to undergo a period of transition from construction-based activity to growth driven by increasing export volumes."
But the state is still getting more and more revenue from mining despite lower prices because more iron ore is being dug up and the Australian dollar is low again the US dollar.
Total mining revenue to the state is budgeted to rise to $6.9 billion in 2013-14 from $5.6 billion in 2012-13.
Iron ore continues to be the largest source of royalty income for Western Australia, making up to 90 per cent of all royalties and almost 19 per cent of the state’s total revenue.
And nationally, exports are forecast to rise by about 11 per cent, about $20 billion, to $197 billion in 2013-14, according to the Bureau of Resources and Energy Economics (BREE).
Industry body the Minerals Council of Australia says terms such as "boom" and "bust" fail to capture the enduring nature of mining industry growth.
"While Australia is at or near the peak in the mining investment cycle, there remains a significant opportunity for future investment in projects in coming years," the council said in a written statement.
"Meanwhile, the export expansion phase arising from past investment is still ramping up. Record levels of mining investment in recent years are expected to contribute to robust growth in export volumes over the medium term.
"While the volume of Australia’s resource exports increased at an annual rate of 3.5 to 4 per cent over the course of the terms of trade boom, it is expected to increase at a faster pace in coming years as a result of the large volume of investment. On official forecasts, this volume growth will support further growth in export revenues."
There's the rub: the Reserve Bank, Treasury and BREE all emphasise the three phases of the mining boom: the boom in the terms of trade; the surge in resource investment; and the subsequent growth in production and export of resources.
Treasury secretary Martin Parkinson says the mining boom has entered the third stage of high exports volumes and Australia is unlikely to see a bust.
"Rumours of the death of the mining sector have been greatly exaggerated," he said on October 5, 2012. "Instead of the boom-and-bust cycle, what we will see ultimately is mining becoming a much larger share of a reshaped economy.
"The mining sector is expected to rise from 5 per cent of gross value added in the early 2000s to in the order of 10-12 per cent in the decades to come."
Our Ruling

The mining boom is far from dead."