What a brilliant outlook, both in terms of the iron ore price and underlying profits, that Moly will generate from its Million-tonne-a-year iron ore project for the next 5 years...
Mining boom to continue: Treasury official
Published 1:29 PM, 8 Feb 2011
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Strong demand for Australia's coal and iron ore from Asian heavyweights China and India is expected to continue for at least the next 15 years.
But this doesn't mean the mining sector is going to corner the labour market in the coming decades, a Treasury official says.
Treasury's executive director of its macroeconomic group, David Gruen, says that even though China and India have been growing rapidly for the past few decades, they remain at the early stages of the economic development.
"Their standards of living relative to that of the developed world are currently lower than was Japan's standard of living in the early 1950s relative to the developed world's standard of living at that time," Dr Gruen said in a speech on Monday.
In his address to the Scenario Development Forum for Skills Australia and the Academy of the Social Sciences in Australia, released by Treasury on Tuesday, Dr Gruen said it seems most likely that Australia's terms of trade will be significantly higher on average over the next couple of decades than before the current mining boom.
"Australia is currently experiencing the largest sustained boost to the terms of trade in our history," Dr Gruen said.
This is having a profound impact on the Australian dollar, which is currently 35 per cent above its average over the 27 years since it was floated in December 1983.
High resource prices, combined with a high exchange rate, are driving demand for both labour and capital out of non-resource parts of the economy and into mining and construction.
But he said while this is a relatively recent phenomenon dating from the beginning of the mining boom - around 2003/04 - the decline in manufacturing employment is a continuation of a trend that has been evident for several decades.
At the same time, it is the services sector that has accounted most for a rising share of employment, not the mining industry, and makes up over three-quarters of jobs in the economy.
"Even if the terms of trade remain high, it seems likely that growth in the number of people employed in the service sectors will continue to outstrip growth in the number employed in mining and construction," Dr Gruen said.
