SA whacked by BHP call
Planned business investment in South Australia dropped by a third after BHP’s decision last year to axe its planned expansion of Olympic Dam, a key economic report says.
Deloitte Access Economics’ quarterly Investment Monitor includes a “Special Focus” report into South Australia in the latest issue, released today.
“The total value of potential business investment in South Australia took a significant hit over the past 18 months, with BHP Billiton’s decision to shelve plans for an expansion of the Olympic Dam mine,” Deloiite’s analysts say.
“That single decision shed more than one third of the value of projects in South Australia’s investment pipeline at the time, and stopped any chance of the current resources boom reaching the State in any meaningful way.
“Indeed the total value of work, either planned or definite, remains well under the levels of a year and a half ago, though Investment Monitor data does show some growth in the total value of projects in South Australia since the Olympic Dam decision.
“That growth has been driven largely by investment outside the resources sector.”
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Despite recent claims the State was experiencing a “resources revolution”, the independent Deloitte report finds otherwise.
“It is concerning that, for a State which is trying to become a bigger player in the resources sector, South Australia has a distinct lack of mining projects underway,” it says.
“Although there are a collection of resource-related projects on the drawing board, it is other sectors that are doing the heavy lifting in terms of business investment in the State.”
Overall the Investment Monitor database shows the total value of projects in South Australia at around $33.6 billion, representing a rise of almost $5 billion over the past 12 months.
Deloitte says the key player at the moment is the taxpayer, with government projects dominating.
“Public money is driving investment in a series of large road and rail projects currently underway, as well as investment in utilities projects such as the recently completed desalination plant in Adelaide.
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‘Indeed, the void left by the absence of private investment has recently been offset by a ramp up in publicly funded projects.”
On a brighter note, the analysts say the State’s potential remains strong.
“Private investors have not completely overlooked South Australia.
“There remains enormous potential in the State’s pipeline of projects.
“The value of planned resource projects (those in the pipeline) is approaching $16 billion, though none have received the go-ahead in the past 12 months. However, although the potential is there it may be some time before circumstances again fall in favour of developing these resources.
“In the meantime, the investment landscape in South Australia will continue to be driven by public projects, in road and rail infrastructure, as well as in investment in health and education.”
The report says no new resource-related projects have been given the go-ahead in South Australia over the past 12 months, and some with existing projects like the Fusion iron ore project have taken a step backward in recent months.
Outside of engineering construction, it is the health sector doing most of the heavy lifting. These are led by continued work at the $1.8 billion Royal Adelaide Hospital and the $200 million Australian Health and Medical Research Institute.
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