Australia's record mining investment to ease mid-2013 - Treasury
CANBERRA May 31 (Reuters) - Australia's record mining boom investment is set to ease from mid-2013, but demand from China and other Asian nations for the country's resources would continue to fuel investment for some considerable time, Australia's Treasury said on Thursday.
Australia is in the middle of its biggest mining boom since the gold rush of the 1860s, with about A$500 billion ($486 billion) of investment in the pipeline, Treasury's head of macroeconomics David Gruen said.
But Gruen said investment in resource projects would taper off after the 2012-13 financial year, which ends in July 2013.
"It can't go on growing at that rate, and it can't stay at those sort of levels," Gruen told a parliamentary hearing on Thursday.
"There is no question that if you look out the next few years, our expectation is we're not going to see continued growth at anything like this rate beyond 2013.
"In fact it seems very likely that the level of investment in the mining sector might come down somewhat. But after all, it is in the clouds at the moment."
However, Gruen said the mining boom would continue at a lower pace for some considerable time, due to ongoing demand from China and other Asian nations.
China is Australia's number one trading partner and the biggest customer for Australian exports. Bilateral trade is worth around A$105 billion a year with exports to China worth A$65 billion in 2010-11.
Treasury Secretary Martin Parkinson said that while mining industry costs had risen and commodity prices may have peaked, China's long-term growth would underpin Australia's industry.
"In a sense, the golden bit is over. But the golden bit was never going to last forever," he said, adding China's economy would go through periods of volatility, but its growth trend would continue to rise.
"If you jump forward 20 years and look back, you are going to see huge cycles in China's growth. But it is going to be around a rising trend. Why? Because that rising trend is being driven by urbanisation and industrialisation," Parkinson said.
"It does not mean it is going to be smooth. There are going to be periods where commodity prices may drop more. We expect them to trend down, but they may drop more and then gradually come up and then drop again.
"So there will be volatility. But that's all going to be volatility around a strengthening standard of living in China." ($1 = 1.0279 Australian dollars) (Reporting by James Grubel)
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