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Wondering which companies have major resource projects underway in Australia? Read on to find out.
Australia’s resource industry is cotinuing to grow. For investors looking to put money into the Australian resource market, this can be a good sign. There are also numerous resource and energy projects in the investment pipeline, many of which are in the committed stage.
Here, the Investing News Network gives an overview of the upcoming resource projects in Australia worth looking out for. The information in this article was taken from the Resources and Energy Major Projects Report (REMP), published annually by the Australian Department of Industry, Science, Energy and Resources.
The projects listed in this article are considered "major" because they have an estimated value of over AU$50 million and are likely to reach a final investment decision in the next five years.
Developments in the Australian resource sector
According to the above-mentioned report, the past few years have seen a lot of growth in terms of resource investments in Australia. There are currently 79 projects at the committed stage, valued at a total of AU$54.3 billion. This rise has added momentum to the investment cycle, and thus created a strong opportunity for investors.
Zooming out to look at the larger pipeline, a large portion of the investment value now comes from hydrogen projects, as well as ammonia and carbon capture and storage projects. These projects combined account for AU$185 billion of the total AU$504 billion value of projects in the pipeline.
Companies with upcoming resource projects to watch
Of all the resource projects currently in the committed stage, 75 percent involve commodities such as iron ore, LNG, gas and coal. Below is a list of a few investment projects worth keeping an eye on.
Mining giant Rio Tinto (ASX:RIO) is currently undertaking many committed iron ore projects. In August of 2021, its Robe Valley expansion achieved its first ore. It also achieved first ore at its Western Turner Syncline phase 2 project in November 2021.
Mining at its new Gudai-Darri mine, which has a 43 million tonne annual capacity, began in December 2021. Rio Tinto expects first production from the mine in the second quarter of 2022.
The largest of the gold projects in the committed stage is Newmont Mining’s (NYSE:NEM,TSX:NGT) Tanami expansion 2 project, which is expected to increase the production of its Callie underground mine from 2.6 million to 3.2 million tonnes per year.
Gold producer Newcrest Mining's (ASX:NCM,TSX:NCM) Cadia stage 1 and stage 2 expansion projects for its gold mines in New South Wales are now at the committed stage. These projects will cost AU$685 million and AU$175 million, respectively.
What is the outlook for investments in the Australian resource sector?
Things are looking optimistic for the Australian resource sector. The total value of committed projects in the resource and energy sector has increased by 24 percent from 2020 to 2021. The majority of investments in the resource sector come from projects involved with producing the country's largest exports, including coal, iron ore and liquified natural gas.
Still, other commodities such as rare earths, lithium, nickel and cobalt also grew substantially. The expected growth of the electric vehicle (EV) industry was the biggest factor in these commodities’ growth.
Although gold prices fell in 2021, the value of committed gold projects between 2020 and 2021 increased 31 percent. There are now 19 gold projects at the committed stage valued at AU$5.1 billion. These projects will increase the country’s gold production by an expected 20 percent in 2023.
In terms of possible future resource projects, a significant increase in investment is expected this year and possibly the next few years. Currently, there are AU$380 billion worth of feasible projects that are considered possible or likely to reach a final investment decision. However, this estimated investment will depend on how mega projects (those involving an investment of over AU$5 billion) progress. Most of these projects are focused on hydrogen, iron ore, coal, gas and infrastructure.
Iron ore projects have slowed in progress over the last year, particularly in South Australia and New South Wales.
Coal projects make up around AU$75 billion worth of the total expected investment projects. However, due to a recent push against coal, many future coal investments may not come to fruition. On the other hand, possible battery and precious metals projects are growing in number. All in all, the outlook for mining investment opportunities in Australia’s resources and energy sector seems positive, especially in the new energy market.
Don’t forget to follow us @INN_Australia for real-time news updates!
Securities Disclosure: I, Matthew Flood, hold no direct investment interest in any company mentioned in this article.
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