Mining Industry

What’s the outlook on mine maintenance spending?

What’s the outlook on mine maintenance spending?
Oxford Economics Australia has released data showing mine maintenance spending may be hitting its peak. But what does it mean for the sector?

The data is part of Oxford Economics Australia’s Maintenance in Australia report which forecasts spending across the transportation, utilities, mining, manufacturing and non-residential building sectors.

The report describes maintenance as ‘work undertaken on an asset which improves the standard or quality of assets but does not improve on the original design standard’.

“This is different to construction, which can be thought of as work which either creates a new asset or improves on the design standard of an existing asset,” Oxford Economics Australia head of global construction forecasting and study author Nicholas Fearnley said.

According to the report, overall mining maintenance spend is expected to hit $13.2 billion in the 2023–24 financial year (FY24) and grow to $13.3 billion in FY25.

“The mining investment boom at the start of the last decade was following by a mining production boom, and then a mining maintenance boom,” Fearnley said.

“We think this boom is now approaching its peak, and we are seeing signs that asset owners are looking to manage their maintenance costs.

“As a result, we expect slower growth in mining maintenance expenditure over the coming years.”

Coal maintenance spending remains significant portion of mining maintenance work, expected to hit $3.6 billion in FY24 and remain stable in FY25.

The near-term prospects continue to be supported as relatively high commodity prices are supporting coal production.

While growth may slow, it certainly isn’t stopping, with some of Australia’s largest commodities like iron ore and copper expected to continue growing.

Maintenance work on iron ore mines is expected to continue growing from $1.1 billion in FY24 to $1.2 billion in FY25.

Oxford Economics Australia expects Chinese construction activity will rebound from 2025, which will support global demand for iron ore.

Copper maintenance activity accounts for over 25 per cent of maintenance spending on metal ore mining.

The outlook for copper mining, and therefore maintenance spending, remains positive as copper is used extensively in both building and infrastructure construction, electric vehicles, and consumer electronic products.

Spending on copper maintenance is estimated to hit $865 million in FY24, and $890 million in FY25.

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