Is the mining boom over? No! BHP’s panic decision not to proceed with the expansion of their mine at Olympic Dam reflects bad management of what was once Australia’s greatest company. Is there a softening of world demand for resources? Yes! Mainly caused by the recession in Europe, but the resources market was overheated and needed to calm down. Will the softening continue? Yes!
What harm will this do to the Australian economy?
Not much, as we are slowly moving away from over-reliance on mining. Smaller mining companies with weak balance sheets will be taken-over by larger ones that will cut costs and improve their marketing skills. As a nation, we will replace any mining losses with an expansion of our service industries in every facet of life, and we will export these services to the world. This will mean that, in the longer term, we will have a more balanced economy and this tells us also that, out there in the marketplace, there is good reason for hope and room for some conservative risk taking.