Queensland Treasury already made a big downward revision of $1.4 billion over four years in mining royalties in the 2012-13 Mid-Year Fiscal and Economic Review last December, and it may need to shave some more off given the bad news from the resources sector continues. The Rockhampton Morning Bulletin reports that the Dumping of Balaclava Island port casts doubt over Wandoan:
THE newly-merged Glencore-Xstrata has been forced to again deny it would dump its $7 billion Wandoan coal mine planned for south-west Queensland after killing off its $1 billion port slated for near Gladstone.
The Balaclava Island port was to create 800 jobs during construction with a further 100 needed once it began operating.
Despite cancelling its Balaclava Island port project – a decision understood to have been made before Xstrata’s merger with Glencore – the mining giant has denied it meant anything for the slated coal mine, which is currently the subject of a Land Court battle.
Balaclava Island was to become an export point for the Wandoan’s coal, after it outgrew the capacity it needed from Gladstone’s Wiggins Island coal terminal.
A spokesman for Glencore-Xstrata said the future of Wandoan still relied on the outcome for a Land Court battle over landowner compensation and a final investment decision.
He said that decision would take into account market conditions at the time.
It is those world market conditions that do not currently sit on the side of the Wandoan project, with Glencore-Xstrata’s statement on Balaclava saying as much in its announcement on Monday.
Residential vacancies data from REIQ are also consistent with a slowing resources sector, with the super-heated rental markets in Rockhampton, Gladstone and Mackay cooling somewhat due to lower demand from the resources sector, as also reported by the Morning Bulletin.
Unfortunately there aren’t many signs the construction sector will pick up in the near future and balance any loss of economic activity from the resources sector. MacroBusiness has a useful chart in its post on today’s new ABS housing finance data showing “new home finance in Queensland…has flatlined over the past six months.”
We already know the Commonwealth Budget tomorrow night will be a horror story, and I expect the Queensland Budget next month won’t be much fun either.