Spending on natural resources soars

Global spending on mining will
surpass pre-crisis levels next year, according to an emerging industry
consensus, highlighting rising confidence in an economic recovery led by China
and other fast-growing markets.

The boom in capital expenditures,
which extends to the oil, natural gas and agribusinesses, comes amid sharply
rising prices for commodities such as copper, iron ore, crude oil, sugar and
wheat.

The investment surge also raises
the likelihood of short-term bottlenecks in the already stretched supply of
equipment and services, and project delays as costs rise.

Global mining expenditure is set to
hit a record $115 billion-$120 billion next year, above the peak of $110
billion set in 2008, according to a survey of senior industry executives and
consultants.

The rise is being driven by miners
such as Vale of Brazil, Rio Tinto and Xstrata, who want to take advantage of
generational boom in demand and pricing for raw materials.

In Australia, the hottest mining
region, the government’s resources forecasting agency predicts expenditure to
jump by 58 per cent year-on-year.

Separately, in energy, consultant
Wood Mackenzie estimates the world’s largest oil and gas companies will spend
nearly $100 billion on development projects next year, up 12 per cent from
2010.

Chevron, the US second biggest oil
company, announced last week its biggest ever capital expenditure, budgeting
$26 billion for next year, up 20 per cent from 2010.

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