Miners:the black side of the boom

The mining boom is bringing billions of dollars to Australia.

But it is also adding to the inflationary pressures that are giving the nation big headaches.

Figures just released by the Australian Bureau of Statistics tell the story.

They also show why those inflationary pressures are not likely to ease any time soon.

The bureau reported, for example, that Australia’s miners currently expect to spend 12.6 per cent more, on new capital in 2008-09, than they did last financial year.

With underlying inflation now running about 3 per cent, that would represent a real increase of almost 10 per cent in their new capital spending.

And miners are the last of the really big spenders, when it comes to capital equipment.

But the boom, with all its demands, arrived suddenly.

So suddenly, in fact, that their fifth estimate of likely spending this financial year was a massive 23 per cent higher than that of the comparable estimate, the previous year.

Estimate 5, for this financial year, is that the miners, alone, will spend no less than $29.6 billion, over the year to June 2008.
With commodity prices now at record highs, the fact is that they can’t afford hold back on new capital projects.

But thissudden rush does have its consequences for tother Australians.
One is that interest rates will probably rise again, next week, as the Reserve Bank tries to curb both demand and inflation.

For some families, that will mean bigger home loan repayments and less to spend on food.

That’s tough. But that’s what mining booms are like.

They have  been a big part of  Australia’s history.

During  the  gold rush days, for example, even common tools, like picks, became too expensive for Australia’s farmers.

That’s because the miners were willing to pay anything for them.