Supply and Demand: 6 good reasons to invest in Australian resources right now
“The chief risk is paying too much for mediocre businesses during generally prosperous times…” -Benjamin Graham, ‘The Intelligent Investor’, 1949
1) BRIC economies (Ed Note: Brazil, Russia, India, China) shrugged off the GFC (Ed Note: Global Financial Crisis)… The share of world growth from Brazil, Russia, India, and China is projected to double in less than 20 years, reaching 40% by 2025
2) India is growing faster than a crowd at a fist fight… The Indians will spend an estimated US$21 billion a year for the next 10 years on the construction of highways, dams, water treatment plants, and nuclear energy facilities.
3) China wants 400 new cities by 2020… The Middle Kingdom will add more people to its new urban areas in the next 15 years than the entire population of the United States. There will be up to 50,000 new skyscrapers… the equivalent of building 10 New Yorks. In addition there’ll be up to 170 new mass transit systems. There are around 70 in Europe today. Trillions of dollars will be spent building power systems, roads, water and wastewater systems, ports and more.
4) We’ve got everything they need… Australia is home to nearly all the mineral and metal deposits needed for the industrialisation of China and India. We’re sitting on the world’s largest deposits of uranium, nickel, zinc, brown coal, lead, rutile, zircon, and tantalum… and the world’s second largest deposits of gold, silver, copper, bauxite and ilmenite…
5) We can’t pull it all out of the ground fast enough. Aussie miners and explorers are spending record levels on finding and extracting resources: According to The Australian Bureau of Agricultural and Resource Economics (ABARE), $6.1bn was spent on minerals and energy exploration in 2007/08, in real terms, the highest level on record. A further $5.6bn is estimated to have been spent in 2008/09. This is more than double the average of the past 25 years.
6) Aussie miners need YOU… The Minerals Council of Australia says that another 80,000 people will be needed in the resources industry by 2020 to maintain Australia’s share of global production. The council says, “Up until the last quarter of 2008, 142,000 people in Australia’s workforce were directly employed in resources. This number was up by a massive 55,400 jobs over the last
five years.”
Ed Note: Listing of Australian Mining Shares HERE.
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Dr. Alex Cowie
The head analyst of our resource investment advisory service Diggers and Drillers – Alex holds a graduate degree in finance and investment from the Financial Services Institute of Australia. Trained in Industrial Equity Analysis and Applied Portfolio Management, he is the editor and chief analyst for Diggers and Drillers and the editor of the Daily Reckoning Week in Review.