There is good news for engineering construction in Western Australia, with Deloitte’s latest business outlook forecasting slow improvement from here on in.
Of prime importance to the WA economy, engineering construction’s “catastrophic” fall in investment over the last four years appears to be levelling off, according to Deloitte’s Q3 Business Outlook Report. As the majority of mining and gas megaprojects have transitioned from construction to production, Deloitte’s reasoning is there’s little room left for investment to fall further.
“The recovery is in the offing. We forecast engineering construction to add to the WA economy in the years to come,” the report stated, although those gains are expected to be moderate. However, many of the gains in engineering construction are expected to come from the replacement of ageing mines and the maintenance of existing assets.
“It won’t be a ‘Pilbara construction boom’ as some newspapers have suggested, but something is definitely brewing,” Deloitte said.
BHP has already kicked things off at the $5 billion South Flank project, which will replace the 80 million tonne per annum Yandi mine. This follows Fortescue’s decision to approve the development of its $1.7 billion Eliwana mine, as well as Rio Tinto’s plans to begin construction of the $2.2 billion Koodaideri mine next year.
Added to this, the state government’s coffers appear to be full enough, with plenty of funds being thrown at road and rail projects. The largest project is the $3 billion first stage of Perth’s Metronet but there are also a lot of smaller projects supporting current and future activity.
However, commercial construction activity in WA is poised to underperform for a while yet, according to Deloitte’s report, with a number of relevant drivers still lagging behind the level of activity in the eastern states.