Australia has a mining revolution that is creating opportunities for Investors

Invest in Regional Towns that are not dependent on Resources alone …

 

Terry Ryder says “the best places to invest in Australia are regional centres that benefit from the resources sector but do not depend on it.”

Did you know that Australia’s mining revolution is creating long-term opportunities for you the Investor? Australia is not having a mining boom, it is in the early stages of a resources revolution, quotes Terry

You may have read recent articles espousing that the mining boom is coming to an end …. how misleading and what nonsense! Are you saying that world population is going backwards and appetite for resources is diminishing? Does this mean the demand for cleaner burning fuels has ended?

On the contrary, world population continues to grow and it’s appetite for clean burning gas is only at the beginning of it’s delivery phase … did you know that Queensland (and WA) contain the majority of Australia’s natural resources and hence many of the best property investment opportunities are also in these States … because the resources industry and local government are pouring 100’s of Billions of Dollars into these regions!

“Either choose to follow irresponsible media journalists or undertake your own research, and if you undertake your own due diligence you will quickly understand the True Opportunity at hand”

Yes certain mining areas are doing it tough or choosing not to go ahead with certain projects; some might even be saying that they will not proceed with further mining development to simply call Julia Gilard’s bluff … she seems determined to penalise mining companies to fill the black hole of debt government has created. And some resources are have recently come off in value, but resources are volatile and soon enough bounce back

HOWEVER, there is ongoing development by mining companies whose primary focus is on Coals Seem Gas (CSG) and Liquified Natural Gas (LNG) where $100’s of Billions of Dollars is either in the process of new projects that are in their infancy phase and also in committed projects that are already planned, dated and ready to proceed

Countries like Australia, China, India and Japan are all contracted to Australian Resources companies for a long term supply of both CSG and LNG. This is fact! Plus the fact that new growth nations are experiencing growth in their economies and they are the same nations dependent on Australia’s supply of resources and commodities. You will be aware that Asia (who have 60% of the worlds population) has entered into an era of mass Urbanisation. This era is expected to last so long that it is referred to as “The Asian Century” … can you imagine the demand that 60% of the worlds emerging population will place on natural resources??

This demand for natural resources is propelled by its enormous population whose wish is to become developed nations where an emerging middle class, estimated to be 1.7 billion, will far exceed the entire Australian population of 22 million. Can you see the enormity of this? Why don’t the media talk up Australia’s future potential then?

What has been overlooked by the doomsayers, however, is what happens when construction of these projects is finished – they are built for a purpose, not for practice!

It’s not until key infrastructure such as processing plants, ports, pipelines and railways are constructed that those valuable resources below the dirt can be converted into highly valuable and profitable dollars. That’s when commodities such as coal, gas and iron ore are processed and exported to the likes of China, India, Japan, South Korea, and France. That’s when our governments start to receive billions in extra revenue each year in the form of royalties. That’s when some of Australia’s biggest companies expect to return bigger profits which will affect retail superannuation holdings. That’s when consumers will start seeing some of the fortunes promised by Treasurer Wayne Swan – tax cuts, increased superannuation contributions and infrastructure projects. Supply contracts which underwrite these royalties are on terms of up to 20 years.

Mining doesn’t stop when construction finishes – it starts! The proponents need to get a return on their investment

These contracts that have been entered to are long term in nature and will ensure that towns such as Gladstone, Rockhampton, Mackay and possibly Townsville will double in size and in population and will be stand alone towns not reliant on Mining Resources alone for their local economies

Think about developing nations that are undergoing economic change, they have massive populations and the same desire as developed countries to improve their own living standards whilst they improve industrialisation and urbanisation within their own countries.

This takes years and years to achieve, all the while securing resources from other countries such as Australia and so what if China experiences a 1% slow down … they are still in positive growth rates and could easily make up this lost 1%. Why the media drama?

Ask yourself  what positive effect will India, Korea, Japan, Thailand, Vietnam, Malaysia, Indonesia, Taiwan etc have on the rest of the world and on Australia over the next decade? Will China’s 1% slow down not be effectively absorbed by other Asian countries incredible looming growth? Can you see the opportunity for Australia to increase supply of resources, minerals, natural gas, steel, coal etc to these emerging economies?

Why are conglomerates such as Rio Tinto, Fortescue Metals, Wheatstone and Hancock Prospecting forging ahead with their expansion programs? The answer is simple, they have done their homework and understand the Long Term potential of supply and demand – we have the resources and our trading partners certainly have the demand and appetite !

Did you know that $70 Billion worth of LNG projects centered on Gladstone is under construction? It is happening whether the media (and you) like it or not. Can you identify with the investment opportunity at hand based on numbers such as these.

Demand for property has sky rocketed and supply simply is insufficient. There are long term opportunities for property investors says Terry Ryder and he is correct. We are talking future supply contracts for decades are in place.

Rockhampton has a Rental Property deficiency right now, and the resources sector in the region is only in it’s infancy phase. Gladstone is only receiving building approval on around 500 homes per year … demand exceeds supply by the thousands! Mackay is currently managing to construct around 1000 dwellings per anum and is barely keeping up with demand.

Try book a hotel or motel room in these areas and see how difficult this is!

I was up there 2 weeks ago,  (all my research and due diligence I have put into this region was proved to be accurate)  but actually being on the ground exceeded my expectations. There is so much activity boosting the local economies, so much positivity, a vibe not felt in a long time that it gave me renewed energy levels the media in Melbourne seemed to drain out of me and many people I know. What opportunity for investors now and into the long term future.

I was astounded to see large supermarket chains having developed and continue to develop new stores to simply meet current demand, with plans to try to keep up with future population growth. These towns will more than double in population and Coles / Woolworths have identified the opportunity and are thus investing heavily themselves … because it is viable and profitable and of a long term nature.

Charter flights are all full with fly-in, fly-out workers who would prefer to have a place to stay rather than commute daily on aeroplanes, expansion programmes by mining conglomerates require high staffing compliments, they too will need somewhere to stay … but where?

You will be astounded to know just how many workers, employees, family members etc will pour into areas such as Gladstone, Mackay, Rockhampton and nearby surrounds. With so many massive mining and infrastructure projects underway (and almost up and running) there could be a demand for over 14,000 employees (excluding family members) now and into the next 2 to 6 years. Once again we ask “Where will they live?” and can you see the investment opportunity being created for you! Some one else’s problems represent an opportunity to those looking!!

Before you go rushing into just any town offering high rental yields you may want to do some of your own due diligence and avoid smaller towns mainly existing simply because there is a mine or two in the vicinity. These are high risk investments and are also viewed this way by the banks who will either under value the property or only lend you 60% to 80% of the value of the property and might even add mortgage insurance on top to secure their risk. If the banks view these areas as risky, then these areas are risky. Even Terry Rider urges investors to avoid towns underpinned by mining only. View latest article on banks lending criteria in mining towns here

An astute investor looks for the following criteria which provide sound fundamentals in making an informed investment decision :

  • Benefit from the economic stimulus from the mining sector
  • Strategically select locations with
    • a stable population base
    • a diverse mix of industries which contribute to the local economy
    • an abundance of employment opportunities
    • and demand for accommodation which is not matched by comparable supply

 

Gladstone Facts :

  • Population Growth 2.4% per anum making it one of the fastest growing regions in Australia
  • Current Population of 60,000 tipped to reach 75,000 in 2016 and could reach 120,000 by 2025
  • Rental Growth demonstrate 15% increases with increases of $70 – $150 per week during the coming 12 months
  • Rental Yields 7 – 8% on unfurnished 4 bedroom homes and 11 – 12% on furnished 4 bedroom homes
  • Gladstone needs around 850 new dwellings per anum, at this time around 200 new homes will be completed during 2012
  • Gladstone requires around 10,000 more homes to satisfy long term demand and sustainability
  • Gladstone has over 10 major industries underpinning its natural growth and long term sustainability

 

  • Projects totaling over $100 Billion

    • The only deep water harbour on the eastern seaboard to accommodate tankers shipping resources to the rest of the world
    • 3 x LNG plants commencing construction imminently
      • $30 Billion over previous 12 months already committed
    • 2 x new LNG plants to begin construction within 2 years
    • 10 projects currently underway estimated at $48.7 Billion in capital expenditure
    • 2 of the worlds largest Alumina refineries
    • $60 Billion of new LNG projects under investigation
    • Second phase of Gladstone Port approved to cope with current shipping demands with construction to begin
    • 350 wells that were to be drilled late 2015 have been brought forward to 2012 to meet demand
    • 470km Gas Pipeline construction to begin
    • China, India, Japan and Australia have signed long term supply contracts for Gas

 

  • Employment
    • 6,000 new jobs being created now and into the coming years
    • 2,500 new jobs to construct second phase of Gladstone Port
    • 2,000 new jobs to construct 470km gas pipeline
    • 1,000 new jobs for TRUenergy $1.8 Billion gas fired power station
    • New coal loader construction commences end 2012 requiring 800 new jobs
    • Boulder Steel seeking approval for new smelter before June 2013 requiring 2,000 workers
    • Bectel recently announced the need for 4000 new employees late 2012 into early 2013

 

  • See further reports and videos here detailing projects, employment opportunities, housing shortage etc

 

Compiled by Stephen Lazar of properT networker

 

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Curtis Island CS Plants in Gladstone

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