Prime Minister Julia Gillard insists that the resources boom has yet to peak, despite Woodside Petroleum (ASX: WPL) today dumping its plans for an onshore LNG plant.
Ms Gillard says we haven't seen the peak of the investment phase into resources yet and we are yet to see the peak of the production phase, adding that Australia would continue to sell resources and make money for 'decades and decades and decades'.
That might be no consolation for construction and engineering company Calibre Group (ASX: CGH), which saw its shares drop by close to 60% just today. The company which primarily services the resources industry revised its expected profit from between $55-$60 million down by almost half to between $30-$35 million. Calibre said challenging market conditions were to blame with mining companies delaying or slowing current and anticipated projects, falling commodity prices, especially in coal, and ongoing cost management.
In other words miners like Rio Tinto Limited (ASX: RIO) and BHP Billiton (ASX: BHP) are focusing heavily on bringing costs down, selling off non-core assets and delaying projects. For mining services companies, the resource boom certainly appears over.
Drilling products and services company Boart Longyear Limited (ASX: BLY) has seen its share price crushed in the last year, falling close to 70%, after the company issued two profit warnings, reported a 58% fall in net profit, lost its CEO and CFO, and downgraded its forecasts for the 2013 and 2014 financial years.
The Centre for Exploration Targeting, a partnership between several universities, government and business believes exploration expenditure peaked in December 2011, and is on a downward trend.
Foolish takeaway
While the prime minister and others may believe that the resources boom is not yet over, it appears evidence is mounting to suggest they may be wrong. Yes, Australia will be selling and making money from resources for years to come, but that's completely different to a 'boom'.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in BHP and Woodside.
