Mining bust a myth, says HSBC

“With commodity prices now having peaked, concerns that Australia may see a mining bust have become more frequently discussed. But, as we have noted before, the mining story is far from over. Commodity prices have peaked, but because much of the investment is in long term projects - mainly LNG - investment is still expected to rise as a share of the economy in 2013,” Mr Bloxham said.

“Looking beyond that, growth will be supported by a ramp up in resource exports as capacity comes on line.”

Mr Bloxham’s comments come less than one month after the resources minister Martin Ferguson told ABC radio that the mining boom is finished.

“You’ve got to understand, the resources boom is over,” he told the radio station.

Mr Ferguson said BHP Billiton’s decision to pull the plug on its planned expansion of Olympic Dam mine site suggested the mining boom was coming to an end.

However, his comments have since been dismissed by Mr Bloxham who argues that there are many reasons to suggest the boom is far from over.

“Unlike during previous mining booms, irrational exuberance in the mining sector has not spilled over into the broader economy this time around, as it had previously,” Mr Bloxham said.

“The financial system is not overly leveraged into the mining story, as it has been on some occasions in the past. Having escaped the global financial crisis reasonably unscathed, Australia's banking system is also in pretty good shape such that conventional monetary policy still works.

“All in all, we remain of the view that this time should be different. When the mining story fades, which is not yet, there will be room for other sectors to pick up and growth to rebalance.”