Is the Mining Boom Over?

That seems to be the question as more project cancellations occur and more profit downgrades happen.

Last week, contracts of two groups providing services to the mining sector were cancelled. Diploma Group has announced that it will no longer be part of the 244 single rooms for Rio Tinto fly-in, fly-out workers.

Diploma Group was tapped by Rio Tinto last July to build rooms for its housing project. The contract was worth $44 million. A few months later, Rio Tinto announced that the housing project is no longer essential.

Emeco, meanwhile, remarked that hiring rates in the country is no longer as high as expected. The equipment leasing group is also looking into offshore projects, including shipping truck fleets to Chile.

Emeco also said only about 66 percent of its equipment are currently being utilized in Australia. The figure is much lower compared to August when its equipment was at 76 percent utilization rate.

Orica has also announced a write-down worth $367 million for its Minova equipment division. The write-down would result into a profit loss of about $400 million for the company.

It appears that the boom days of the mining industry are drawing to a close. Last week, the Reserve Bank of Australia lowered its forecast for the country’s gross domestic product growth for 2013.

From 2.5 to 3.5 percent, the forecast has been downgraded to 2.25 to 3.25 percent. The capital spending profile for coal and iron ore in the next two years has also been downgraded.

Industry analysts believe that indeed the mining boom is about to reach its peak. Deloitte Access Economics says the industry may reach its peak by 2014. If this happens, the industry should expect fewer projects to come in.