Iron ore prices have surged more than 70 per cent in the last four months, restrengthening projects in Western Australia and sending miners back to work on major projects.
The spot price fell to lows of around $90 in the second half of 2012, but the market has taken back almost all of the lost ground and the price currently sits at almost $150 a tonne.
Ernst & Young global mining and metals leader Mike Elliott said while costs remained an issue for Australian miners, the sector would see a renewal in investment as commodity prices rebounded.
According to The Wall Street Journal Elliott said the decision by Fortescue Metals Group to restart work on its Kings deposit, sidelined last year after the fall in commodity prices, was also expected to rebuild confidence in the sector.
“There is still a very good pipeline and we are confident that modest price signals will emerge over the next six to 12 months, resulting in some new project commitments in the second half of 2013,” he said.
“I think, unlike before, it’s likely to be more of a gradual rise in the number of projects being committed to.
“But the fundamental demand story for mining and metals remains strong and we are already seeing an increase in growth in the Chinese economy, with expectations that this will be maintained in 2013.”
The WSJ reports beyond iron ore UBS analysts are tipping a rise in the thermal coal price from US$90 to US$105 later this year, with aluminium, nickel, and zinc prices also expected to rise.
Bank of America Merrill Lynch analysts are also forecasting higher prices for gold, platinum, and zinc.