THE mining sector has reached a new five-year low, with confidence levels likely to take years to recover, according to industry leaders surveyed in the latest Mining Business Outlook Report.
Despite some optimism last year, the 2014 report found mining leaders were plagued by tough market conditions including declining commodity prices, falling demand and a difficult regulatory environment.
A majority shared the view that the sector's future was now out of their control, signaling an increasing possibility of drastic changes to the industry, especially in thermal coal.
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The report confirms the sector's increasing sombre outlook, with an overwhelming 93% of leaders not optimistic about their growth prospects for the next 12 months, up by more than 50% compared to last year.
A further 82% are not confident of large-scale projects resuming in the next 12 months, predicting it will take at least three to five years.
Economist Saul Eslake supported the report's findings, saying he didn't expect any major new mining projects to begin in the next few years.
"There is wide consensus that commodity prices will continue to decline as more supply comes on stream globally, while the growth rate of demand for commodities slows," Mr Eslake said.
"Economic growth will continue at a below-trend pace over the next 12 months, and unemployment will continue to rise."
Tough market conditions are the prevailing factor driving the gloomy outlook for almost five in seven mining leaders.
A further one-quarter are concerned by falling demand in key markets such as China, stating that demand from other markets will remain hampered due to the high costs of doing business in Australia.
While last year's outlook was dominated by postponements in new investment, this year's negative views are shaped by persistent, ongoing macro-economic and market challenges out of the sector's control.
Newport Consulting managing director David Hand said mining leaders were saying they had done all they could to address their business performance, as demonstrated by large cost-cutting exercises and job retrenchments.
"Leaders are demanding better business conditions for confidence to return," Mr Hand said.
"They've accepted the new lows hit by the sector and have embraced a government who will listen. However, they want action quickly - less red tape, more flexible IR laws and better infrastructure."
The report also revealed that the industry had lost its investment appeal, with 89% of leaders agreeing that Australia was no longer the world's best investment market.
That view has been echoed by mining magnate Gina Rinehart, who told The Australian the high cost of doing business in Australia was driving some multinational companies to pursue overseas projects that have the potential to further damage Australia's export revenue.
Mrs Rinehart criticised the decision by some companies to invest in lower-cost offshore projects that could drive down commodity prices and undercut Australian projects.
"Sadly, too many multinational companies, even Australian companies, are focusing and preferring to invest in overseas countries with lower costs," she said.
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