This article is more than 8 years old

This article is more than 8 years old

An Australian government minister has declared the end of the resources boom that had cushioned the country against the global financial crisis, a day after the world's biggest miner, BHP Billiton, shelved two major expansion plans worth at least $40bn (£26bn).

"The resources boom is over," resources and energy minister Martin Ferguson told Australian radio on Thursday. "We've done well – $270bn (£178bn) in investment, the envy of the world. It has got tougher in the last six to 12 months."

Ferguson's comments came after BHP announced it was indefinitely delaying the planned $20bn (£13bn) Olympic Dam copper expansion in South Australia and plans to build a new harbour, estimated at more than $20bn, to nearly double its iron ore exports in Western Australia, looking for cheaper alternatives.

But Ferguson's Labor party colleague Senator Penny Wong, the finance minister, disagreed with his assessment. "We still have a lot of investment coming in to this country, about half a trillion dollars in the pipeline and more than half of that at the advanced stage," she told ABC News Breakfast.

"I think the mining boom still has a long way to run. But what I would say is that the government has always assumed that the terms of trade would step down over time, that's what our budget is predicated on.

"I think Mr Ferguson was referring to when the terms of trade peaked, and that's factored into the Government's budget."

Ferguson later released a statement rowing back from what he had initially said. "The commodity price boom is over but in terms of investment in Australia the boom continues," he said.

Fuelled by Chinese-led demand for coal, iron ore and other resources, Australia's economy was one of the very few in the developed world to sail through the global financial crisis without sliding into recession.

The resources boom fuelled what has been dubbed a two-speed economy, which has pumped up the Australian dollar and exacerbated the pain felt in manufacturing sectors and retail in Australia's most populous states.

While manufacturers like Ford and Bluescope Steel have shut down plants and axed jobs, Australia's unemployment level has stayed around 5% thanks to substantial jobs growth in resources projects, where truck drivers command six-figure pay packets.

Politicians may be worried the whole economy is moving into the slow lane but analysts say the fear is premature, as energy projects, underpinned by customers who have already been locked in, will continue full steam ahead.

"A marriage of our macroeconomic research with analysis of already committed and possible projects has confirmed our expectations that a peak is coming, but is yet to arrive," National Australia Bank economists said in a report.

NAB expects the resources boom to peak in 2013 and 2014, when resource capital spending will be around 1% of gross domestic product higher than now.

BHP put the Olympic Dam expansion on hold as it reported a 35% slide in second-half profit, the biggest sign of the pain inflicted by the slowdown in China's economic growth.

Weaker demand from China has knocked prices of all key commodities, including iron ore, languishing at its lowest levels since December 2009, copper, coal and aluminium, clouding the outlook for all miners.

In response to pressure from shareholders worried about poor returns in a weak global markets, miners have put the brakes on capital spending, with BHP on Wednesday announcing it would not sanction any major new projects in the year to June 2013.

The Olympic Dam project, which had been due for approval by December 2012, would have created 25,000 jobs, according to the South Australian government.

"The next round was always going to be difficult and I must say Olympic Dam was always a very, very challenging project – its sheer size," Ferguson said.

He said he still hoped the project could go ahead. "Our requirement now is to continue to work together in partnership, South Australian and Australian governments, with BHP Billiton to actually get this project in place," he said.