Falling commodity prices and rising costs have resulted in the lowest spending on new resource projects in more than a decade, with many projects either stalled or shelved.
Rather, after the resources boom, the transition to production is under way, the latest review by the Bureau of Resources and Energy Economics has found. But declining prices amid a surge in output has weighed on proposed new spending.
"This trend appears to be continuing," the bureau said in its latest report on Wednesday, adding "the latest cycle of investment in the resources and energy sector therefore appears to have peaked".
"The latest commodity price cycle has reached its apex and the decline in the price of most commodities over the past 12-18 months has created more challenging investment conditions," the agency warned. "Many (but not all) commodity markets are either already or soon [will] be oversupplied."
So, with a record $30 billion of project spending completed in recent months, new projects worth just $1.7 billion have been sanctioned, a decade low.
And, with two of these projects - Yancoal's Ashton South East mine and Whitehaven's Maules Creek mine - subject to outstanding legal appeals, both could be blocked.
Rising caution amid weakening commodity prices has also resulted in a downturn in exploration outlays, particularly in the mining sector.
Overall spending here in 2012-13 declined by 8 per cent to $8 billion, which masked steep falls by coal (36 per cent), minerals (31 per cent), gold (16 per cent and iron ore (13 per cent). In contrast, exploration for petroleum surged 61 per cent, limiting the overall decline.
Iron ore is an area where there is a rising risk of projects not proceeding, which the bureau says may be due in part to a lack of access to rail and port facilities.
"There is increasing risk that a number of iron ore projects may not progress beyond planning stages," the agency said, pointing to Aquila and AMCI's $7.4 billion West Pilbara project and Grange Resources' $2.9 billion Southdown magnetite project which have stalled.
"While iron ore prices currently support investment, access to export infrastructure remains a challenge for emerging developers of iron ore projects," the bureau noted.
Iron ore projects remain one of the largest sources of potential investment in Australia and at the end of October there were 19 projects mooted, worth a total of between $35.8 billion and $55.8 billion.