Reserve Bank Governor Glenn Stevens
The head of Reserve Bank appearing before the House of Representatives Economics Committee.PT0M0S 620 349
The Reserve Bank of Australia (RBA) says the mining investment boom will peak sooner and at a lower level than previously expected.
The central bank also says that while commodity prices are likely to drift lower over the next few years, Australia will continue to benefit from China's economic expansion.
Export volumes for resources are set to rise steadily as new mines come into operation.
RBA assistant governor (economic) Dr Christopher Kent said on Friday that the boom in mining investment was expected to peak this year, with the sector accounting for about eight per cent of gross domestic product at its high point.
Dr Kent warned that commodity prices were likely to fall over the next few years as more mines came on line to meet demand from China.
''Despite the potential for further growth in the demand for commodities from China and other developing economies, we expect commodity prices to gradually decline over the next few years,'' he told the Committee for Economic Development of Australia (CEDA) forum in Perth.
''This reflects the extra supply generated by the substantial amount of mining investment under way in Australia and elsewhere.''
Coal and iron ore prices slumped in mid to late 2012 as growth in China slowed, causing miners to shelve or ditch a number of planned resource projects.
Dr Kent said the rebound in prices since December had not affected investment plans in the industry.
''The recent sharp rise in iron ore prices, as best we can tell, has not yet made much of a difference to investment plans, presumably because the price is not expected to stay at its current high level,'' he said.
Dr Kent said Australia was still well placed to benefit from China's continued growth, with production from new mines to help boost export volumes.
''And as mining investment tails away, we'll increasingly move into the operational phase of the mining boom,'' he said.
''Strong growth of iron ore, coal and LNG (liquefied natural gas) exports has been evident for some time now.
''Further strong growth is anticipated, particularly for LNG, which is expected to grow much more rapidly starting from around 2015.''