Uphill battle: Mining service providers are being affected by cancelled projects.

Uphill battle: Mining service providers are being affected by cancelled projects. Photo: Nic Walker

PROJECT cancellations and profit downgrades are mounting as the mining services sector confronts its post-boom future.

In announcements late on Friday, two groups servicing the mining sector said contracts with large mining companies, including Rio Tinto, had been cancelled or were not expected to be renewed, while Orica revealed a $367 million write-down.

Diploma Group said it would not proceed with 244 single rooms for fly-in-fly-out Rio Tinto workers near Tom Price in the Pilbara, while equipment leasing group Emeco said hiring rates in Australia were much lower than expected.

Emeco has been looking offshore, and has shipped a fleet of trucks to Chile, where copper mining is ''robust'' and growing.

Orica's decision to write down the value of its Minova equipment division will slash its profit to $400 million, well down from analyst forecasts of about $650 million for the year. Orica's results for the year to September 30 are due out on Monday morning, while explosives manufacturer Incitec Pivot releases its results on Tuesday.

The announcements follow the Reserve Bank's decision of Friday to cut its forecast for Australia's GDP growth in 2013 to between 2.25 per cent and 3.25 per cent, from between 2.5 per cent and 3.5 per cent.

The RBA said: ''The profile of capital spending on iron ore and coal in 2013 and 2014 has now been revised lower.''

The experience of these companies supports conclusions from Deloitte Access Economics that the peak of the ''construction leg of the mining boom'' is now approaching.

''This construction boom is likely to peak in 2014 as fewer projects move through planning over time to replace the large swathe of projects which will be completed,'' the firm's investment monitor for September found.

The total value of projects increased by $6.2 billion, or 0.7 per cent, between June and September, but the value of ''projects in planning'' was $10.6 billion lower at the end of September.

''While the quantum of projects in planning had moderated a little over the past year, some of those on the drawing board may be further from the green light now than they were three or six months ago, given the downturn in global commodity prices and concerns over China's development path in the short term.''

Diploma Group's $44 million contract to build the rooms for Rio near Tom Price was its first with Rio and was announced in July this year. Just four months later the housing project is now ''non-essential'' to Rio's expansion plans.

Emeco said that only 66 per cent of its equipment in Australia was in use at present, down from 76 per cent in August. This is far below the ''average utilisation of 91 per cent'' in the first half of 2011-12.

Specifically, two goldmines in Western Australia did not renew contracts and iron ore miners were unlikely to re-hire equipment until early 2013. Emeco does not expect several coalminers in New South Wales and Queensland to renew their contracts.

In September iron spot ore prices dropped below $US100 a tonne for the first time since 2009, but have since recovered to about $US120 a tonne.

Economics & Beyond chief economist Jeff Oughton said confidence in the mining sector was still low because of uncertainty about what will happen to China's economic policy when a new leadership team emerges from this week's National Party Congress in Beijing.

There is also concern about Europe's economic recovery and how a re-elected Barack Obama will deal with calls for spending cuts and tax increases in the US.

However, putting mining projects on ice does not mean they will not be built.

''This is about new capacity coming on stream and, one, they have been running into lower prices than potentially hoped for; and, two, they are running into higher costs and the availability of skilled workers to get [the projects] done,'' Mr Oughton said.