The analyst yesterday launched a massive sector analysis of the mining industry from the present until 2023.

One key message from the forecaster is that sustained and historically high levels of mining investment, plus growing production, will offset the “dampening impacts” of rising costs and interest rates in Australia.

To this end, the boom will deliver gross domestic product growth of 2.5-4.5% over the next five years to the Australian economy.

BIS Shrapnel infrastructure and mining unit senior manager Adrian Hart also said soaring production would offset commodity price declines, keeping the mining sector growing.

“In fact, strong export growth, driven mainly by the mining sector, will see Australia’s trade deficit swing back into positive territory through 2008-2009 and 2009-2010, the first full year of surpluses since 2002,” Hart said.

Unsurprisingly, the forecaster said the brightest prospects would come from energy and steel-driven commodities.

For coal and iron ore, 2009 will bring further growth but 2010-2012 will see declines – but not of the same level as facing the base metals.

As for mining investment, the next two years may bring a downturn but overall levels should remain relatively high, especially in iron ore and nickel given global demand for steel and stainless steel.

Of course, the analyst said the biggest risk facing the Australian mining sector – and the overall economy – is a severe downturn of the Chinese economy.

“A manufactured slowdown in the Chinese economy to prevent over-heating and an inflationary spiral could cause a sharper-than-expected downturn in commodity prices,” the forecaster said.

While all eyes would be on China, the forecaster said its own prognostications for the engine of the world’s economic growth were “sound”.

The other major risk to the Australian resource industry would be a carbon emissions trading scheme, to the point where BIS Shrapnel said new thermal coal power station investment should be delayed until clean coal is commercially viable.

Instead, gas and uranium power generation should be getting any new power investment money.

Commenting on the report, Queensland Resources Council chief executive Michael Roche said the forecast capacity of the resources sector to insulate the Australian economy from recession for the next five years hinged in Queensland on a new level of commitment from governments to address business and community infrastructure challenges.

"One of the keys to that output growth is a concerted effort by governments and infrastructure providers to meet the export supply chain expectations of customers such as the rapidly expanding export coal industry in central and southern Queensland," he said.

"If we in Australia don’t properly plan for the resources supercycle, we will simply cede the growth opportunities to countries who get the planning right."