The results of Newport Consulting’s annual “Mining Business Outlook” report will come as no surprise to many in the industry, and the report called for a more supportive regulatory environment and sound business management to meet the challenges.

“Falling thermal coal prices, militant activity by unions and unsupportive policies and rhetoric from the federal government have generated a much more negative outlook for the industry compared to the findings of the survey in 2011,” Newport said.

Of the 55 mining executives interviewed, just 25% were planning to invest in major projects, compared with 52% last year.

Reasons included escalating business costs (29%), tough market conditions (24%), volatile commodity prices, particularly for coal (14%) and labour shortages (14%).

Newport estimates that infrastructure costs account for up to 80% of project capex, compared to around 40% in the late 1990s.

“In such a climate, we were concerned to find that many of these and other capex projects could be put on hold in 2012–13,” the report said.

The report found the carbon tax was a concern for miners, but other areas were more worrying.

“While the carbon tax and its impact on the mining industry has dominated the media, some parts of the sector simply note that tough business conditions and increased business costs are the real concerns, as they were last year,” Newport said.

The high electricity and labour costs were singled out as factors in Australia’s high costs.

“Respondents were concerned these costs could soon make Australia a less attractive place for the mining sector to invest in development and expansion,” the report said.

The report suggested up to 20% of mining projects to be delayed as a result of union action.

“With around $500 billion dollars of projects in the pipeline, our surveyed leaders are deeply concerned that overseas investors will go elsewhere if one fifth of these projects become hamstrung because of industrial relations action,” Newport said.

As for the future, the mood is much gloomier than in past surveys.

Last year, 57% of respondents had a “very optimistic” outlook, but that number plummeted this year to just 20%.

Executives with a “not optimistic” view soared to 34%, a three-year high, from just 13% last year.

“From our interviews this year with mining leaders, it appears that the industry is partly in survival mode,” Newport said.

“Volatile market prices for certain commodities have hit some mining companies, and those who are more optimistic must overcome severe challenges before they can capitalise on the opportunities that exist.”