Do Your Research When Buying In Mining Towns

As a result of commodity prices dropping and the demand for those commodities reducing (which I believe is to be short lived) certain mining operators have decided to close down their operations in some mining towns in the past few months. One such devastating announcement for example was by BHP to close down its nickel mining operation at Ravensthorpe and axe 1800 jobs in June this year. A little over a year when it was officially opened. I recall certain property spruikers (i.e. slicked salesmen) and their seminars saying that buying properties in these types of areas was good as the yield on these properties were high (as a result of property prices being low and rents being high). I have heard that vacancies in Ravensthorpe are rising as people are leaving this area as unemployment is now rising. Also property prices are gradually declining. What I am trying to get at is if one is going to buy properties in these types of areas/towns, obviously one must do their homework to ensure the security of their investment.

Ask questions like:

1) How long is the mining lease to go for, and has that mine(s) in that town had a history of closing down previously when such a situation like commodity prices dropped.

2) Is there infrastructure to be developed in that area? One can check sites like the Department of State Development, Infrastructure and Planning www.dsdip.qld.gov.au as a source for information on infrastructure developments. Another site is the Department of Transport and Main Roads Project's Site http://www.tmr.qld.gov.au/Projects.aspx for road projects. Some of these projects do lead into mining towns. This is an indication that the state government is spending money to ensure that the roads are capable of further expansion in these mining regions. You may call it investing for the future.


Even though some of the websites are Queensland based, there is similar government departments that one can obtain information on infrastructure projects that is occurring/to occur in other Australain states.

Yes it may sound nice chasing the yields, but if one is to pursue such a venture wouldn't it make sense to do your own diligence instead of being lead by spruikers? It pays to also visit the town and get a feel first hand for what other economies are driving growth in that town apart from mining.