By Esmarie Swanepoel
July 2, 2018 - Australia’s resource and energy export earnings are estimated to have reached a record A$226-billion in 2017/18, driven by rising liquefied natural gas (LNG) exports, the Department of Industry, Innovation and Science said in its latest Resources and Energy Quarterly.
LNG export volumes increased to 62-million tonnes in 2017/18, generating forecast earnings of some A$30.8-billion.
Australian iron-ore export volumes grew by 3.4% to 846-million tonnes in 2017/18, driven by the ramp-up of Rio Tinto’s Silvergrass mine and improvements to rail infrastructure in the Pilbara.
Metallurgical coal export volumes increased from 182-million tonnes to 200-million tonnes in 2017/18, reflecting a recovery in operations following Cyclone Debbie in 2017, while thermal coal export volumes maintained at around 200-million tonnes.
Gold export volumes reached 339 t in 2017/18, while 1.9-million tonnes of copper in concentrate and 333 000 t of refined copper was exported in the same period.
Minister for Resources and Northern Australia Matt Canavan said strong demand and prices for iron-ore, coal and LNG in particular were pushing total exports from the sector to the new records.
Thermal coal prices rebounded in the June quarter, while iron-ore prices held up strongly as Chinese steel production rose. Furthermore, LNG prices are strong and expected to grow further, as demand rises for flexible dispatchable energy, while prices for base metals are strengthening, with demand for copper and nickel particularly strong.
Commodity prices have followed a clear trend over the past 10 years, rising largely in unison during the early days of the commodity boom, and then easing back as new investment and supply followed, the report found.
Commodity prices now are following a less unified trend; however, with growth in some offsetting falling prices in others. Trends in global industrial production will continue to play a significant role in commodity demand moving forward.
Meanwhile, growth in global industrial production and manufacturing output appears to have peaked in the first half of 2018, suggesting that resource commodity prices may generally have set their highs for the cycle.
However, the report noted that it is likely that prices will continue to diverge among different commodities in response to different pressures.
Looking ahead, Canavan noted that export earnings in 2018/19 was expected to be A$12-billion higher, at A$238-billion, with coal expected to overtake LNG as Australia’s largest export earner in 2018/19, generating A$58.1-billion in revenues.
“That will see coal reclaim its place at the top of Australia’s export earners – a position it held for decades until it was supplanted by booming iron-ore exports in 2010 – and is great news for the major coal-producing states of Queensland and New South Wales.
“It is likely coal and iron-ore will continue to fight it out for the title of Australia’s top export-earner in coming years, while LNG will also perform strongly,” he said.
Iron-ore exports are expected to earn A$57.7-billion in revenue in 2018/19, while LNG export revenues will increase to A$42.4-billion.
Minister Canavan said the figures for coal demonstrated the continuing strong world demand and its ongoing importance to the Australian economy.
“I emphasize the strong performance of coal only because anti-mining activists constantly try to talk down its importance. Coal remains a vital contributor to the Australian economy and the economic well-being of families throughout Australia.
“As one simple example, coal royalties will contribute some A$3.8-billion to the Queensland budget this year and, without coal royalties, the state government would have to tax every Queensland household almost $2,000 extra to provide the same level of services.”
Minister Canavan said the report also predicted increased coal exploration in Australia.
“In May this year, the Queensland government called for tenders to explore more than 540 km2 in the Bowen, Surat and Galilee Basins for coal, which is likely to support further growth in exploration activity.”
However, the report noted that Australia’s coal export expectations could be at risk by potential capacity losses from proposed changes to the maintenance schedule of freight operator Aurizon, due to enforced cuts to its revenue.
The Queensland Resources Council on Monday said that the impact of the threat to stop the movement of up to 20-million tonnes of coal a year, would cut up to A$4-billion in export revenue and up to A$500-million in royalties to Queensland.
“Aurizon’s actions come as the sector is strengthening. Over the last 12 months, the resources industry in Queensland created a new job every hour and generated A$1-billion in exports every week,” QRC CEO Ian Macfarlane said.
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