A RISE of 25% has been forecast for earnings from Australia’s resources and energy exports in 2016-17.

The Resources and Energy Quarterly – June Quarter 2017 report was released on Friday by the federal Department of Industry, Innovation and Science.

In the report’s foreword, the department’s Chief Economist, Mark Cully, said preliminary estimates of earnings grew rapidly in 2016-17 to $205 billion.

“The rise in export values in 2016–17 was largely due to an unexpected spike in metallurgical coal and iron ore prices,” he said.

“These steel-making commodities account for over half of Australia’s resources and energy exports by value.”

Capacity cuts in coal, a resurgence of China’s steel sector, as well as temporary supply disruptions, all contributed to spikes in the price of metallurgical coal and iron ore in 2016–17.

However, price increases for these commodities weren’t expected to continue across the next two years, Mr Cully said.

“Global resource and energy commodity demand growth — particularly for steel making commodities — is expected to slow in the next two years, driven largely by a slowdown in infrastructure spending and construction activity in China. Lower demand growth is expected to adversely affect iron ore and metallurgical coal prices”, he said.

Forecasts suggest resource and energy export earnings will decline marginally for 2017–18 (to $202 billion) and 2018–19 (to $200 billion), with declining prices expected to more than offset the impact of rising export volumes.

“Global resource and energy commodity demand growth — particularly for steel making commodities — is expected to slow in the next two years, driven largely by a slowdown in infrastructure spending and construction activity in China,” Mr Cully said.

“Lower demand growth is expected to adversely affect iron ore and metallurgical coal prices.”

LNG is forecast to add $14 billion to Australia’s resources and energy exports over the next two years.

As new projects reach production, LNG export are forecast to increase from $23 billion to $37 billion

LNG is on target to surpass metallurgical coal as Australia’s second-largest export commodity in 2018/19.

However, the rise in LNG is expected to be offset in overall export earning with weakening coal ($11 billion) and iron ore ($9.8 billion) prices.

The report also featured a special focus on battery component commodoities.

“Global battery markets have entered a period of rapid growth in recent years, and the Australian mining industry may be well positioned to capitalise on this growth,” Mr Cully said.

“Australia has the fourth highest reserves in the world of lithium and the fourth highest of cobalt — both of which are battery component commodities.

“However, it is not clear yet how far Australia can progress beyond mining and into other parts of the battery supply chain, which are dominated by China.

“Despite this, the undeveloped state of the supply chain may result in opportunities emerging that are not yet apparent.”

RISE of 25% has been forecast for earnings from Australia’s resources and energy exports in 2016-17.