RESOURCES AND ENERGY exports will create record revenues for Australia in 2017-18, despite an overall decline in commodity prices, according to the Australian Government’s latest Resources and Energy Quarterly analysis.
The Office of the Chief Economist’s December 2017 report reveals resources and energy export earnings are forecast to reach $214 billion in 2017-18, driven by growing LNG and iron ore export volumes.
This outlook has been revised up by $3.3bn (1.6 per cent) since the September forecast, primarily reflecting the higher than estimated iron ore, thermal coal and metallurgical coal prices.
However, export values are expected to decline by 6.7 per cent by 2018-19, as an overall 12 per cent drop in prices is forecast to more than offset a solid 5.8 per cent rise in export volumes.
“Growing LNG export volumes, attributed to the completion of three remaining LNG projects currently under construction – Wheatstone, Ichthys and Prelude – will underpin growth in LNG export earnings out to 2018-19, while declining iron ore and coal prices are expected to drive the forecast decline in overall resources and export earnings” Chief Economist Mark Cully said.
“Continued moderation in Chinese steel production, coupled with increased supplies from both Australia and Brazil, are expected to weigh further on iron ore prices over the next two years.
“Coal prices – both thermal and metallurgical – are also forecast to weigh heavily on Australia’s export earnings in the next two years, due to rising global supply and moderating demand.”
Overall exploration expenditure has continued to decline, however a rise in minerals exploration has contributed to an increase in the value of projects at the publicly announced stage.
After five years of decline, the value of projects at the publicly announced stage picked up over the past 12 months to October, rising by almost $10bn to $66bn.
This was driven in part by rising prices for commodities such as zinc and lithium, which have encouraged some fast-tracking and increased exploration for those minerals over the past 12 months with infrastructure project announcements expected to boost Australia’s export capacity from the 2020s.
Responding to the report, Minister for Resources and Northern Australia Matt Canavan said the figures showed the value of the resources sector to the Australian economy.
“In 2016-2017 mining accounted for 6.9 per cent of Australia’s GDP,” Minister Canavan said.
“The mining industry benefits regional communities through job creation and local investment, it is also a significant contributor to the wealth of the nation.
“Our resources sector continues to lay the foundation for the Australian economy. But we can’t take this for granted. It’s important that we plan for the future through new investments and new mines, across Australia’s range of commodities.”
AREEA’s policy and development ensuring the Australian resources and energy industry is an attractive place for future investment and employment. Members can contribute to our policy development via [email protected]
Click here to view the December 2017 Resources and Energy Quarterly report.
