(EnergyAsia, October 4 2012, Thursday) — As a result of weaker commodity prices, Australia’s resources and energy commodity export earnings are expected to decline 2% to A$189 billion for the year to June 30 2013, according to the Bureau of Resources and Energy Economics (BREE).
The sector’s export earnings hit a record high of A$193 billion in the previous 2011-12 year, according to BREE’s Resources and Energy Quarterly report issued last month. (US$1=A$0.97).
“The latest forecasts of volumes and prices show two distinct trends. First, the prices of many resources have moderated from historic highs in 2011 and further declines are expected over the medium term in US$ terms relative to these peaks,” said Quentin Grafton, BREE’s executive director and chief economist.
“Second, Australian export volumes, especially in terms of bulk commodities, are growing rapidly and are expected to do so for several years to come.”
Energy earnings are forecast to grow by 4% to A$81 billion, with strong increases from the sale of liquefied natural gas (up 36% to A$16.3 billion) and thermal coal (up 11% to A$19 billion) offsetting a projected 15% decrease in metallurgical coal earnings to A$26 billion).
Mineral commodity export earnings are forecast to decrease 6% to A$108 billion due mostly to weakness in the export value of iron ore (down 16% to A$53 billion), aluminium (down 18% to A$3.1 billion), nickel (down 14% to A$3.5 billion) and zinc (down 1% to A$2.3 billion).
BREE expects energy products to show the largest increases in export volumes, led by LNG (21%), thermal coal (14%) and metallurgical coal (12%).
Australia’s LNG exports for the rest of this financial year will be boosted by the Pluto project in Western Australia state, which will increase the country’s annual LNG capacity from 20 million tonnes to over 24 million tonnes.
“This forecast, as emphasised in the macroeconomic outlook, is based on assumed improvements in world, OECD and Chinese economic growth in 2013 and the assumption that the Australian dollar will remain close to parity with the US dollar in 2013,” said Professor Grafton.
According to BREE, the mining and energy sector has contributed around 7% a year to Australia’s total GDP, and about 2% of total employment over the last three years. Energy accounts for about 40% of the sector’s export earnings, while mining has the larger share.
In 2010–11, the gross value added produced from mining activities was essentially unchanged from the previous year at around A$100 billion (in 2011–12 dollars).