Improved commodity prices are expected to push the value of Australia’s mining and energy exports to a record in 2016-17, according to the Department of Industry, Innovation and Science.
In its latest resources and energy report, Department chief economist Mark Cully said higher prices for steel-making raw materials and thermal coal, as well as increased liquefied natural gas (LNG) export volumes, are expected to see Australian earnings increase by 30 per cent to a record $204 billion in the current financial year.
“Continued growth in demand from China’s steel sector, as well as disruptions to the supply of a number of resource commodities, have boosted prices,” Cully said.
“The world economy appears to be picking up speed. At the same time, significant investment in Australia’s productive capacity has supported strong growth in LNG export volumes.”
However, the report outlines that the higher prices are not expected to last, while the combination of slowing demand growth from China’s steel sector and increased global supplies look like lowering export values slightly in 2017-18.
The report also stated that the production phase of the mining boom would continue, with exports volumes forecast to increase in each of Australia’s top five mining and energy commodities in 2017-18.
LNG is expected to be the standout of these commodities following significant investment in several mega projects around the country over the past decade. LNG export earnings are forecast to increase by 124 per cent, from $17 billion in 2015-16 to $37 billion in 2017-18.
Despite higher commodity prices, the Department anticipates that a cautious approach to mining and energy investment will continue.
“Expectations of challenging operating and market conditions have resulted in delays to final investment decisions for many projects, as producers divert their focus to reducing costs and ensuring the commercial viability of existing assets,” Cully explained.
“Nevertheless, the overall prospects and opportunities for further investment in Australia’s resources and energy sector remain broadly positive. Australia has many high quality mineral and petroleum deposits, which can be developed when the price cycle rebounds.”
Visit www.industry.gov.au/oce to download the report.