The Australian Government’s outlook for commodities export earnings has attracted excited analysis as iron ore prices continue to ascend.
The iron ore price jumped as high as $US123.65 ($177.60) a tonne this morning, at a time when Australia has cemented its status as the world’s largest supplier of the commodity during a time of global supply issues.
The Department of Industry, Innovation and Science’s latest Resources and Energy quarterly for the three-month period ending June 30 has shown that commodity earnings were estimated to reach $275 billion in 2018–19 and $285 billion in 2019–20.
Iron ore led the way as Australia’s top resources sector export at $64 billion for 2018–19, while liquefied natural gas (LNG), metallurgical coal and gold also performed well.
Thermal coal, which ranked as the fourth-largest export earner for 2018–19 overall, is expected to slip to fifth place behind gold by 2019–20 and 2020–21.
Minister for Resources and Northern Australia Matt Canavan said exports of iron ore and liquefied natural gas (LNG) helped to provide energy and infrastructure for “hundreds of millions of people” in emerging economies around the world.
“Australia produces more than half of the world’s iron ore and every year exports enough to build 10,000 Sydney Harbour Bridges,” he said.
“Steel produced from Australian ore is building the new wave of global infrastructure, with around half being used for construction, and much of the rest for machinery and motor vehicles.”
The Australian Resources & Energy Group (AMMA) said the forecast highlighted an opportunity for the Morrison Government to implement policies from its National Resources Statement (NRS), a five-point policy plan announced in February this year.
The NRS — which builds on the findings of the Resources 2030 Taskforce chaired by former Queensland Minister for Natural Resources and Mines Andrew Cripps — is set to become Australia’s first long-term reform plan for the resources sector in over 20 years.
“To underpin further industry growth and even greater national contribution, it is critical that industry and government work together on implementing the National Resources Statement during this term of parliament,” AMMA head of policy and public affairs Tom Reid said.
Reid added that employers would be buoyed by the estimate that resources and energy earnings reached $275 billion in 2018–19.
“This record surge of more than 20 per cent shows Australia is now reaping the benefits of the huge levels of investment in major resources and energy projects over the past 15 years,” he said.
“It’s also another reminder of how significantly the resources and energy industry contributes to Australia’s economic well-being and living standards.”
Australian Petroleum Production & Exploration Association (APPEA) chief executive Andrew McConville said the LNG upswing increased its earnings year-on-year by 61 per cent to $18.8 billion in 2018–19, the largest growth spike among all the commodities listed in the report.
“Australia’s LNG projects will deliver decades of economic growth, jobs and exports,” McConville said.
“The billions of dollars invested in these projects has also benefited the domestic market, which is now much larger. The LNG industry is a very large supplier of domestic gas to the east coast gas market.”
McConville also added that LNG was “doing its bit” to address the global challenge of reducing emissions while also growing the Australian economy.