Mining earnings down $6 billion

 

A leading authority on the resource industry says mining exports have crashed by $6 billion on the back of a volatile iron ore market

The Bureau of Resources and Energy Economics delivered its quarterly  industry report today, stating that export earnings are forecast to decline to $186 billion in 2012–13, a 3 per cent decline.

The report stated that the high Australian dollar and volatile commodity prices were to blame for the fall.

‘Iron ore prices, which have been particularly volatile over the last six months, are one of the main drivers of the lower export values,” said the bureau’s director and chief economist Quentin Grafton.

The report predicts that while export volumes would increase, Australia’s export earnings from mineral commodities are expected to peak  in 2014-15.

Export volumes of iron ore, thermal coal and metallurgical coal are projected to rise at average annual rates of 10 per cent, 11 per cent and 7 per cent, respectively.

“…the real value of mineral exports in Australian dollars is expected to peak in 2014-15 at around $123 billion," said Grafton.

“The assumed continuation of a high-valued Australian dollar and a fall in the US$ price of iron ore over the outlook period are the principal causes of this dip in the real export values of minerals from 2014-15.”

LNG is projected to be the main source of export growth, increasing from 19 million tonnes in 2011-12 to 88 million tonnes in 2017-18 as a result of huge investments in LNG production in Australia.

LNG export earnings are expected to increase from $12 billion in 2011-12 to around $61 billion in 2017-18 to be Australia’s second highest export earner, second only to iron ore.

In a sign that major companies are trying to stem the loss from falling prices, both Rio Tinto and Xstrata have scaled back operations on several coal projects over the last six months with news this week that both companies are cutting workers.

100 fixed-contract positions were cut from Rio’s Clermont coal mine, while the closure of an office in Brisbane will see 100 Xstrata workers go.

Earlier this week, global banker Goldman Sachs cut its iron ore price forecast estimates.

The company expects demand for the bulk commodity will level and steel production in China will slow.

Goldman analysts Christian Lelong and Jeffrey Currie wrote in a report that iron ore may average $US139 a metric ton, compared with a previous estimate of $US144.

 

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