The December 2017 edition of the Resources and Energy Quarterly was released today by the Department of Industry, Innovation and Science. The report shows that Australia’s resource and energy export earnings are forecast to reach a record $214 billion in 2017–18, driven by growing LNG and iron ore export volumes. In 2018–19, expected price declines are likely to outweigh continued volume increases, with earnings forecast to decline to $200 billion.
This edition of the Resources and Energy Quarterly also includes a special chapter on Major Resources and Energy Major Projects, which examines the latest developments in the investment pipeline for mining, infrastructure and processing projects over the 12 months to October 2017.
“2018 marks the end of the remarkable resources and energy investment boom of the past decade”, said Chief Economist Mark Cully. “The three remaining large LNG projects—Wheatstone, Ichthys and Prelude—are expected to complete construction. Beyond that, a slight uptick in projects that have been publicly announced or under feasibility points to a bottoming in the investment cycle”, Mr Cully said.
The Resources and Energy Quarterly analyses global economic conditions in the context of Australia’s major resources and energy exports. Global economic growth, industrial production and manufacturing output gathered pace in 2017, indicative of a positive environment for commodity demand. However, the combination of slowing demand growth from China’s steel sector and growing global supplies are expected to lower export unit values over the next two years, weighing down Australia’s resource and energy export earnings.
Despite a subdued outlook for commodity prices, the report notes that Australia is well into the production phase of the mining boom. Australia’s resources and energy export volumes are forecast to continue to grow at a robust pace over the next two years, boosted by solid growth in LNG exports and to a lesser extent, iron ore exports.