Australia’s resource and energy export earnings in 2016–17 are estimated to have reached $205 billion and are forecast to decline marginally in 2017–18 to $202 billion, and decline to $200 billion in 2018–19.
The June 2017 edition of the Resources and Energy Quarterly, released today by the Department of Industry, Innovation and Science, estimates a 25 per cent increase in earnings in 2016–17.
The report shows this increase was largely driven by price increases in iron ore and metallurgical coal, Australia’s current top two resources and energy commodity exports.
Price spikes in metallurgical coal and iron ore in 2016–17 were aided by capacity cuts in coal, a resurgence of China’s steel sector, as well as by temporary supply disruptions.
Mark Cully, Chief Economist at the Department of Industry, Innovation and Science, said the price gains were not expected to last over the next two years.
“Global resource and energy commodity demand growth—particularly for steel making commodities—is expected to slow in the next two years, driven largely by a slowdown in infrastructure spending and construction activity in China. Lower demand growth is expected to adversely affect iron ore and metallurgical coal prices”, Mr Cully said.
As prices decline beyond 2016–17, the value of Australia’s resources and energy exports are projected to remain above pre-mining boom levels. This will be thanks to the continuation of the production phase of the mining boom—which is not expected to peak until late 2019.
The report forecasts that growing LNG export volumes are expected to offset declining prices in other commodities, constraining declines in export values over the next two years.
“In the next two years, LNG is forecast to add $14 billion to Australia’s resources and energy exports,” Mr Cully said.