Resource and energy exports are on track to reach a new record level of $230 billion in 2017-18 and earn a trillion dollars for Australia in the next five years.
The March 2018 Resources and Energy Quarterly released yesterday by the department of industry, innovation and science mentions higher iron ore and coal prices and rapidly growing LNG export volumes bolstering resources and energy export earnings.
The March edition of Resources and Energy Quarterly provides extended five-year projections for key macro-economic measures, as well as commodity prices, supply, consumption, and Australian production and exports.
The report projects export earnings to decline slightly from current levels, before levelling out at about $212 billion to $216 billion from 2019–20 onwards. In total, the next five years will deliver more than $1 trillion in resources and energy export income.
“This compares with average annual export earnings of $72 billion in the decade prior to the onset of the resources boom, validating our long-held view that the mining boom would continue to reap dividends long after the price peak in 2011,” Mark Cully, chief economist, department of industry, innovation and science, wrote in the foreword to the report.
Over the next few years, the prices of some of Australia’s large resource and energy exports are expected to decline. Prices for both iron ore and metallurgical coal — Australia’s two largest resource and energy exports — are expected to be weighed down by increasing supply and declining steel production in China.
The price of Australian LNG, set by the oil price, is expected to increase modestly, constrained by price-sensitive shale oil production in the United States and sluggish growth in world oil consumption.
Meanwhile, the ramp up in export volumes — driven by the mining investment boom — is expected to have run its course by the turn of the decade.
The last of Australia’s LNG projects is scheduled for completion by the end of the year, while growth in iron ore export volumes will slow from 2018–19.
The story is similar for other key resource and energy export commodities including coal, gold and several base metals. In this sense, 2020 will mark the end of the remarkable growth phase of the Australian resources and energy sector.