Australia’s mineral and energy exports will rise at a slower pace of 4.6% to $208.32 billion Australian in 2012-13, as demand for commodities slows in Asia and in China in particular.
That will be after an 11% rise in the year to June 30 this year to A$199.17 billion, according to forecasts issued by the Bureau of Resources and Energy Economics in its Resources and Energy Quarterly publication out yesterday.
While volumes of coal and iron ore and other commodities (such as LNG) will rise, the increases will be slower than seen in previous years (Except 2011 when coal and iron ore exports were hit by cyclones and floods).
But prices will fall for iron ore, metallurgical (coking) and thermal coal in coming years as demand slows and supplies expand.
Iron ore prices will be down 8% this year, coal and metals prices will lose 6%.
"Over the medium term, the outlook for energy and minerals commodity exports remains robust," the Bureau said.
By 2016-17, the Bureau sees Australia’s resources and energy commodity export earnings reaching a record $225 billion (in 2011–12 dollars).
In all export revenues are expected to top $1 trillion over the next five years, according to yesterday’s report.
The growth in resources and energy export earnings over the next five years will be "underpinned by increases in export earnings for most commodities, including LNG, iron ore and thermal coal," according to the Bureau
"Despite projections of lower commodity prices relative to 2010–11 over the medium term, increased resources and energy export earnings are projected to be underpinned by substantially greater export volumes for most commodities," said Professor Grafton, BREE’s Executive Director and Chief Economist, in a statement.
A large proportion of increases in export earnings are expected to come from LNG, with eight projects (including the almost complete Pluto project) under construction.
Export volumes are forecast to increase from 20 million tonnes on LNG in the year to June 2012 to over 60 million tonnes in 2016–17, while export earnings for LNG are also forecast to treble over the same period to $30 billion.
"The growth in Australia’s LNG industry over the next five years is underpinned by over $175 billion worth of investment to expand capacity in Western Australia, Queensland and the Northern Territory,’ said Professor Grafton.
Between 2011–12 and 2016–17 export volumes are forecast to increase for iron ore (62%), metallurgical coal (47%), thermal coal (65%), copper ores and concentrates (77%) and alumina (29%).
‘The increase in Australia’s export volumes for most commodities reflects commitments by the industry to increase production and expand infrastructure capacity over the medium term,’ said Professor Grafton.
In 2010–11 the overall index of Australian mine production increased by 5% compared with 2009–10.
This includes a 13% increase in metals and other minerals production that was offset by a 3% fall in the production of energy commodities, primarily coal due to flooding in Queensland.
Total Australian mine production is forecast to increase by 6% in 2011–12, relative to 2010–11, primarily due to a 7% increase in the output of energy commodities, particularly thermal and metallurgical coal.
Another contributing factor to this growth will be a forecast 6% increase in the production of metals and other minerals, underpinned by rising iron ore, nickel and zinc production.
"Export earnings from energy and minerals commodity exports increased by 25% in real terms (in 2011–12 dollars) between 2009–10 and 2010–11, reaching $185 billion in 2010–11," the Bureau forecasts.
"Of this total, export earnings from minerals commodities contributed $113 billion, accounting for about 61 per cent of the total.
"Export earnings from energy commodities accounted for a smaller share, 39 per cent, and contributed approximately $72 billion in real terms to the total value of Australian energy and minerals exports."
In 2011–12, the total export earnings for energy and mineral commodities are forecast to increase by 8% to $199 billion supported by increases in the export values for both energy and mineral commodities.
The Bureau says energy commodity export earnings are forecast to grow by 7% to $77 billion (in 2011–12 dollars) as a result of strong increases in export earnings from thermal coal (up 28% to $17.8 billion), LNG (up 13% to $12 billion), oil (up 7% to $12.6 billion) and metallurgical coal (up 4% to $31 billion).
Mineral commodity export earnings are forecast to increase by 8% to $122 billion as a result of increases in the export values of gold (up 33% to $17.3 billion), alumina (up 14% to $6 billion), copper (up 7% to $9 billion) and iron ore (up 2% to $59.7 billion).
Partially offsetting the increased export earnings for mineral commodities will be lower forecast export earnings for aluminium (down 9% to $3.8 billion) and zinc (down 8% to $2.2 billion).
Amid the welter of fresh views and data on the outlook for commodities, BREE looked at iron ore which was in the news this week with the market overreaction to the statement from a senior BHP executive that growth in China’s demand was "flattening".
BREE is much more confident about the outlook than a lot of people.
Australia’s iron ore and metallurgical coal export volumes are projected to increase at a
