Australia's export earnings from natural resources dropped by roughly 10% over 2023-24 and are forecast to fall further in the coming year, according to the June quarter Resource and Energy Quarterly, released on Monday.
Lower prices for iron ore and coal, as well as some renewables, will be the culprits, along with expectations for a rise in the value of the Australian dollar.
In its regular quarterly report, the federal government’s Department of Industry estimated export earnings from minerals and energy totaled A$417 billion in the year to June, down from a record A$466 billion in 2022-23 (thanks to the Russian invasion of Ukraine in February 2022, which sent commodity prices soaring).
The outcome for 2022-23 of A$466 billion was A$6 billion above the June 2023 estimate of A$460 billion.
The June 2023 estimate for 2023-24 was originally A$390 billion, A$27 billion under the likely outcome.
It forecast export earnings to fall to about A$380 billion in 2024-25, which the survey says is a bit better than previously expected.
A further modest decline to A$356 billion is forecast in 2025-26, as prices start to bottom out, the survey said.
"The near-term outlook for Australian resource and energy commodity exports has improved slightly in net terms since the March 2024 Quarterly," the survey said.
"Major economies have seen a modest uptick in economic activity, and the outlook is for an improvement in world economic growth in 2025 once monetary policy becomes less restrictive in major Western economies."
"Nickel and lithium prices have managed to make modest recoveries as global supply is wound back closer to demand.
"Gold has hit a new record high since the March quarter of 2024, and iron ore prices have steadied as the Chinese government adopts substantive measures to support the real estate sector."
But the report has a cautionary warning about US politics.
It cautions that the outcome of the US election between Trump and Joe Biden would impact demand for producers of critical metals.
“The pace of US adoption of electric vehicles and renewable energy technologies… could change depending on the outcome of the US presidential election in November, with significant implications for the demand for Australian critical minerals in the short term,” it warns.
Australia has major reserves of minerals such as copper, cobalt, lithium, nickel, and rare earth elements, which the world will need in far greater quantities to build renewable energy infrastructure, batteries, and electric vehicles.
