It may be recent history but production and value figures for Australian mineral exports for the December quarter and 2007 show just how lucky a country we are.
Higher oil prices helped push up the value of mineral output and exports in the December quarter, while lower metal prices and those continuing constraints on coal production, transport and export restricted the ability of the coal industry to exploit boom-like conditions.
But the big factor was the strength of the Aussie dollar compared to both the December quarter of 2006 and 2006 as a whole.
And just when we looked to be losing the oomph from the resources boom, along comes an iron ore boom as there is an ungainly rush by Japanese, Chinese and Korean steel companies to grab output at virtually any price.
Then snowstorms, the worst in 50 years, cripple China, forcing it to ban coal exports, which in turn sends the cost of spot coal deals for thermal and the various grades of steel making coal through the rough: more than doubled in some cases, with talk of price rises above 150%.
And despite a continuing strong Australian dollar in January and February, the US-induced credit crisis, subprime mess and slowing economy forces the US Federal Reserve to slash interest rates, inject liquidity and this kicks the US dollar higher.
So much so that oil, copper and gold and some agriculturals like wheat and corn look like they have been underwritten by the sinking US dollar.
So Australia escapes again, and the Australian Bureau of Agricultural and Resource Economics ABARE brings out a forecast for a rosy 33% increase commodity export income, with big rises for oil and gas, and for the likes of coal, iron ore and copper.
This week, ABARE published the 2007 figures, which show how close we came to seeing the boom stalling.
ABARE said that in the December quarter 2007, the index of export prices of Australian mineral resources (export unit returns) increased by nearly 2% compared with the September quarter 2007.
Prices for energy minerals rose by around 3%, primarily because of higher oil prices.
Prices for metals and other minerals increased by 0.3% as higher gold and silver prices were offset by declines in prices for most base metals.
Compared with the December quarter 2006, the December quarter 2007 index was nearly 4%, with higher prices for energy commodities (up 0.1% year on year), more than offset by a decline in prices for metals and other minerals (down nearly 6% year on year).
Prices for metals and other minerals have declined relative to the December quarter 2006 as a result of global supply increases and uncertainty surrounding the outlook for the US economy.
The stronger Australian dollar also contributed to the overall fall in Australia’s export unit returns.
This all left total earnings from Australia’s mineral resources exports down slightly to $26.7 billion in the December quarter 2007, a decrease of $34 million or 0.1% compared with the previous quarter.
ABARE said that contributing to the fall in export earnings was the negative effect of a stronger Australian dollar, weaker metals and other minerals prices and falls in volumes for some commodities.
This helps explain the indifferent trade and current account performance in the quarter which detracted 0.8% from Gross Domestic Product.
ABARE said the commodities that recorded significant increases in export earnings were: crude oil, up $305 million (14%) to $2539 million; LNG, up $257 million (22%) to $1430 million; lead, up $184 million (35%) to $709 million; iron ore and pellets, up $132 million (3%) to $4284 million; thermal coal, up $97 million (6%) to $1791 million; and manganese ore, up $49 million (23%) to $258 million.
The higher earnings reflect both higher export volumes and prices for these commodities.
The commodities that saw significant declines in export earnings in the December quarter 2007 were: refined gold, down $228 million (8%) to $2501 million; aluminium, down $222 million (16%) to $1168 million; copper, down $196 million (12%) to $1477 million; zinc, down $186 million (16%) to $954 million; nickel, down $142 million (10%) to $1353 million; and metallurgical coal, down $44 million (1%) to $3313 million.
ABARE said the fall in the value of gold exports reflects lower volumes shipped, while the fall in the value of aluminium, copper and nickel exports is a result of lower export volumes (total metal content in ores, concentrates and refined metal) and lower prices received.
The decline in zinc and metallurgical coal exports was driven largely by lower prices received.
Production results were higher in the December quarter, with nearly two thirds of Australia’s major minerals and energy commodities increasing production from the previous quarter.
There were production increases for tin ores and concentrate (41%), blister copper (35%), refined copper (32%), diamonds (23%), refined gold (19%), copper ores and concentrate (19%), uranium oxide (18%), refined lead (16%), rutile concentrate (14%), iron ore (10%) and zinc ores and concentrate (9%).
Higher tin production was the result of improved performance and higher metal grades at Metals X’s Collingwood tin mine.
The increase in blister copper production was the result of record production from Olympic Dam in the December quarter. Refined copper production increased because of higher production from the Townsville copper refinery and Olympic Dam. The commencement of production at the Lady Annie SX–EW (solvent extraction–electrowinning) project also contributed to higher refined copper output.
The increase in diamond production reflected hi
