Resources and energy export earnings set to reach and remain at all-time high

7 April 2017

Australia’s resource and energy export earnings for 2016–17 are forecast to reach a record high of $215 billion and are expected to remain at this level in 2017–18.

The Resources and Energy Quarterly – March Quarter 2017 (annual five-year outlook edition), released today by the Department of Industry, Innovation and Science, forecasts a 32 per cent increase in earnings in 2016–17.

The report shows this increase will largely be driven by price increases in iron ore and metallurgical coal, Australia’s current top two resources and energy commodity exports, coupled with the impact of high LNG export volumes.

Price spikes in metallurgical coal and iron ore in 2016–17 have been pushed by a resurgence of China’s steel sector, as well as by temporary supply disruptions.

However, Mr Cully said the price gains were not expected to last in the medium term.

Production of steel in China is expected to decline over the next five years, as construction activity slows, particularly in the residential sector. This will affect metallurgical coal and iron ore prices over the outlook period.

As prices decline beyond 2016–17, the value of Australia’s resources and energy exports are projected to remain well 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 export volumes will continue to rise for iron ore, base metals, and coal over the next two years, but the most important source of growth will be LNG.

“Australia’s LNG export volumes, which grew by nearly 50 per cent in 2015–16, are forecast to double in the next three years, as new production capacity comes fully online,” Mr Cully said.

The report shows that global demand for resource and energy commodities will continue to grow over the next five years, but at a markedly slower rate than in the previous five years. However, with reserves of high-energy coal and high-grade iron ore, demand for Australia’s resources are expected to remain strong, as China moves away from using (and producing) low-energy coal and low-grade iron ore to limit air pollution in some of its large cities.

For more information and to access the report, visit www.industry.gov.au/oce

Media contacts: Department of Industry, Innovation and Science media 02 6213 6308, media@industry.gov.au

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