Australia’s resources sector on track to set record export earnings
New data has shown that Australia is on track to set a record for resources and energy exports in 2022-23 – however, dark clouds are forming over the next few years for some of our major earners.
In releasing the latest edition of the Resources and Energy Quarterly, the Federal Minister for Resources and Northern Australia, Madeleine King, said the resources sector continues to power the nation’s economy.
She said the Department of Industry, Science and Resources June quarter publication has estimated that Australia’s resources and energy exports will have earned a record $459 billion in the past financial year.
The current edition of the report identified that the impact of Russia’s invasion of Ukraine and a stronger US dollar has played key roles in the strong export earnings performance.
Critical minerals powering ahead
Of particular note in the report’s findings was the performance of critical minerals and base metals which are estimated to have posted record earnings of $46 billion for 2022-23.
As the world’s leading lithium producer, the value of Australia’s lithium exports in 2022-23 almost quadrupled from the previous financial year, to over $19 billion in 2022-23.
Australian mining powering the nation
Minister King said the latest Resources and Energy Quarterly highlights the Government’s critical minerals sector support.
“The road to net zero runs through the resources sector. Australia is well positioned to supply long-term demand for base metals and critical minerals such as lithium, which are crucial components of clean-energy technologies such as batteries, solar panels and wind turbines,” the Minister said.
“The latest Resources and Energy Quarterly underlines the Government’s plan to support the development of our critical minerals sector, to make Australia a clean-energy superpower and to help Australia and our trading partners meet commitments to lower emissions.”
Earnings to decline in near future
However, both overall export and critical and base metal earnings are tipped to decline in 2023-24 and 2024-25.
In total Australia’s resource industry export earnings are tipped to decline to $394 billion in 2023-24 and then to $346 billion in 2024-25 due to a forecast decline in commodity prices, while critical mineral returns will fall modestly over the same periods as lower prices more than offset the impact of higher volumes.
The value of Australia’s lithium exports are forecast to slide down to around $15 billion in 2024-25 as prices moderate.
While the report highlights a number of current export success stories it also forecasts lower prices for Australia’s major export commodities of iron ore, LNG, and coal over the next two years, as global markets rebalance.
Data provided by the Office of Australia’s chief economist, found that iron ore spot prices slid in the June quarter. This related to a slowdown in global economic growth and an easing in the rate of recovery of Chinese steel production.
Iron ore and LNG prices tipped for strong decline
The latest Resources and Energy Quarterly has tipped a significant decline in returns from many of Australia’s major export earners.
The quarterly report forecast that iron ore export earnings may decline from $123 billion in 2022-23 to $113 billion in 2023-24 and $95 billion in 2024-25.
Due to warmer than normal temperatures during the Northern Hemisphere winter, LNG prices were assessed to have stabilised over the June quarter, with the quarterly report predicting the value of Australian LNG exports will drop from around $92 billion in 2022-23 to $70 billion in 2023-24 and $60 billion by 2024-25.
Australia’s metallurgical coal exports are forecast to fall from an estimated $60 billion in 2022-23 to $42 billion in 2024-25, while the value of thermal coal, used to produce electricity, is forecast to fall from a peak above $64 billion in 2022-23 to around $30 billion by 2024-25.