Mining exports set for $38b slide over next two years

Higher export volumes and a lower exchange rate have helped Australia’s resource and energy exports reach an estimated record $293 billion in 2019–20. But that figure is expected to slide to $263 billion in 2020–21 and $255 billion in 2021–22. The forecasts are contained in the latest Resources and Energy Quarterly report, coming against a backdrop of a sharp weakening in the world economy and consequent commodity price falls as a result of the COVID-19 crisis. Iron ore prices have recovered the losses of the first four months of2020, but coal and base metal prices have declined as falling demand outpaces supply cuts. Looking out to 2022, low prices and Australian dollar gainsare expected to more than offset the higher export volumes. The export earnings forecast for the current financial year was revised down from $299 billion to $293 million (still the largest resource and energy export figure in Australian history). In a forward to the latest report, the Office of the Chief Economist stressed that the forecast exports of about $263 billion next financial year would still represent the third highest total ever. Resource and energy earnings will be almost 50 per cent higher – in real terms – than earned in 2008–09, during the GFC. The ABS Private New Capital Expenditure and Expected Expendituresurvey showed a list in investment by Australia’s mining industry to $8 billion in the March quarter 2020, up 8.8 per cent over the last year. Expenditure across the mining sector as a whole was driven by higherinvestment in machinery and equipment, which was up by 25 per cent overthe year to the March quarter. Forward expectations suggest that mining companies willinvest an estimated $38 billion for the year over 2019–20, up by about 15per cent, with investment in the following year expected to be largelystable. The report identified strong prices for gold, iron ore and other minerals as spurring the investment plans, including the re-opening of mines. However, investment in new greenfield projects remains well below the levels of the previous decade. Exploration spending for all commodities reached $1 billion in the Marchquarter 2020, up 19 per cent on March quarter 2019. Record gold earnings Australia’s gold exports are forecast to reach a record $32 billion in 2020–21, as prices hit an eight-year high due to the COVID-19 pandemic and its impacts. An expected global economic rebound is projected to see the price slide to around $US1510 an ounce in 2022. Australia’s gold mine production is forecast to reach a peak of 381 tonnes in 2021–22, as high prices encourage an expansion in production. The value of Australia’s gold exports is forecast decline to $30 billion in 2021–22, as gold prices ease back. Copper outlook improves Australia can expect a rebound in copper prices to a forecast $US6240 a tonne in 2022, according Resources and Energy Quarterly forecasts. Australia’s copper exports are forecast to rise from an estimated 925,000 tonnes in 2019–20 to around 966,000 tonnes in 2021–22 (in metal content terms), as output from existing mines expands and new mines start. As copper prices and export volumes rise, Australia’s export earnings are forecast to steadily lift, from an estimated $9.6 billion in 2019–20 to $9.9 billion by 2021–22.

Mining exports set for $38b slide over next two years

Industry Queensland

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