According to BREE’s September Resources and Energy Quarterly, Australia’s mineral and energy export earnings totalled $A177 billion in 2012-13, down 8% from 2011-12.
Mineral commodities export earnings accounted for 61%, or $107.9 billion.
While volume exports increased for most commodities, BREE blamed weakness in pricing as a result of increasing world supply, resulting in the lower export revenues for local producers.
The flow-on effect of lower commodity prices has been felt among the mining industry the most, with BREE reporting the number of workers in the mining industry in the previous quarter was about 15,900, representing a 5.7% decline year on year.
“This decrease in the mining workforce reflected the cost savings programs many mining companies have been implementing in Australia in response to lower commodity prices,” BREE noted.
While the mining boom has peaked, demand for Australia’s growing LNG and iron ore industry will help Australia’s total export revenues grow at an average annual rate of 7% from between 2013-14 and 2017-18 to $294 billion.
In 2013-14, total export earnings for energy and mineral commodities are forecast to increase a further 11%, with mineral commodity export earnings tipped to jump 20% to $127.7 billion.
Mineral and energy export earnings are expected to total $151 billion and $142 billion respectively in 2017-18.
The growth in bulk commodity export volumes is also complemented by a lower Australian dollar exchange rate, with BREE predicting a more rapid recovery in the US economy and a longer period of lower interest rates could result in an even lower exchange rate.
BREE is predicting the Australian dollar exchange rate will average US86c in 2014-15.
“The outlook for Australia’s mineral and energy exports remains positive,” BREE said.
“Although prices for most commodities are expected to moderate over the outlook period, the projected substantial growth in export volumes for Australia’s key commodities will support growth in export earnings.”
However, BREE said export earnings from mineral commodities would peak in 2014-15, with energy commodity exports tipped to be the principal driver of export earnings.
“LNG exports are projected to increase around 360% over the outlook period as the large investments in new facilities over the past three years start production,” BREE said.
In addition, BREE is forecasting a 25% increase in world LNG prices this year to value $A17.2 billion, compared to a 1% fall in iron ore prices and a hefty 19% decline in metallurgical coal prices, which is expected to put further pressure on coal companies.
With spot prices to iron ore having recovered slightly from the June quarter to average $US122/t in the September quarter, BREE expects the spot price to average $125/t in 2013.
However, BREE warns of the possibility of a stronger price decline in the December quarter as additional supply enters the market.
With iron ore prices surpassing $160/t as recently as 2011, BREE forecast the only way for iron ore to go was down.
“Over the remainder of the outlook period, spot and contract prices are projected to decline year on year to average around $91 a tonne in 2018,” BREE said.
“The decrease in prices is expected in response to substantial increases in seaborne supply from mining projects that are already under construction as well as planned mines that are expected to begin producing in the medium term.”
Australia, which is the world’s largest exporter of iron ore, is projected to retain its dominant position in the market.
Australia’s exports of iron ore are tipped to increase 16% in 2013 to 570 million tonnes.
