Weak Aussie dollar pushes mining towards a new export boom
Advertisement

Weak Aussie dollar pushes mining towards a new export boom

A weaker Australian dollar and increasing global demand for coal, oil and LNG has set Australia’s resources on the path to a new export boom.

The Department of Industry, Science and Innovation September resources and energy quarterly has forecast the combination of Australia’s falling dollar and growing energy demand will lift Australia’s export values to about $252 billion in 2018-19, nearly 10 per cent above previous estimates.

Australian exports are now forecast to be 10 per cent higher than previous estimates.

Australian exports are now forecast to be 10 per cent higher than previous estimates.Credit:Glen Campbell

“We now expect Australia’s resources and energy export earnings in 2018-19 to reach a new high of more than a quarter of a trillion dollars,” the Department’s chief economist Mark Cully said.

“Strong world demand and some concerns over supply have helped keep the prices of oil and thermal coal relatively high over the past quarter, boosting the prospects for Australian export earnings over the outlook period.”

Advertisement

Oil is sitting at levels not seen since 2014, recently pushing above $US82 a barrel.

However, exports are expected to decline in 2019-20 to $238 billion in value in 2019-20, just below previous forecasts of $240 billion for the period.

Iron ore remains Australia’s number one export, although it will decline over the next year from $60 billion in value down to $56 billion in value.

LNG is expected to stay relatively flat after a massive spike, leaping from $30 billion in export value in 2017-18 to $48 billion this year, after which it will see a very slight decline to $47 billion in 2019-20.

This is despite growing LNG demand in countries such as China, and new projects coming online such as Inpex’s Ichthys project in the Northern Territory and Woodside’s Wheatstone operation.

Loading

However, ongoing trade tensions between China and the United States, which supplies China with a large proportion of its LNG, could prove a boon to Australian producers, giving them an opportunity to provide LNG to China without the higher tariffs imposed on US goods.

Coking coal, which is used to make steel, is forecast to continue to decline, slipping from $37 billion this year to $31 billion in 2019-20, roughly in line with the falling demand in iron ore.

Thermal coal is facing a reverse, after seeing a massive spike in growth this year.

In 2017-18, it grew in value from $23 billion to $26 billion due to increased demand in China, however, new anti-pollution regulations in the country have seen these demand levels slashed as the country turns to LNG as a power source while Japanese demand has also declined due to increased competition in the country’s energy market.

Thermal coal is expected to decline to around $19 billion in value in 2019-20.

The Department also expects a massive growth in Australian lithium due to an increased demand for its use in electric vehicle battery materials.

“Electric vehicles require large batteries, and rising sales are expected to create huge markets for battery-grade lithium over the coming years,” Mr Cully said.