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PERTH (miningweekly.com) – Australia’s resources and energy export earnings are expected to reach a record A$230-billion in 2017/18, as liquefied natural gas (LNG) exports increased.
The Department of Industry, Innovation and Science has reported in the March 2018 edition of the Resources and Energy Quarterly that LNG is expected to make the largest contribution to growth in overall export earnings in 2017/18, driven by higher export volumes and higher prices.
The real value of Australia’s LNG exports is forecast to increase from A$23-billion in 2016/17 to A$39-billion in 2022/23, and LNG is expected to overtake metallurgical coal as Australia’s second-largest resource and energy export in 2018/19.
LNG export volumes are forecast to reach 79-million tonnes in 2022/23, up from the 52-million tonnes exported in 2016/17, with the quarterly report noting that the higher export volumes will be driven by the completion of the Wheatstone, Ichthys and Prelude projects.
The completion of these three projects will bring the combined nameplate capacity of Australia’s LNG projects to 88-million tonnes a year.
Thermal and metallurgical coal will also make major contributions to growth in export earnings.
Australia’s thermal coal export earnings are forecast to hit a record A$22.9-billion in 2017/18, before declining to A$17.1-billion in 2022/23, while metallurgical coal export earnings will reach nearly A$40-billion in 2017/18, before declining.
The quarterly report notes that coal prices have rallied over the past few quarters, owing to Chinese output and capacity cuts, weather events in Australia and the US restricting metallurgical coal production.
Also propelling the value of Australia’s resources and energy exports higher in 2017/18 will be iron-ore’s continued price strength, coupled with growing export volumes. Furthermore, the recovery in oil prices, the ramp up in condensate exports from new LNG projects, as well as a mini-rally in base metals prices will also increase export values.
Australia’s iron-ore export earnings grew by 16% to A$63-billion in 2017, driven by higher prices and growth in export volumes, which increased by 2.5% to 828-million tonnes.
However, export earnings from iron-ore are expected to decrease by A$55-billion in 2022/23, as a result of projected decline in prices as a result of falling steel production in China and a well-supplied seaborne market.
Despite export earnings reaching record levels in 2017/18, the Department of Industry, Innovation and Science has predicted that commodity prices would decline from 2018/19, with falls in iron-ore and metallurgical coal prices having the largest impact on projected export earnings.
Australia’s resources and energy export earnings are projected to level out at between A$213-billion and A$216-billion from 2019/20 onwards.