A recent government report has revealed Australia’s mining and energy export earnings are forecast to grow 30 per cent by 2021.
The Department of Industry, Innovation and Sciences published the report Resources and Energy Quarterly in early April, which shows a positive outlook for Australia’s mining and energy exports in the medium-to-longer term.
According to the report, Asia will propel the growth with continuing urbanisation, manufacturing development and infrastructure investment creating ongoing demand for Australia’s minerals, particularly, coal and iron ore.
Although the longer-term outlook is encouraging, Department of Industry, Innovation and Science chief economist Mark Cully said the forecast for most commodities during 2016 is subdued, with many prices predicted to fall below 2014-2015 levels.
Cully stated the challenging conditions are likely to continue for the next few years, but Australian producers need to adapt to the volatility by reducing costs and boosting efficiency.
Additional supply capacity, particularly within iron ore and energy, will also impel producers to remain more competitive.
Mineral and Energy Export Earnings
Australian earnings from resources and energy exports are projected to fall 7 per cent from 2014-2015 to $160 billion in 2015-2016. However, prices are expected to rise again, but much more moderately at annual average of 3 per cent to $208 billion by 2020-2021 (in 2015-2016 dollar terms).
Of the $208 billion, iron ore is expected to earn Australia more than $70 billion in export earnings by 2020-2021, with LNG the second largest earner at $42 billion and metallurgical and thermal coal exports expected to reap a combined $33 billion.
There are several issues that could arise to stunt this anticipated growth, including ongoing economic and geopolitical uncertainty.