CATERPILLAR’S MARKET CHALLENGES WITH THE DOLLAR AND KOMATSU

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.

Near-Term Outlook

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.

Mining export earnings to keep growing

Additionally, quite a few emerging economies have displayed signs of weakness, and because many are minerals and energy exporters, too, they are also impacted by the drop in commodity prices and higher debt.

Up until recently, China has been the power house behind Australia’s commodities boom. But, despite slower growth, China remains a prominent market for Australia’s minerals. China’s economy is anticipated to plateau. If China’s economy does fall, it is believed it will be a modest decline.

This report highlights the need for Australian miners to become more competitive and lower cost producers. Support sectors assist with this by continuously innovating heavy equipment to ensure it is more durable and fuel efficient, which enhances productivity at mining and construction operations.

Resources and Energy Export Growth Good for Support Companies

This is encouraging news for the entire mining sector, which contributes about 10 per cent to Australia’s entire Gross Domestic Product.

It is also reassuring for the multiple support industries that service the resources companies. There will be an ongoing requirement for innovative, efficiency and reliable earthmoving equipment, parts and attachments.

If your business needs earthmoving equipment, parts attachments, Resolute Equipment offers flexible solutions at the most competitive prices.

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