Australia’s annual mining and energy exports set to shrink $79b by 2030
Australia’s resources boom is about to end as official forecasts point to a sharp drop in export revenue over the coming years.
Australia’s resources boom is about to end as official forecasts point to a sharp drop in export revenue over the coming years, driven largely by falling WA iron ore and gas earnings.
The Department of Industry, Science and Resources’ (DISR) latest quarterly commodities forecast paints a gloomy picture for the nation’s most lucrative sector in the medium to long-term.
Mining and energy export earnings are expected to rise $19 billion in the current financial year to $422b, but will then tumble over the next four years, falling to $343b in inflation-adjusted terms for FY2031.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.Iron ore and liquefied natural gas (LNG) — both produced in greater volumes in WA than in all other Australian states and territories combined — are expected to be the biggest losers.
Iron ore is Australia’s biggest export earner, generating $119b of income for the recent financial year. That is expected to fall by more than a quarter to $87b in FY2031.
Weaker projected prices for the steel-making ingredient due to slowing economic growth in China and rising iron ore supply from Africa were the key factors behind the projected earnings decline.
“Since 2021, iron ore prices have been falling, reflecting growing global supply and weaker Chinese demand (China imports 75 per cent of global seaborne iron ore supply), and this is forecast to continue,” DISR warned.
The emergence of China Mineral Resources Group — a procurement agency created by Beijing to consolidate the purchasing power of China’s steel mills — could also add to the price pain, the government department warned.
“Recent media reports on negotiations and supply agreements between China Mineral Resources and various iron ore miners underscore CMRG’s growing presence in the seaborne iron ore market,” DISR said.
“This could represent a shift in market structure, with potential implications for commercial negotiations and price discovery.”
WA’s LNG producers, meanwhile, are currently experiencing a pricing windfall.
An unseasonal heatwave in India, Bangladesh, Thailand, Vietnam and the Philippines caused a demand spike during the September quarter.
“These countries are typically price-sensitive but have been managing unusually high demand for gas-fired cooling at the household level since August,” DISR said.
Meanwhile, war in the Middle East has hit global supplies, putting more upwards pressure on prices.
LNG facilities across the Gulf states were damaged earlier this year in the tit-fo-tat between Iran and the United States-Israel alliance.
LNG earnings are expected to rise this financial year by $14b to $70b but DISR believes the gravy train will soon be over.
“As Middle East supply and trade conditions normalise, export values are projected to decline to $42b (in real terms) by 2030–31,” it said.
LNG spot prices will more than halve over the next five years, according to the forecast, as US supply grows and Qatari output recovers.
Originally published on The Nightly
