Mineral and energy commodity prices will remain high

20th Sep 2011

Buoyed by strong demand from China, mineral and energy prices will remain high in the near future, according to forecasts from the Australian Bureau of Agricultural and Resource Economics and Sciences.

ABARES is holding its annual Outlook conference in Canberra.

Strong growth in China, driven by the growing demand for products such as motor cars and electronics, combined with increasing urbanisation and a booming housing industry. means that the country will be the leader among developing nations in providing a market for Australian commodities.

Export earnings from Australia’s energy and minerals commodities in 2010-11 are forecast to increase by 33 per cent to around $186 billion, driven by forecast higher export prices and volumes for most commodities.

Thermal coal

World thermal coal trade is forecast to grow to 962 million tonnes by 2016, an increase of 4 per cent.

Major importers will be China and India, while Japan, Korea and Europe will remain steady consumers as well.

Australian thermal coal exports will continue to grow, with mine expansion continuing in all producing states.

In 2011-12, Australia’s coal exports are forecast to increase by 9 per cent to 161 million tonnes.

Mine production scheduled to commence in 2011, including Moolarben and Mangoola, will underpin this expansion.

Between 2012-13 and 2015-16, Australia’s thermal coal exports are forecast to grow at an average annual rate of 11 per cent to total 242 million tonnes in 2015-16.

Encouraged by sustained high prices and strong demand, mining companies are expected to invest in expanding capacity.

Coal export earnings are forecast to increase by 24 per cent to $15.1 billion, reflecting higher prices and an increase in exports. In 2011-12, the value of coal exports is forecast to increase by a further 28 per cent to $19.3 billion.

Metallurgical coal
The flooding in Queensland earlier this year has affected coal exports from the state, and ABARES predicts that Queensland’s coal production could be 15 million tonnes lower than previously anticipated. It is estimated that the value of the lost exports could be around $2-2.5 billion.

Iron ore

Again, China will rely on imports of iron ore to feed a growing number of mills being built in the country, and declining domestic reserves.

ABARES predicts that Australia’s exports of iron ore will increase at an annual average of 7 per cent to 2016, driven by new developments, largely in Western Australia.

In 2015-16, iron ore export earnings are projected to reach $68 billion (in 2010-11 dollars), as strong growth in export volumes offsets lower prices.


World gold prices are forecast to rise in the near future, before falling to around $US 973 an ounce in 2013, then rising again to $US 1064 by 2016.

Australian gold production will be boosted by new mine production, mostly in Western Australia.

The value of Australian gold exports is forecast to rise by 15 per cent to $15.0 billion in 2010-11, in response to a significantly higher Australian dollar denominated gold price and the modest increase in export volumes.

In 2011-12, the value of gold exports is forecast to rise by a further 12 per cent to $16.8 billion as the rise in export volumes is partly offset by a lower gold price.

Base metals

Aluminium production in Australia is forecast to remain steady. Aluminium production in Australia increasing slowly, from 1.96 million tonnes in 2010-11 to 2.07 million tonnes in 2015-16. Most Australian production is exported, and new developments in such areas as car construction will account for its use.

Australian exports of aluminium are projected to increase from 1.72 million tonnes in 2010-11 to 1.76 million tonnes in 2015-16.

In 2010-11, Australia’s export earnings from nickel are forecast to increase by 13 per cent to $4.4 billion.

This reflects an increase in export volumes, up 2 per cent to 226,000 tonnes, and prices that are forecast to be 24 per cent higher than in 2009-10. The increase in export volumes is driven largely by higher production from existing operations, including higher production at Western Areas’ Spotted Quoll operation.

Copper production is also expected to rise, with exports of 893,000 tonnes in 2010-2011.

The value of copper exports is projected to reach $11.8 billion in 2012-13, before declining to $9 billion in real terms by 2015-16.

India and China are leading zinc consumers, and in Australia in 2010-11 zinc mine production is forecast to increase by 10 per cent to around
1.50 million tonnes.

At present, about 55 per cent of worldwide LNG capacity under construction is located in Australia.

By 2015-16, Australia’s LNG exports are forecast to increase to 41 million tonnes, an increase of 126 per cent from 2010-11.

Oil exports are forecast to increase by 15 per cent in 2010-11 and by a further 7 per cent in 2011-12 to reach 22 gigalitres.

These forecast increases in exports reflect an assumption that a significant proportion of production from fields in the Bonaparte, Browse and Carnarvon basins will be exported, given their proximity to Asian refineries.

Beyond 2012-13, oil exports are projected to decline to 20 gigalitres by 2015-16. However, the value of Australia’s oil exports is forecast to increase from 2010-11 to 2012-13, reflecting a forecast increase in export volumes and higher expected prices.

By 2012-13 the value of oil exports is forecast to reach $13.6 billion, before declining gradually to $11.7 billion by 2015-16.