PERTH (miningweekly.com) – The Bureau of Resources and Energy Economics (BREE) has downgraded Australia’s resource and export commodity earnings forecast from A$186-billion to A$177-billion for 2012/13 on the back of falling commodity prices.

In the next financial year, however, BREE was forecasting that resources and energy exports would increase by 11%, or some A$20-billion, to reach A$197-billion, as an assumed depreciation of the Australian/US dollar exchange rate provided support for Australian dollar denominated resources.

“Large fluctuations in equity and foreign exchange markets, coupled with weakening sentiment have negatively affected the price of some resource commodities, particularly precious and base metals,” said BREE executive director and chief economist, Professor Quentin Grafton.

“The largest fall was in the price of gold, which declined in value by 12% in one week during April,” Grafton added.

Evidence of softening in the Chinese economy and concerns surrounding the tapering off of the US Federal Reserve's quantitative easing before the end of 2013 also contributed to a more than 10% depreciation of the Australian dollar relative to the March quarter.

Grafton noted that while a depreciating dollar increased the Australian dollar value of resources and energy exports denominated in US dollars, this was more than offset in 2013 by weakening commodity prices.

Overall, Bree predicted that Australian mine production was forecast to increase by 4% in 2013/14, relative 
to 2012/13, primarily owing to a 3% and 5% increase in the output of energy and mining commodities, respectively.

Production of gas, iron-ore and copper were forecast to increase by 20%, 13% and 10%, relative to 2012/13, while production increases in oil of 5% and thermal coal of 3% are projected in 2013/14, relative to 2012/13.

Meanwhile, metal and other mineral exports were forecast to increase by 14% to A$120.2-billion as a result of increased values of iron-ore, alumina and zinc exports. Energy commodity export earnings were forecast to increase by 10% to A$77.7-billion, primarily as a result of forecast increased value of gas, thermal coal, metallurgical coal and oil.

Small decreases in the value of uranium, aluminium and gold export earnings would be more than offset by large gains in alumina, iron-ore, liquefied natural gas (LNG), thermal coal, metallurgical coal and oil, BREE reported.

Over the outlook period, energy and mineral commodity exports were projected to remain robust, largely driven by significant increases in iron-ore, coal and LNG exports.