PERTH (miningweekly.com) – Despite the economic downturn brought about by the Covid-19 pandemic, Australian resource export earnings are set to reach an all-time high in 2019/20, the latest Resources and Energy Quarterly from the Office of the Chief Economist has found.

Australia’s resources and energy export values are estimated at a record A$293-billion in 2019/20, a 4.2% increase on the 2018/19 figures.

The latest export estimate was down from the A$299-billion previously estimated, but was still the largest resource and energy export figure in Australian history, the Office of the Chief Economist said.

The report noted that gold, which is considered a safe haven in uncertain times, is set to be a strong performer, with prices surging to an eight-year high, and export earnings now on track to set a new record, of almost A$32-billion in 2020/21.

Australia’s gold mine production is forecast to reach a peak of 38.1 t in 2021/22 as high prices encourage expansion.

“While normally vulnerable during downturns, iron-ore earnings have been resilient in recent months, with a strong outlook for prices. The Covid-19 pandemic appears to have affected both sides of the iron-ore market: demand disruptions have run up against supply problems localised in Brazil, where Covid-19-related lockdowns have derailed efforts to recover from shutdowns in the wake of the Brumadinho tailings dam collapse. Our earlier forecast for Australian iron-ore export earnings to top A$100-billion in 2019/20 appears to have been achieved,” the report said.

Iron-ore export volumes are forecast to grow from an estimated 852-million tonnes in 2019/20 to 915-million tonnes by 2021/22, reflecting the start of several new mines in Western Australia.

Meanwhile, the report noted that Covid-19 has resulted in sharp price falls for other commodities, notably energy.

“The most significant impacts have fallen on oil producers, with the average Brent crude price expected to plunge by about 40% in 2020. Many oil producers are likely to operate at a loss through much of 2020, with potentially significant implications for the high cost producers.

“Given the huge price swings induced by large changes in demand and supply, we have constructed scenarios to consider the relatively wide range of possibilities going forward,” the report states.

Liquefied natural gas (LNG) prices, which were already in a downward cycle, have declined at an accelerated pace since the Covid-19 outbreak began.

LNG exports are expected to reach an estimated 79-million tonnes in 2019/20 and would edge up to 80-million tonnes by 2021/22 as the rapid expansion of the country’s LNG capacity comes to an end.

LNG export earnings are forecast to decline from an estimated A$47-billion in 2019/20 to A$35-billion in 2020/21, weighted down by low contract and spot prices, before edging up to A$36-billion by 2021/22

Coal prices, which fell sharply in 2019, declined further in the June quarter, and are likely to remain low through the rest of 2020.

Thermal coal exports are forecast to drop from an estimated A$20-billion in 2019/20 to A$16-billion in 2020/21, before a partial recovery to A$17-billion by 2021/22.

Metallurgical coal exports will also fall sharply from an estimated A35-billion in 2019/20, to A$25-billion in 2020/21, but would have a partial recovery to A29-billion in 2021/22.

Meanwhile, the quarterly report noted that base metals have also been significantly impacted, with a sharp fall in vehicle output/sales affecting their outlooks.

Australian copper exports are forecast to rise from 925 000 t in 2019/20 to around 966 000 t in 2021/22, with export earnings expected to steadily lift from an estimated A$9.6-billion to A$9.9-billion in the same period.

The value of aluminium, alumina and bauxite exports are expected to fall by 20% in 2019/20, to nearly A$13-billion, and by 2.8% in 2020/21, to A$12-billion, owing to low prices and declining bauxite export volumes.

After falling from A$1-billion in 2019/20 to A$0.6-billion in 2020/21, Australia’s lithium export earnings are expected to partly recover to A$0.7-billion in 2021/22.

Meanwhile, Australia’s nickel export earnings are forecast to increase on the back of growing export volumes and recovering prices, reaching A$6.8-billion in 2021/22, up from an estimated A$4.3-billion in 2019/20.

“Commodity markets overall remain subject to a combination of lower consumer demand and government-imposed lockdowns, which have set back production schedules. However, an emerging wave of stimulus measures should offer a significant, though unpredictable upside,” the report said.