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Energy and battery minerals driving Australian exports to record levels

Image shows operations at Port Hedland

Photo by Bloomberg

4th October 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Australia’s resources and energy exports are forecast to reach a record A$450-billion in 2022/23, with the export of battery metals, including copper, nickel and lithium, expected to more than double on the 2020/21 earnings.

In the latest Resources and Energy Quarterly, the Office of the Chief Economist has forecast that the current surge in resource and energy export earnings has been driven by a spike in energy prices and the Australian dollar weakness against the US dollar.

Gas, liquefied natural gas (LNG) and thermal coal prices are at record levels, as northern hemisphere nations try to build stockpiles ahead of winter. Drought in large parts of Western Europe, the US and southern China has exacerbated energy shortages, the report stated.

High energy prices have caused the curtailment of energy-intensive metal smelting/refining, especially in Western Europe. These output cuts have partly offset the impact of weaker metal demand.

Despite weaker export volumes, earnings from LNG are forecast to be A$90-billion in 2022/23, and thermal and metallurgical coal should both earn over A$57-billion. This is two to three times higher than in 2020/21, when the Covid-19 pandemic saw energy prices dip sharply. Earnings from these commodities are likely to fall back towards pre-Covid-19 levels after 2023/24, as supply improves.

Australia’s LNG export volumes are forecast to ease and stabilise at around 81-million tonnes through to 2024, after reaching 83-million tonnes in 2021/22. Meanwhile, higher production in New South Wales and Queensland is expected to push up Australia’s metallurgical coal exports, from 171-million tonnes in 2020/21 to 180-million tonnes by 2023/24.

A resolution of recent supply disruptions is expected to see Australian thermal coal exports increase from 192-million tonnes in 2020/21 to 203-million tonnes by the end of the forecast period.

Minister for Resources and Northern Australia Madeleine King said the strong export revenue driven by the resources sector is supporting Australia’s economy and providing a welcome boost to government revenue ahead of the October budget.

“The Resources and Energy Quarterly report for the September quarter 2022 underlines the importance of the sector for Australia’s ongoing economic wellbeing, and shows the outlook for Australian resources and energy remains strong,” King said.

“The Treasurer has noted that the current high prices have helped contribute to a A$27-billion boost to the budget bottom line for 2021/22, with the sector continuing to support our economy and more than 270 000 jobs.”

The record forecasts follow last year’s A$422-billion result, and come despite easing iron-ore prices and demand. Driving the rise in 2022/23 is the search for alternative sources of energy following Russia’s invasion of Ukraine, and a surge in the US dollar against the Australian dollar.

King said Australia is experiencing strong growth in demand and prices for minerals that are crucial for low-emissions technology, such as lithium, copper and nickel, owing to growing demand for electric vehicles, batteries and cleaner energy.

“The Australian government is strongly backing our critical minerals sector, which provides the crucial minerals needed to help Australia and the world meet our net-zero commitments,” King said.

“Lithium exports are continuing to grow, on the back of demand for batteries and electric vehicles. Lithium export earnings are forecast to increase more than ten-fold in just two years, from A$1.1-billion in 2020/21 to almost A$14-billion in 2022/23 before easing to around A$13-billion in 2023/24.

“Lithium export volumes are expected to grow steadily as Australia maintains its position as the world’s largest lithium miner,” she said.

Australia’s lithium production is forecast to grow from 247 000 t of lithium carbonate equivalent (LCE) in 2020/21 to 387 000 t in 2022/23 and 469 000 t of LCE in 2023/24, while Australia’s export volumes are estimated to rise from 157 000 t in 2021/22 to 202 000 t in 2023/24, supported by the need for Australian nickel for the transition to low-emissions technologies.

Australia’s copper exports fell to 802 000 t in 2021/22 as scheduled maintenance reduced production, but copper exports are expected to grow to 977 000 t by 2023/24 as production from new mines and mine expansions come online.

Meanwhile, the Resources and Energy Quarterly attributes lower iron-ore prices over the past quarter to slowing global growth and weakness in China’s housing sector. Iron-ore prices are expected to ease further, as world supply grows faster than demand.

Iron-ore export earnings are forecast to ease from A$119-billion in 2022–23 to A$95-billion in 2023–24, reflecting moderating prices, more modest growth in global steel output, and rising iron-ore supply.

Australian iron-ore export volumes were 0.9% higher year-on-year in the first half of 2022, with new greenfield supply starting to come online from major producers. Exports are forecast to increase by 3.1% in 2022–23 to reach 903-million tonnes, and rise by 3.8% to 937-million tonnes in 2023–24.

Lower prices over the outlook are expected to see Australia's iron-ore export earnings ease from A$134-billion in 2021–22 to A$119-billion in 2022–23, and then to A$95-billion in 2023–24.


Meanwhile, Australian gold mine production in the June quarter 2022 was 0.9% higher year-on-year at 81 t. Labour and skill shortages were still affecting mining operations, however production was 10% higher than the disrupted March quarter 2022, the report stated.

Gold earnings are forecast to rise from A$23-billion in 2021–22 to about A$25-billion in 2023–24, as rising export volumes outweigh lower prices.

Edited by Creamer Media Reporter

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