Australian resources and energy export earnings tipped to hit $425 billion

A global energy crunch resulting in soaring demand for gas, coal and oil has lifted the forecast for Australia’s resources and energy export earnings, now tipped to hit a record $425 billion this financial year.

The latest forecast — contained in quarterly data released on Monday by the Federal Department of Industry, Science, Energy and Resources — is up 12 per cent on the December projection of $379b and 33 per cent on the record $320b achieved in 2020-21.

However, exports are tipped to fall back to around $370b in real terms in 2022–23 before steadying out at $263b–$293b a year over the five year outlook to 2026–27 as inventories rebuild and energy prices soften.

“Driving the fall will be the return of bulk commodity prices to more ‘normal’ levels, following the elevated levels experienced recently, including as a result of the Russian invasion of Ukraine,” the Department said.

It expects earnings from the nation’s biggest money-maker, iron ore, to decline “noticeably” in the outlook period as supply from Brazil recovers further and growth in global demand moderates.

But lower revenue from the steel-making ingredient would be partially offset by a stronger outlook for base metals and lithium, with growing production of electric vehicles expected to push up demand for commodities such as copper, aluminium and nickel over the next five years.

The combined export earnings for lithium, nickel and copper will likely exceed $23b this financial year, the Department said, which would represent an increase of 38 per cent on the 2020-21 earnings.

Resources Minister Keith Pitt said the latest forecast had found that soaring demand and high prices for Australian LNG, oil and gas were a key contributor to record export earnings.

“In short, our resources sector is knocking it out of the park and underpinning our economic growth, our energy security and our national security,” Mr Pitt said.

“Critical global shortages in energy and resource commodities have led to record prices for many of our commodities.”

Mr Pitt said the data showed that with international coal prices at record levels — as the conflict in Europe and ongoing La Niña weather conditions affect supply and demand — Australia’s combined coal export earnings were forecast to rise to about $110b this financial year.

“Coal becomes only the second Australian commodity after iron ore to break through the $100 billion annual export mark,” he said.

Meanwhile oil prices — which recently hit their highest level since 2008 as markets scramble to accommodate the loss of some supply from Russia, the world’s third largest oil producer — are expected to ease over the outlook period as supply recovers.

While contract LNG prices are forecast to drop back as oil prices settle, the Department said spot LNG is “likely to be high for some time”.